Special Report

Case studies: challenging times and targets ahead

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Special Report: The Carbon Reduction Commitment


The CRC is another factor driving energy efficiency and carbon management. ENDS looks at how a local authority, a water firm, a supermarket chain and a university are responding

Northamptonshire County Council

Cutting carbon: a joint effort

Northamptonshire County Council might only have one person responsible for its energy and carbon management strategy but that is not limiting its ambition. Darren Perry, who manages Northampton Borough Council’s CRC participation as well as the county’s, is co-opting council staff, local businesses and schoolchildren to reduce emissions on his behalf.

The county council was one of the first to get funding for its energy efficiency programme from the government-backed Salix Finance scheme six years ago. It has already managed to cut its annual carbon dioxide emissions by more than 1,300 tonnes, a 2% cut. This has reduced annual energy bills by £170,000, and earned the county the Carbon Trust Standard.

Looking ahead, Dr Perry is planning a clutch of further energy efficiency projects and considering the opportunities for renewable energy schemes that take advantage of the new feed-in tariff and other government incentives. “I have to say, this is one of the biggest areas of opportunity for councils,” he says. There are over £1bn-worth of commercially viable energy projects available across Northamptonshire’s public sector alone, he believes.

“The CRC is a red-herring really,” says Dr Perry. Not only is its statutory framework limiting but it also excludes renewables. Nonetheless, it is still big money – the council’s first allowance bill will be about £720,000 – and the removal of the recycling payments is a blow. Northamptonshire could have expected to do well in the first few years of the scheme and would have reinvested the payments into its energy saving fund.

The council’s CRC portfolio covers about 650 sites. Half of these are schools. The rest includes offices, libraries and fire stations. It is also responsible for the county’s 60,000 streetlights, which account for about 16% of its energy budget.

While emissions from other sources are decreasing, those from street lighting are growing because of housing expansion. A mass replacement programme run as a private-finance initiative had aimed to partially address this, but the programme is now up for review.

Northamptonshire’s slimline internal team is no accident, says Dr Perry. He prefers to commission services as and when he needs them. He also has the help of individual building managers across the council’s sites.

For help and support on the CRC, Northamptonshire is using consultants from M&C Energy Group. This is a more cost-efficient solution than employing extra staff, says Dr Perry, and it made the registration process this summer remarkably straightforward.

The council also expects to have rolled out smart meters for electricity and gas at all its sites by April and should therefore be in line to collect full points under the early action metric. This was not done specifically for the CRC, but is a condition of a new county-wide energy contract signed last year that saves the council £1.2m per year. The electricity meters are provided free through this and the council is paying for the installation of the gas meters.

Northamptonshire has a good relationship with its schools, unlike some other council energy departments, but the automatic data will help it avoid future problems with data collection.

Most schools pay their own utility bills, but the council had planned to pay for all their CRC allowances up front, then share out any recycling payment. If the council had been in the lower half of the league table, it intended to charge them. This will no longer work with the changes made to the scheme and an alternative is being worked out.

But another unusual initiative designed to help schools
manage and reduce their emissions is still going ahead. This is the introduction in September of the country’s first carbon trading schemes for schools.

The schemes – one for primary and one for secondary schools –are simplified versions of the CRC (perhaps the government should take note). There are prizes for schools that manage the biggest cuts and prizes for pupils such as work experience placements. Ten schools have signed up so far and the first trial school, which helped develop the scheme and spread the word to its peers, has already made a 10% reduction in its annual energy spend, says Dr Perry. The project is run with support from consultants at KPMG, electricity supplier NPower and builders’ merchants Travis Perkins.

To date, most of the county council’s emissions reductions have come from better insulation and new computerised building management systems at larger sites. The insulation cost £332,000 and saves about 803tCO2/year, while the first ten management systems, costing £193,000, have saved 377tCO2/year.

The rules are strict on what investments can be made with funds raised through Salix Finance, including a requirement for the initial capital to have been paid back and generate savings within five years.

Northamptonshire received £300,000 from Salix and matched this with £300,000 of its own money. This initial pot had all been spent by 2008 but the fund is a rolling one, refreshed with the money saved through the energy efficiency measures it has financed. Northamptonshire now has an annual budget of over £200,000 for further investment.

