Why you must act now on carbon reduction

Carbon reduction has always been important but with the introduction of legislation to govern carbon output, failure to act could affect your company’s profitability.

The European Union Emissions Trading System (EU ETS)

EU ETS is the largest multi-national trading scheme in the world and a major part of EU climate policy.

It covers more than 10,000 installations in the energy and industrial sectors within Europe and accounts for around 50% of UK CO² emissions.

Who does it affect?

The first phase covers energy-intensive industries, including:

● Power generation

● Refining

● Iron and steel

● Cement and lime

● Paper

● Food and drink

● Glass

● Ceramics

● Engineering

● Vehicle manufacture

EU member state governments are required to set emissions targets for all installations in their country covered by the scheme. Companies that produce more pollution than allowed must buy permits from their cleaner rivals.

In time the cap is reduced and the price of carbon permits rise, incentivising companies to reduce their emissions.

The first phase of the scheme was from 2005 to 2007 and the second phase from 2008 to 2012. Industry is currently in Phase III which runs from 2013 to 2020 and will see an EU-wide cap on the number of available allowances.

Installations may meet their cap by either reducing emissions and selling the surplus, or letting their emissions remain higher than the cap and buying allowances from other participants.

Over time, credits will be steadily reduced. This will make them more valuable in order to incentivise companies to lower carbon output.

The CRC Energy Efficiency Scheme

Formerly known as the Carbon Reduction Commitment, the CRC is a UK-based directive affecting large, non-energy intensive organisations.

It will directly affect the service sector, the public sector and other less energy-intensive industries. The aim is to reduce carbon output by about 1.2 million tonnes by 2020.

Who does it affect?

Companies affected include:

● Water utilities

● Supermarkets

● Hotel chains

● Office-based corporations

● Government departments

● Large local authorities

Overall, this will directly affect the 5,000 or so companies across the UK with at least one half-hourly meter settled on the half-hourly market and whose consumption exceeds 6,000 MWh/year.

All fuels other than transport fuels will be covered including electricity, gas, fuel and oil.

The CRC timeline

Beginning in 2010, the scheme requires participants to purchase and surrender allowances to offset their emissions. Over time, the number of credits will be reduced and the price paid for credits will rise, meaning that those producing less carbon will pay less into the scheme.

At the end of each set period, organisations will need to report their carbon output with the results publicised in a carbon league table. The least-polluting companies will receive money from recycling unused carbon credits back into the scheme.

What are my options when it comes to carbon reduction?

1. Continue to do nothing and pay increasingly large amounts to offset your carbon output, leading to reduced capital.

2. Invest in energy-saving equipment, resulting in reduced energy consumption and lower bills.

How Gibbons can help:

Free energy survey

Gibbons offers a free, no-obligation energy survey for businesses. The survey identifies areas that can benefit from improved energy efficiencies, leading to lower energy bills. It also identifies where drives and motors can save money and gives an assessment of how much carbon can be saved by investing in energy-efficient equipment.

Energy-saving equipment

Electric motors account for 65% of all electricity used in industry, so reducing consumption here will have a significant impact on energy bills and carbon output. Gibbons offers a range of carbon-reducing, energy-efficient equipment to help lower bills. For example, a 90 kW high-efficiency electric motor can save £12,000 during a 10-year service life. We also supply ABB variable-speed drives, which can save as much as 60% energy in many applications, normally giving payback periods of 12 months or less.

We’re always here to offer advice and work with our clients to help them save energy. So to discuss your company’s carbon reduction needs, call Gibbons on 01621 868138 or email info@gibbonsgroup.co.uk.