HERTFORDSHIRE COUNTY COUNCIL

ENVIRONMENT AND PLANNING CABINET PANEL

TUESDAY 8 MARCH 2011 AT 10.00 A.M.

GOVERNMENT CONSULTATION ON LOCAL AUTHORITY CARBON EMISSIONS REPORTING AND SIMPLIFICATION OF THE CARBON REDUCTION COMMITEMENT ENERGY EFFICIENCY SCHEME

Report of the Director of Environment and Commercial Services

Authors:John RumbleTel: 01992 556296

Emma EllisTel: 01992 556459

Executive Member:Derrick Ashley

  1. Purpose of report

To inform and seek the Panel’s views on two consultations issued by the Department for Energy and Climate Change. The first is on sharing information on greenhouse gas emissions from the Local Authorities own estate and operations (the successor to National Indicator 185). The second is on the simplification of the Carbon Reduction Commitment Energy Efficiency Scheme.

  1. Summary

2.1The Department of Energy and Climate Change (DECC) is consulting on two key areas of carbon emissions reporting for the County Council. The first of these is the successor to national Indicator 185 (CO2 emissions from the local authorities’ estate and operations). The second is on proposals for the simplification of the Carbon Reduction Commitment Energy Efficiency Scheme (CRC).

2.2The consultation on the successor to national indicator 185 is proposing to align local authority reporting with that undertaken by the private sector. It is extending the scope to include all reportable greenhouse gases and is potentially expanding the scope of activity for which emissions will need to be calculated. In addition the proposals are to make this indicator locally reportable with DECC compiling national data from those reports published by local authorities. Therefore the premise that the new approach is reducing the burden and simplifying the approach is debatable. The proposed response to this consultation is set out in appendix B to this report.

2.3The consultations on the simplification of the CRC cover five main areas:

  • Private (business) sector organisational rules.
  • Review of the CRC supply rules.
  • The CRC qualification criteria.
  • The overlap between existing carbon related schemes such as the CRC, climate change agreements and the EU emissions trading system.
  • The timing and frequency of the sale of allowances from 2012 onwards.

Of these only the consultations on the supply rules and the timing and frequency of allowance sales have any impact upon the County Council.

2.4In relation to the proposals on CRC supply rules the main issue is the potential re-inclusion of passive un-metered energy supplies (street lighting) within the scope of the CRC. If this were to happen it would add, annually,c £300,000 to the cost of allowances.

2.5The proposals outlined on the timing and frequency of allowance sales would mean that the County Council could face a potential double sale of allowances during the transition from phase 1 to phase 2 of the CRC in 2013/14. This would mean that we would move to purchasing allowances based on a forecast of energy use rather than known energy usage. Whilst this would have no direct financial impact upon the authority it does introduce uncertainty and would necessitate a greater contingency to be built into the budget for CRC allowance purchases in 2013/14.

2.6The basis for the proposed response on these consultation documents is set out in section 9.1 of this report.

  1. Recommendation

That the Panel note the report and;

(a)supportthe proposed response to the DECC consultation on Local Authority emissions reporting, as set out in appendix B to this report.

(b)supportthe points set out in section 9.1 of this report as the basis for the response to DECC on its proposals to simplify the CRC.

  1. Background

National Indictor 185 – CO2 Emissions from the Local Authorities Estate and Operations

4.1The Department for Communities and Local Government (DCLG) announced in October 2010 that it was decentralising Local Area Agreements and replacing the National Indicator Set with a single comprehensive data list from April 2011. In December 2010, the DCLG published a draft single list setting out all the data requirements that central Government needs from Local Authorities, inviting council’s comments by 4 February 2011.

4.2DECC requested that emissions data from Local Authority (LA) own estate and operations be included on the single data list, which was formerly collected under National Indicator (NI) 185. DECC has proposed a new approach for collecting this data and is seeking views from all local authorities by 18 March 2011.

4.3Under NI 185 the County Council was required to report on all carbon dioxide (CO2) emissions from the property and transport used to deliver its functions. DECC collected NI 185 data for the 2008/09 financial year and this information was published on the DECC website in July 2010. Information for 2009/10 was collated by the County Council but this was not collected by DECC.

Carbon Reduction Commitment Energy Efficiency Scheme

4.4The Carbon Reduction Commitment Energy Efficiency Scheme (CRC) commenced on 1 April 2010. As part of the Comprehensive Spending Review national government announced that the scheme would be changed to a straightforward payment based on CO2 emissions at a cost of £12 per tonne. As a participant in the scheme the County Council is required to account for all emissions arising from energy use within its use of property, highways related energy use and street lighting, although for the introductory phase of the CRC street lighting emissions will not be included. The first payment required from the county council is for the year 2011/12 and it is estimated that this will amount to £1.4 million.