Future projects in the pipeline include an overhaul of lighting, responsible for about 40% of energy use in the council’s buildings, and a green IT programme that will include server optimisation, automatic standby modes and the replacement of inefficient computers and monitors.

The council is also recruiting staff into its team of ‘carbon reducing office warriors’. They will spread energy-efficient practices in their workplaces and bring in ideas for further emissions reductions. They are expected to take these practices home with them too.

Dr Perry is also trying a more imaginative and collaborative approach to future efficiency projects with a competition for local businesses. Firms with energy saving technologies were encouraged to work with individual council sites to pitch for investment in particular projects. The conditions are the same as for the Salix money and eight winners were recently chosen. Another round is planned for next year.

“The idea is to reverse the scenario, rather than me saying ‘I want loft insulation’, I am going to businesses and saying ‘how can you save us money?’,” says Dr Perry. Most of the winners were lighting projects but they also included three variable speed pump systems for school swimming pools and computing power management controls.

The average payback period is two to four years and the projects are expected to save £54,800 a year and 394t/CO2 per year for an initial investment of £133,200. Lifetime saving is estimated at £859,500.

The sums may not be enormous but Dr Perry hopes successful projects will be replicated once the case for them is proven. “If if works, the question will then be why haven’t we done this at every site?” he says. And taken alongside all the other initiatives Northamptonshire is developing, they contribute to an impressively broad and energetic carbon management strategy.


An ambitious carbon goal

LSE's New Acedemic Building features energy-saving measures such as passive ventilation and automatic metering. Photo courtesy of Gareth Simkins
LSE's New Acedemic Building features energy-saving measures such as passive ventilation and automatic metering. Photo courtesy of Gareth Simkins

Gas and electricity costs, funding criteria and financial obligations are all piling on the pressure for the London School of Economics & Political Science (LSE) to cut its carbon footprint. The CRC comes on top of these, and the school believes it has a strong green reputation to maintain.

The LSE has faced up to these challenges by setting an ambitious goal: by 2020, it plans to cut its emissions by 63% compared with 2005.

This move contrasts favourably with the government’s target for a 43% cut over the same period from all English higher education institutions (HEIs). But it is particularly challenging for the LSE as it emitted 15,606 tonnes of CO2 in 2009/10, 5% higher than its 2005 baseline.

Responsibility for achieving these cuts lies with director of capital development Ken Kinsella and Victoria Hands, head of environmental sustainability. A new carbon reduction manager will also be appointed in January 2011 to cover an annual energy outlay exceeding £1m and a projected annual £140,000-spend on CRC allowances.

Mr Kinsella is putting the finishing touches to a revised carbon management plan (CMP), due for approval by senior management early next year. Building on the 2005 plan, and now fully priced to 2020, it will encompass the school’s target of 57% carbon cuts from fuel and electricity use, alongside ‘scope 3’ emissions – not included in the CRC – from refrigerants, waste, travel and procurement.

Under instructions from the Higher Education Funding Council for England, every English HEI is required to develop a CMP. The body’s funding for capital projects is partly linked to carbon performance, so HEIs have more to gain from energy efficiency than most other organisations, whether inside or outside the CRC (ENDS Report 415, p 41).

The first step in delivering LSE’s CMP will be halting continuous access to academic buildings in the school’s compact city-centre campus at Aldwych. Mr Kinsella wants only a few open during weekends and holidays. The move is projected to generate a carbon saving of 12-15%.

But he says the CMP’s key element is the building of a £4-5m energy centre, the design of which has not yet been finalised. It could provide combined cooling, heating and power running on gas. Biomass is out of the question due to transport and air pollution concerns.

Passive ventilation

The new energy centre will supply a major new building and may be connected to other parts of the campus. But logistical problems could arise because the LSE site is crossed by public roads, which would need to be temporarily closed off.

LSE already has some combined heat and power provision. This is supplemented by solar energy, but on-site renewables will not improve CRC performance.

New constructions, such as the New Academic Building, opened in 2008, must be rated as ‘excellent’ under the BRE environmental assessment method, with “an aspiration of
outstanding”, says Mr Kinsella. An A-rated energy performance certificate is also mandatory.

New developments have passive ventilation, rather than carbon-intensive air conditioning. The only exceptions are the kitchens and a basement nightclub. Most buildings have automatic metering. The opening and closing of windows is controlled centrally, although some can be opened manually. This gives building occupants a sense of control while inhibiting them from trying to circumvent and break the control devices.

