Emissions Trading and Ring Fencing within the Agreement

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Emissions Trading and Ring Fencing within the
Agreement

• Gareth Stace
• Dairy Energy Savings

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Are you meeting your Second milestone target ?

• Yes No
• Emissions Trading
• Ring Fencing
• Both of these could apply whether meeting target
  or not

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Background

• DEFRA Document CCA10
• CCA Data Reporting Including Adjustments for
  Emission Trading

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Where do we Start ?

• Currency is carbon dioxide (CO2)
• Therefore, all surplus, or deficit has to be
  converted
• This is much easier than PMO!

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Issues

• Not meeting the target
• Buy CO2 Allowances
• How ?
• Open an account on the Emissions Trading Registry
  (ETR)
• Contact a broker

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Issues

• Meeting the target
• Sell surplus CO2 Allowances
• Ring fence
• Donate

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Problems

• Selling surplus CO2 Allowances is expensive
• In order to sell any CO2 your data have to be
  externally verified by a UKAS (UK Accreditation
  Scheme) approved verifier
• potentially more than a 1,000 per site. Much
  less of a group scheme (600 per site).

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Partial Solution

• DES has been working with other trade
  associations with DEFRA to allow Group
  Verification
• Reduce costs (600 per site)
• Full details will be available soon

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What is Ring Fencing ?

• Calculate in CO2 how much surplus your site has
• Ideally before the end of the target period,
  declare to me that any surplus made will be ring
  fenced
• No verification required until you want to sell
  or use CO2

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What is Ring Fencing ? cont.

• Could bank for next milestone
• Either to sell (after verification)
• Use to meet MS2 target (after verification)
• Or MS3 target

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How Do You Calculate the CO2 Needed, or Surplus ?

• The over achievement in SEC terms should be
  multiplied by the throughput in the milestone
  year to derive the energy over achievement, which
  is then converted to carbon and carbon dioxide.
• If the target SEC is 50 units/tonne, the achieved
  is 48 units per tonne and the milestone year
  throughput is 1000 tonnes then the number of
  allowances is
• (50-48) x 1000 x C x 44/12 tonnes CO2

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Calculating the C Factor

• The factor C is used to convert one energy unit
  to the equivalent number of tonnes of carbon.
• For example, a site uses 130,000 kWh (primary)
  electricity, 100,000 kWh of natural gas and
  10,000 kWh of gas oil.
• C(130,000 x 0.0453) (100,000 x 0.0518)
  (10,000 x 0.0680)
• (130,000 100,000 10,000) x 1000
• C 0.0000490 tonnes C/kWh

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ConversionEnergy to Carbon (not CO2)

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Example Calculation
Rebate worth 181,244 per year
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Example Calculation

• First obtain the C factor
• (57,163,9280.0453)(57,802,4380.0518)
• (57,163,92857,802,438)1,000
• 0.0000486 tonnes C/kWh

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Example Calculation

• tonnes of CO2
• (Target year SEC MS2 target SEC) target year
  throughput C (44/12)
• (561.78-440.71)204,6480.0000486(44/12)
• 4,412.2 tonnes CO2
• If CO2 is 6.00 per tonne 26,473
• Remember the rebate is worth 181,244 per year

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Example Calculation

• Do the same calculation for
• Ring fencing
• For buying CO2
• For selling CO2
• Judging how far PMO takes you
• PMO can not take you beyond your target

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How do I Buy/Sell CO2 ?

• Example of a broker is
• Tim Atkinson
• Natsource-Tullett (Europe) Ltd
• Tel. [phone]
• Fax. [phone]

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Emissions Trading Registry

• Web site for the
• Emissions Trading Registry
• www.defra.gov.uk/etr

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What Next ?

• Today is so that you know the issues
• When you send your data to me soon after 30th
  September 2004, I will calculate your
  surplus/deficit and inform of your options
• However, you may want to trade buy CO2 now

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Gareth Stacegstace_at_dairyUK.orgTel. 020 7467
2602Fax. [phone]Dairy UK93 Baker
StreetLondon, W1U 6QQ