4.5Whilst the scheme is now a straight-forward payment much of the administrative burden surrounding the scheme still remains and it is relatively complicated to administer and report on. DECC is therefore consulting on proposals to simplify aspects of the CRC and is asking for comments by 11 March 2011

  1. DECC Proposals for Local Authority Emissions Reporting

5.1DECC’s proposed way forward for acquiring emissions data is for LA’s to:-

  • Follow the same guidance that was published for organisations by DECC and The Department for Environment, Food and Rural Affairs in September 2009 entitled ‘Guidance on how to measure and report your greenhouse gas emissions’.
  • Publish an emissions report locally and inform DECC of where the report has been published.

5.2It is proposed that the 2009/10 and the 2010/11 data be published at the same time, no later than 30 June 2011. The raw data previously collected by LA’s for NI 185 and for the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme can be used as the basis for the new proposal.

5.3DECC intends to collate each LA’s data in one published spreadsheet, expected to take place in September 2011. To enable this to happen DECC requests that:-

  • The template set out in Annex I of the guidance, shown in Appendix A, is adhered to.
  • The data published covers all greenhouse gas emissions and is reported as CO2e – carbon dioxide equivalent, as is recommended in the guidance.
  • If a LA is responsible for reporting on behalf of other sub-organisations that they consider separating out the reports (or write sub-sections of a collated report) so that LA’s are able to compare similar parts of their overall organisation with other Local Authorities.
  1. Differences between NI 185 and the new reporting approach

6.1There are a number of differences between reporting emissions under NI 185 and the proposed new approach. The new approach requires LA’s to report on total greenhouse gas emissions (GHG) emissions, i.e.

  • carbon dioxide (CO2),
  • methane (CH4),
  • hydrofluorocarbons (HFCs),
  • nitrous oxide (N2O),
  • perfluorocarbons (PFCs) and
  • sulphur hexafluoride (SF6).

Under NI 185 only CO2 emissions were reported.

6.2LA’s are required to publish emissions data locally, using a new reporting template, rather than submit a dedicated spreadsheet to DECC. The new reporting approach requires emissions to be categorised into three groups (known as scopes), as shown in the following diagram:

6.3These scopes cover emissions from sources that were not included in NI 185. Under NI 185 the County Council currently reports on emissions from ‘Fuels combustion’ and ‘Owned Transport’ from scope 1, all of scope 2 and some of scope 3 (outsourced services and some transport-related activities). Although scope 3 emissions are discretionary, the new guidance recommends that ‘significant’ scope 3 emissions are identified and reported.

6.4Emissions reductions from carbon offsets and green tariffs are included. These were not included in NI 185. Emissions from the combustion of biomass/bio-fuels are included; these were not reported under NI 185.

6.5In the proposed new approach, emissions reported for the CRC Energy Efficiency Scheme and other regulatory schemes, may be used for the purposes of reporting total GHG emissions. Where this information does not include all sources of emissions, the approach in the guidance should be used to measure or calculate remaining emissions. However, it is suggested that the method outlined in the guidance could be used to report all emissions due to the differences in the approaches in the regulatory schemes and the guidance.

6.6The proposed guidance recommends total scope 1 and 2 emissions are normalised using an intensity ratio, such as tonnes of CO2e per full time equivalents.

6.7As the proposed guidance is followed by other organisations, particularly in the private sector (currently on a voluntary basis), each LA’s emissions will be comparable to other organisations in their areas. This was not possible for emissions reported under NI 185.

  1. Proposed response to DECC Proposals for Local Authority Emissions Reporting

7.1Appendix B to this report sets out the proposed response to the consultation. The response recommends that the proposed approach for the sharing of information of emissions from LA estate and operations be amended to reduce the burden of data collection on LA’s. It recommends that emissions are reported as CO2, rather than CO2e, and that only emissions from those sources previously reported on under NI 185 should be included, i.e. property and highways energy use, transport and significant emissions from outsourced services.

7.2The response also calls for the proposed reporting deadline of 30 June 2011 to be moved to 29 July 2011, in line with the CRC Energy Efficiency Scheme reporting deadline, to give LA’s enough time to process the required data.

  1. DECC Proposals for Simplification of the CRC Energy Efficiency Scheme

8.1DECC has announced a series of consultation documents all based upon the intention to simplify certain aspects of the CRC scheme. The areas that are being addressed as part of this suite of consultation documents are:-

  • Private (business) sector organisational rules.
  • Review of the CRC supply rules.
  • The CRC qualification criteria.
  • The overlap between existing carbon related schemes such as the CRC, climate change agreements and the EU emissions trading system.
  • The timing and frequency of the sale of allowances from 2012 onwards.