LED lighting is being rolled out across the campus and is fitted as standard in new buildings. Four PowerPerfector voltage optimisation units have been installed (ENDS Report 423, pp 9-11).

Campus computers are programmed to shut down automatically at 7pm. A bid has also been made for funds to rationalise servers and establish if cooling is needed.

The estates division has also made use of on-site expertise on climate change adaptation in the Grantham Research Institute on Climate Change and the Environment, chaired by Lord Stern. The academics’ advice includes oversizing drains to cope with storm surges and ensuring that passive ventilation is able to cope with long-term rises in exterior temperatures.

But there have been teething troubles along the way. Lights connected to movement detectors would turn off when rooms were occupied, and there were some objections to restricting the flow rate of showers last year.

Leading by example

There are currently no plans to charge departments for their energy use, which could provide a further incentive to cut carbon emissions. Although this has been successfully implemented in some universities, bureaucratic hurdles make it an unattractive option.

Mr Kinsella hopes his intention to “lead by example” maintains LSE’s good position in national student group People and Planet’s Green League, which assesses the environmental performance of HEIs (ENDS Report 414, p 11). The school came 15th out of the UK’s 133 HEIs this year. Keeping this reputation is a key driver for carbon abatement.

Dr Hands adds that LSE has been rewarded for its environmental management by the mayor of London, the National Recycling Awards, the National Union of Students and the Environmental Association for Universities and Colleges. It participates in the Green Impact environmental accreditation scheme and is well on the way to ISO14001 certification. It renewed certification to the Carbon Trust Standard last year, which boosts performance in the CRC’s league table.

Along with 56 other HEIs, LSE has taken advantage of a ‘green revolving fund’ from Salix Finance, a not-for-profit company backed by the Carbon Trust that funds public-sector carbon reduction projects. The £500,000 supplied has so far been spent on building management systems, LEDs and a residential air-source heat pump. Savings from these and future projects keep the fund topped up. It only has to be paid back when there are no more opportunities to improve efficiency.

Mr Kinsella is clearly proud of LSE’s track record but is sceptical of how well it will be reflected in the CRC league table, which he thinks will “just show who is spending money” he says.

South West Water

Metering and measurement

Pumps account for 80% of South West Water's energy use
Pumps account for 80% of South West Water's energy use

Water companies are some of the biggest energy users under the Carbon Reduction Commitment (CRC) energy efficiency scheme. The CRC is primarily focused on businesses whose energy bills are 1-2% of their costs, whereas for the water industry that figure is about 10%.

South West Water uses 270 gigawatt-hours of energy per year costing £18m. It will have to spend £1.74m to buy enough allowances to cover its annual emissions from energy use of 145,000 tonnes of carbon dioxide.

This is the lion’s share of the firm’s total annual carbon footprint of 164,380 tonnes of CO2 equivalent in 2009/10, which includes other greenhouse gas emissions from sewage sludge, business travel and supply chain emissions not covered by the CRC.

David Rose, South West Water’s carbon manager, says the company was “very disappointed” at the government’s decision not to recycle revenue from the sale of allowances back to participants, plus or minus a bonus or penalty payment for performance. He believes South West would have done fairly well in the first few years of the CRC league table, earning a small bonus or at least breaking even.

Water industry regulator Ofwat has ruled that water companies are not able to pass on the costs of the CRC to customers in order to encourage the industry to cut energy use. Now CRC costs are higher, water firms are seeking a review of this decision.

“The end of revenue recycling has pulled the rug out from under the scheme… We would have liked to have seen it simplified, but not in this way,” says Mr Rose.

South West appears well-prepared for CRC regulation. Mr Rose says the company has been voluntarily measuring and reporting its energy use and carbon emissions for 12 years. Three years ago, water industry regulator Ofwat made it mandatory. This is because carbon emissions from the energy used by the water sector are rising, driven by tightening water quality and pollution standards (ENDS Report 421, pp 34-37).

South West has a carbon reduction target of 18% by 2015 compared with 2009/10 levels. David Rose says this puts South West on a more ambitious trajectory to cut emissions, at least in the short term, than the UK’s target for a 34% cut by 2020 and 80% by 2050 on 1990 levels. The water sector aspires to match the UK targets.

