1 Peter Brabazon Sustainable Energy Ireland Glasnevin, Dublin 9 Tel: Fax: Update on Negotiated Energy Agreements Pilot Programme Update on Negotiated Energy Agreements Pilot Programme

2 Negotiated Agreements Pilot - Presentation format Introduction and Context Pilot Project Details The Role of Audits Progress and Next Steps

3 Energy Agreements An agreement between an individual firm or group of firms and the state aiming to achieve substantial energy and emissions reductions “beyond business-as-usual”

4 Policy context Climate change Kyoto Protocol EU: Burden sharing arrangement Ireland: +13% by National Climate Change Strategy – Oct ‘00 Industry – One million tonnes CO 2 reduction

5 National policy context Integrated strategy Early action to meet targets Burden sharing and equity across all sectors Market instruments with appropriate supports Industry – taxation, agreements, best practice, emissions trading

6 Tax & Agreements National Climate Change Strategy (Oct 2000): - Targeted taxation measures - Negotiated agreements linked to taxation measures - Industry overall: 1Mt CO 2 reduction Minister for Finance (Dec 2002): Carbon/energy tax to be introduced from end 2004, with full consultation

7 Negotiated Agreements Aim to provide fairness, flexibility while building competiveness Firms agree to take certain actions or to meet specific targets Equity in context of market instruments Incentives for participation Flexibility for firms while meeting national objectives Can be individual or group basis Can be across all activity, or technology specific

8 Agreements in Ireland Core element of strategy Signalled connection to energy/climate levy Firm level, multi-year, legally binding agreements Energy management systems a minimum Best international practice, beyond business as usual

9 Negotiated Agreements Pilot - Presentation format Introduction and Context Pilot Project Details The Role of Audits Progress and Next Steps

10 Negotiated Agreements Pilot Initiated by SEI in February 2002 Completion date – planned end June 2003 Draft, non-binding agreements Ongoing consultation includes IBEC (business representative body) and relevant Government Departments Aims to inform policy makers for development and implementation of full measure

11 NA pilot project involves: Draft agreements with:- 1.One major energy-using company

12 Aimed at very large energy consumers with unique processes or activities Based on full audit of all energy practices Criteria negotiated and agreed Audit and criteria used to develop list of possible actions Draft agreement based on identified desirable actions Individual agreement

13  Aughinish Alumina Individual agreement

14 NA pilot project involves: Draft agreements with:- 1.One major energy-using company 2.A representative group of 15 companies across industry, focusing on a shared end-use technology (thermal energy)

15 Capturing key elements of energy use across industry Pilot agreement focuses on generation and distribution of hot water and steam Audits to understand existing practices, develop standards and identify opportunities Discussions with suppliers/installers Agreement based on actions and practices Technology agreement

16  Aer Rianta, Dublin  Cadbury, Coolock, Dublin  Dawn Meats, Co Mayo  GE Superabrasives, Dublin  Glanbia Ballyragget, Co Kilkenny  Green Isle Foods, Naas, Co Kildare  Hewlett Packard, Leixlip, Co Kildare  Kepak, Co Meath  Millipore, Carrigtwohill, Cork  Smurfit Paper Mills, Dublin  St James’s Hospital, Dublin  Transitions Optical,Co Galway  Tyco Healthcare, Mulhuddart, Dublin  Unilever BestFoods Ireland, Dublin  Yeast Products, Dublin (15) Technology agreement

17 NA pilot project involves: Draft agreements with:- 1.One major energy-using company 2.A representative group of 15 companies across industry, focusing on a shared end-use technology (thermal energy) 3.A group of 10 similar companies from same sector (pharmachem)

18 Collective efficiency A group of firms with largely similar processes Audits to develop general understanding Criteria for action agreed List of desired actions developed Draft agreement based on identified actions Collective agreement

19  GlaxoSmithkline, Co Cork  Cambrex Profarmaco, Co Cork  Janssen, Little Island, Co Cork  Leo Pharma, Dublin  Micro-Bio, Fermoy, Co Cork  Novartis, Ringaskiddy, Co Cork  Pfizer, Loughbeg, Co Cork  Pfizer, Little Island, Co Cork  Servier Laboratories, Arklow, Co Wicklow  Wyeth Medica, Newbridge, Co Kildare (10) Chemical / Pharmaceutical Sector Collective agreement

20 Pilot project – approach: Collaborative approach with industry Action-based, firm-level agreements Use of energy audits to identify what actions required to bring companies to best international practice Negotiation to ensure realistic/ acceptable draft agreements Exploration of links between bottom-up (action- based) approach and overall reduction targets

21 Pilot project – main steps: 1.Company/group recruitment/selection 2.Development of energy audit templates 3.Selection of energy auditors 4.Energy audits in each firm 5.Development of negotiation framework 6.Negotiations themselves 7.Exploration of resource/system needs for full NA system (info systems, monitoring, benchmarking, etc)

22 Negotiated Agreements Pilot - Presentation format Introduction and Context Pilot Project Details The Role of Audits Progress and Next Steps

23 The templates Setting out the special requirement of the pilot project audits Standardising scope Establishing compliance and data quality checks Standardising reporting Not standardising assessment, analysis, creative input

24 Special features Data quality checks Specific reference to best practice 6 year payback in first analysis No distinct payback categories Identifying Special Investigations

25 Using the template Auditor contracted to the firm to provide audit for energy strategy Some special requirements for the pilot project additional to the firm’s needs Template sets out project approach specific data needs Quality assurance by SEI

26 Negotiated Agreements Pilot - Presentation format Introduction and Context Pilot Project Details The Role of Audits Progress and Next Steps

27 Schedule June 29 th 02Individual Meeting, Dublin July 10 th 02Collective Meeting, Waterford 16 th July 02Technology Meeting, Dublin 11 th October 02Joint Meeting, Portlaoise 1th December 02Auditor Briefing, Dublin 14/15 January 03Training for Group Reps 27 th -31 st January 03Site visits by FES/SEI 11 th February 03Meeting with Group Reps

28 Looking ahead - some priorities: Inform policy development Explore ability of agreements to ‘deliver’ on top- down emissions objectives Explore impacts on industry Benchmark against intl. best practice Options for monitoring/compliance Explore options for codes of practice Inform and develop the broader industrial sector

29 Next steps Collation and analysis of audits Commencment of negotiations meetings Provisional deadline of 30 th April Production of final report in June

30 Indications so far: High level of cooperation/commitment from industry Industry sees agreements as vital, in the context of taxation Indications that agreements could add significantly to impact of taxation on emissions reduction Possible to move between bottom-up and top- down approaches Strong/positive support from auditors to audit approach

31 Peter Brabazon Sustainable Energy Ireland Glasnevin, Dublin 9 Tel: Fax: Update on Negotiated Energy Agreements Pilot Programme Update on Negotiated Energy Agreements Pilot Programme