8.2The government is seeking feedback from stakeholders on the following set of issues:-

1.The effectiveness of the framework for driving energy efficiency in large private and public sector organisations, in the light of wider policy developments in other areas such as the implementation of a carbon price floor, electricity market reform, implementation of a Green Deal for business and the review of Climate Change Agreements, and company reporting of greenhouse gas emissions.

2.The perceived complexity of the CRC scheme and hence the need to reduce the administrative burden on:

•Those organisations which are subject to the scheme.

•The administrators of the scheme (Environment Agency, Scottish Environment Protection Agency, Northern Ireland Environment Agency).

3.Optimising the projected emissions-savings attributable to the CRC scheme due to an increased focus on energy efficiency by the target sectors.

8.3Of the five consultation papers issued by DECC the two relating to private sector organisational rules and the overlap between existing carbon related schemes do not raise any issues for the County Council as they are addressing matters which do not affect its participation in and operation of the CRC. The other three consultation documents however do raise issues that the County Council should respond to.

8.4The proposals outlined in the review of supply rules are looking at the definition of an energy supply relationship that determines an organisation’s participation within the CRC and what energy supplies should be accounted for within the scheme. Of significance to the County Council within the options put forward is the fact that the energy use for street lighting, currently excluded from the CRC, would be included if these proposals where carried through. The document outlines eight options for simplifying the supply relationship. One of the proposals on the inclusion of passive non-metered supplies (street lighting) would mean the County Council facing an additional annual cost of circa £300,000.

8.5The consultation document on the review of the CRC qualification criteria is looking at the levels of energy use that determine an organisations’ requirement to participate in the CRC. Currently this is set at an annual use of 6,000 MWh of electricity (settled on the half hourly market). None of the proposals for simplification would have any impact upon the participation of the County Council in the scheme; they are only looking at those organisations that are close to this set threshold.

8.6The final consultation document deals with the timing and frequency of emissions allowances sales from 2012 onwards. At present allowances for emissions arising during 2011/12 will need to be purchased in May 2012. However the original intention within the scheme was that it would, in its second phase, be a cap-and-trade scheme and this is not possible if allowances are purchased for known emissions after the end of the reporting year. One solution to this is to undertake a compulsory double sale of allowances at the beginning of phase 2 (2013/14). Therefore DECC is seeking CRC participant’s views on this. An example of how this might be enacted is shown in appendix C as an allowance sale timeline.

  1. Proposed response to DECC Proposals for CRC Simplification

It is suggested that the County Council respond to the DECC consultation on the simplification of the CRC on the following basis:-

  • That all efforts to simplify the scheme should be supported in order to reduce the administrative and financial burden on local authorities.
  • That the County Council is opposed to any change to the supply rules which may lead to the inclusion of passive non-metered energy being included within the scheme.
  • That the County Council supports an approach that continues to pay for supply allowances based upon a known usage and does not see the need to introduce any double sale of allowances in the future.
  1. Financial Implications

There are no direct financial implications arising from this report.

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Appendix A: Reporting template

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Appendix B:Proposed response to the consultation on sharing information on greenhouse gas emissions from Local Authority own estate and operations (the successor to National Indicator 185)

Hertfordshire County Council (HCC) welcomes the opportunity to share its views on the Department for Energy and Climate Change’s proposed new approach for sharing information on greenhouse gas emissions from Local Authority own estate and operations. Our views are presented below.

Deadline

We strongly believe that the proposed deadline for publishing the 2009/10 and 2010/11 data does not provide LA’s with enough time to collect and prepare the required information. Although raw data for 2009/10 has already been collected, the new approach will require us to rework the data in order to comply with the new reporting template. In addition, we will have to collect and process raw data for 2010/11 and prepare for reporting under the CRC Energy Efficiency Scheme. Therefore, we would propose that the 30 June 2011 deadline to be moved to 29 July 2011, in line with the CRC reporting deadline.

Emission sources

The new approach covers sources of emissions that were not previously included in NI 185. Currently HCC measures emissions from scope 1, scope 2 and some of scope 3 in its carbon accounting processes. Given the difficulty and increased burden in obtaining emissions from some of the additional sources highlighted in the DEFRA guidance, The County Council is of the view that any future reporting should be limited to thiose emissions falling entirely within scopes 1 and 2 and should be focused on emissions arising from energy use for property and highways purposes and from the use of transport for business purposes. The County Council is also of the view that until a robust methodology is developed for calculating and reporting on scope 3 emissions these should be excluded from any future reporting requirements.

Greenhouse gas emissions

We believe that reporting on greenhouse gas emissions, instead of carbon dioxide emissions; will increase the burden of data collection on LA’s. Therefore, the County Council is of the view that reporting should be limited to carbon dioxide emissions only.

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Appendix C: CRC Allowance Sale Timeline

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