“We’ve got some pretty hefty carbon targets to meet,” Mr Rose says. But the CRC has strengthened the business case for accelerating some aspects of its energy efficiency programmes.

As part of its CRC preparations, the water company has achieved the Certified Emissions Measurement and Reduction Scheme (CEMARS) standard from  procurement services firm, Achilles. CEMARS is approved by the Environment Agency as an early action metric, which improves an organisation’s league table position. Other approved schemes include the Carbon Trust Standard and the BSI Energy Reduction Verification Kitemark.

South West chose CEMARS because it already uses Achilles’ database on the environmental performance of suppliers for the utilities sector. This also led to a discount on the application fee.

To gain CEMARS or the equivalent standards, organisations must demonstrate reductions in emissions over one to three years, depending on their size, and make a commitment to achieving further year-on-year cuts.

South West’s efforts to save energy have reduced emissions by about 4,500tCO2 over the past three years, a cut of 2.5%.

South West has 1,800 sites that use electricity including water and sewage treatment works, pumping stations and offices.

The main area where emissions can be cut is in the energy used by the thousands of pumps that transfer water and sewage through pipe networks. This accounts for 80% of the South West’s energy consumption.

The firm is investing £1.9m between 2010 and 2015 in a rolling programme devoted to improving pump efficiency. Mr Rose says: “As soon as you install a new pump or refurbish an old one it starts to wear and you get degradation over time, so it’s a constant process of testing, refurbishment and replacement.” Refurbishing a pump increases its efficiency by about 5%.

South West is also improving the energy efficiency of its water and sewage treatment works. For instance, modern treatment works are enclosed in big sheds where lighting is connected to one switch. The company is making more efficient use of lighting by linking it in zones. These improvements will cost £500,000 up to 2015.

South West also has a programme to use information and communications technology to centralise control of treatment works. Remote control enables more energy efficient operation.

As a result of the CRC, Mr Rose says the firm accelerated its installation of 700 automatic meter readers that gather accurate energy data – another early action metric. Together with the existing half-hourly meters, South West now has accurate data for 95% of its electricity use.

South West is investing £5m in renewable energy to cut emissions. But the company is helping to finance the investment with subsidies through the Renewables Obligation, so emissions reductions are excluded under the CRC to prevent double counting.

South West was originally going to register for the CRC as the Pennon Group, which includes waste management company Viridor. But the water company took the decision to disaggregate because it has a much longer track record of carbon management than its sister company. Moreover, Viridor’s emissions are increasing rapidly through business growth. “We didn’t want them to drag us down the league table,” Mr Rose says.

He says registering was “dead easy”, as long as you have the necessary information at your finger tips, such as your list of half-hourly meter code numbers.

Producing the footprint report and annual report will be the next job. “The footprint report presents a little bit of a problem because we have to chase down emissions sources such as liquified petroleum gas, for which we only know how much we bought rather than used,” Mr Rose says. But in general, South West’s existing energy database provides all the information needed for these reports.


A complex journey towards sustainability

High-cost investment in energy-saving technology delivers 30% of demand at Sainsbury's store in Crayford, Kent. Photo courtesy of Sainsbury's
High-cost investment in energy-saving technology delivers 30% of demand at Sainsbury's store in Crayford, Kent. Photo courtesy of Sainsbury's

Supermarket giant Sainsbury’s has been focused on energy efficiency and going low carbon for more than a decade. The Carbon Reduction Commitment (CRC) energy efficiency scheme is the latest challenge. 

Preparing for the CRC has been no small feat. Sainsbury’s is a complex organisation, one of the oldest and largest retailers in the UK, with almost 800 stores, over 2,000 suppliers and 150,000 staff.

But the group had already started on its journey towards sustainability, energy efficiency and low carbon long before the advent of the CRC. It has, for example, been trialing different renewable technologies since its first environmental store in Greenwich opened in 1999.

Jack Cunningham is climate change and environment manager for Sainsbury’s. He stresses that one of the biggest issues arising from the CRC was that of registration itself, a “massive challenge” due to its wide and complex portfolio of properties, including tenanted buildings, and subsidiaries with little day-to-day contact.

As to whether the CRC has yet had the desired effect on large energy users, raising awareness and prompting behavioural change and new investment in energy efficiency, his judgment is a qualified one.

Behavioural change

He considers it an extra policy driver that “helps lead to behavioural change”, but stresses that like many larger organisations, investment in energy efficiency to cut costs has long been on the agenda: “We’ve been targeting store managers, we’ve invested in energy efficiency for many years, so the economic argument for it was already well understood.”

Sainsbury’s has established demanding targets. Overall, its energy ‘Reset’ programme saves at least 16% on energy consumption after stores are upgraded. The current programme has been going since 2007, but developed from a previous programme started in the mid-1990s. The primary stimulus was the need for business efficiency.

The ongoing programme ensures best practice is applied to new or existing retail outlets. Over 300 Sainsbury’s stores have been through it, with over 5,000 separate savings initiatives identified. Reset is being extended to 420 supermarkets and convenience stores in 2010/11.

More sophisticated automated building management systems, highlighting energy use to managers and recommending solutions, will also be tried at 20 convenience outlets.

There is also a wider group target to cut CO2 emissions by 25% per square metre by 2012 relative to 2005, set in 2008 based on earlier internal store specifications as well as Reset. “We are on track to hitting that target.” The group is currently considering a new set of more challenging targets. These will take into account risks from CRC exposure, but future rising energy prices and the wider, future cost of carbon are the main considerations, notes Mr Cunningham.

Even so, while energy efficiency and carbon reduction have been embedded in thinking internally, “the CRC helps make this more official”.

The Carbon Trust has played a part in supporting the group’s energy and emissions reduction strategy for several years. In early 2010, Sainsbury’s achieved the Carbon Trust Standard, an early action metric that will help ensure competitive positioning in the league tables.

The main focus of effort to meet energy efficiency targets is on operation and maintenance, notably on demand-side management through behavioural change, and on store managers communicating the benefit of that change. The managers have access to real-time energy data and can talk to the energy team, for example, to establish costs and ensure lights are switched off.

Sainsbury’s has an operation and maintenance team of experienced sustainability and energy managers, based in London, working with store managers. The team is also responsible for CRC data and compliance. Outside the Carbon Trust Standard certification, more formal environmental management systems are not considered useful at group level, though they are applied at various sites including depots.

Sainsbury’s has also trialed other technologies. Those adopted include natural light through ‘sun pipes’, intelligent heating and LEDs on refrigerator displays, biomass boilers and CO2 refrigerants. Such measures have enabled sites such as Durham to increase 50% in area while cutting absolute emissions by 10%. These are being rolled forward as standard for new stores, and retrofitted where possible.

At Crayford, Kent, a 6,000m2 extended store is a dramatic example of higher cost investment, making a bet on market operation conditions in the future. Here, pioneering closed-loop borehole systems integrated with refrigeration units enable storage of waste store heat for later use 200 metres below the surface. The technology delivers 30% of the store’s energy demand. It means that despite being over double the size, the store’s carbon footprint is no bigger than the original one.

Sainsbury’s also has 14 depots, both under its direct control and managed by contractors. These are using similar technologies to stores, notably for chilling. But their number and energy use is modest compared to stores, where most attention is focused.

There are also one-off opportunities for district heating where housing and community buildings are included as a condition for new sites. Five more biomass boilers are also planned. However, on-site renewables cannot be used to boost CRC performance.

Remaining challenges

The next CRC challenge will come beyond the introductory phase with the need for full, detailed carbon reporting.

The concern here is not ability to report. The energy team has already set up systems for this, with more information available through power purchase agreements with utilities such as Greenergy. Instead, it is over the different emissions reporting format required by the CRC compared to internationally agreed formats. Mr Cunningham points out: “We are likely to see different footprints emerge.”

Perhaps the biggest challenge comes from uncertainty over the future of the CRC beyond the introductory phase (pp 4-9). Already, the dropping of revenue recycling in the comprehensive spending review (ENDS Report 429, p 7) has badly dented confidence in the consultation process with government.

While loss of these funds will be relatively small compared to overall turnover, it is a significant cost increase that has sharpened attention at senior management level. Mr Cunningham considers this “could change future MAC [marginal abatement cost] curves for those stores”, potentially bringing forward heavy investments. But funds lost could also damage planned investments. The group is still working out the implications.

Sainsbury’s is pushing forward on energy efficiency and emissions reduction, but investment planning is clearly harder as long as uncertainty over the CRC continues. And trust in the consultation process must be rebuilt.

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