Responsible Care ‘you can’t live without us’ Responsible Care Welcome Climate Change Agreements Workshop 28 November 2014

Responsible Care ‘you can’t live without us’ Programme 10:45Session 1 - How the Climate Change Agreements (CCAs) work CCA overview & timelines Participants’ CCA commitments Eligibility and targets 12:00COFFEE 12:15Session 2 – Maintenance of CCAs 12:30 Changes to CCAs Claiming Climate Change Levy (CCL relief) 12:45LUNCH 14:00Session 3 – CCA performance reporting 14:15 CCA performance calculations and reporting to CIABATA Managing compliance and possible audits 15:00Roundup / TEA / further Q&A

Responsible Care ‘you can’t live without us’ Responsible Care Session 1 - How the CCAs work

Responsible Care ‘you can’t live without us’ How the CCAs work CCA overview & timelines Participant’s CCA commitments Eligibility and targets

Responsible Care ‘you can’t live without us’ CCA overview – principles and benefits Join through the sector association for your activity Eligibility – energy intensive industries exposed to international competition –Facilities with Environmental Permitting Regulation part A installations Participants commit to challenging but achievable energy efficiency targets to 2020 in exchange for relief from the Climate Change Levy (CCL) CCA facilities are also exempt from the Carbon Reduction Commitment (CRC) and its £16/tCO2 annual charge for all emissions A more sustainable instrument for industry to contribute to carbon reductions…..

Responsible Care ‘you can’t live without us’ CCA overview - roles The Department of Energy and Climate Change (DECC) sets CCA policy The Environment Agency (EA) is the Administrator – implements policy and administers the scheme through a web-based Register CIABATA is a subsidiary of CIA -Represents CCA participants’ interests with DECC and EA -Negotiates targets with DECC -Sector interface with EA – administration of new entrants and supports sites’ ongoing participation -Collects performance against targets for on-reporting to EA and assists with changes to agreements

Responsible Care ‘you can’t live without us’ Chemical sector CCA target negotiation DECC proposed 13.5% CIABATA negotiated 11.2% 230 sites, individual targets as per survey £50m p.a. Climate Change Levy saving -90% power -65% gas £25m p.a. CRC Energy Efficiency Scheme saving £7m compliance costs per target period

Responsible Care ‘you can’t live without us’ Duration of CCAs and CCL relief Baseline Targets Certification Sign-up & CCL relief 1 Apr 2013 CCL relief renewed 1 Jul 2015 Scheme ends 31 Mar 2023 Targets – 4 consecutive target periods Jan’13 – Dec’14Jan‘15 – Dec’16Jan’17 - Dec’18Jan’19 - Dec’20 Target review

Responsible Care ‘you can’t live without us’ CCA overview - compliance Examination against CCA targets every 2 years -CCA Performance Calculation Spreadsheets for detailed calculations -CIABATA web-forms to report headline data Target shortfalls are met by paying a £12/tCO2 buy-out price Target overachievements can be used for own compliance with future targets Sanctions for: -Non-reporting and misreporting -Failing to comply with targets -Failing to notify EA of changes / provide information EA request

Responsible Care ‘you can’t live without us’ EA Reduced Rate Certificate

Responsible Care ‘you can’t live without us’ How the CCAs work CCA overview & timelines Participants’ CCA commitments Eligibility and targets

Responsible Care ‘you can’t live without us’ Participant agreement documents DocumentWithComment Underlying agreement EATarget and operator obligations Participation agreement CIABATAObligations to each other Facility eligibility form EADefines eligible facility Only supplied for charges on pre-existing CCA eligibility definition (PP4 eligibility form) Bottom-up Data Survey CIABATABaseline data and target submission targets tightened by 0.1% in negotiation with DECC

Responsible Care ‘you can’t live without us’ 3 chemical sector CCA agreements Sign-up is electronic Environment Agency Participating company CIABATA Umbrella agreement Underlying Agreement (entered by assent) Participation Agreement (Entered by agreement to enter Xls form)

Responsible Care ‘you can’t live without us’ Underlying agreement

Responsible Care ‘you can’t live without us’ Not included for Novem in energy targets as same as baseline energy

Responsible Care ‘you can’t live without us’

Responsible Care ‘you can’t live without us’ Underlying Agreement - settings and terminology ItemComment FacilityParticipating site or part of site Target unitA facility or group of facilities covered by a CCA target CCA contactsResponsible Person (gives legal assent) Administrative Contact (manages the CCA) Facility Contact (not in UA – works with admin contact) Target currency “Novem in energy” = energy efficiency “Absolute in energy” Target % reduction on base year From Bottom-up Data Survey: EITHER - Reduction in Novem ratio (energy efficiency ratio) OR - absolute energy in GJ

Responsible Care ‘you can’t live without us’ Sanctions Penalty for minor infringements (10% CCL saving in 2008) – Failure to report on time – Failure to meet other info request – Failure to notify EA of need for a variation (within 20 working days) Minor infringement penalty + buy-out-fee – Failure to meet target (error in milestone report) Decertification – reporting but not complying Termination – failure to report or pay a penalty

Responsible Care ‘you can’t live without us’ How the CCAs work CCA overview & timelines Participants’ CCA commitments Eligibility and targets

Responsible Care ‘you can’t live without us’ Facility eligibility form (pre-existing PP4 eligibility form) Eligibility form defines the activities within the CCA Facility covered by the CCA (usually = whole site) At sign up new forms submitted for – New entrants / facilities – Eligibility changes, e.g. making use of 70/30 rule (formerly 90/10) Categories of activities:  Eligible process – Permitted activities / activities listed in part 2 of the Environmental Permitting Regulations 2010 (+updates) +Directly associated activities - on-site, support eligible process, capable of affecting emissions (Q7) +70/30 activities – non-EPR, 30%

Responsible Care ‘you can’t live without us’ Eligibility – 70/30 rule shares of energy (primary fuel input basis) EPR processes (incl pilot plant for commercial purposes) Offices / canteen Ind gases R&D storage air / water abatement waste treatment

Responsible Care ‘you can’t live without us’ CCA targets – Bottom-Up Data Survey SectionContent General information Site(s) covered, eligibility changes and contacts Target Unit Summary Summary of baseline consumption, throughput and energy efficiency and projected targets Baseline fuel summary Baseline (2008) consumption by fuel Efficiency driversProjected penetration of energy efficient technologies Product mix sheets Supports Novem approach - one per product group in the CCA target unit

Responsible Care ‘you can’t live without us’ Look in product mix sheet(s) for throughput measurement basis

Responsible Care ‘you can’t live without us’ Electricity from the grid 3rd party high efficiency electricity & steam generators Other steam - from chemical plants? On-site generation of electricity and steam by CHP Process energy consumption for chemicals production by-products Primary fuels (P) Oil Gas Coal Waste Renew- ables P P P P P P F F F Final consumption (F) F e e d s t o c k s Site boundary P F

Responsible Care ‘you can’t live without us’ Energy and throughput accounting rules (1) Include ALL energy combusted for direct and indirectly supplied heat and power Exclude –Use of energy as feedstock –Exothermic heat –Energy regulated under the EU Emissions Trading Scheme (EU ETS) –On-supplies Include: –By-products and waste and used as fuel –Renewable energy

Responsible Care ‘you can’t live without us’ Energy and throughput accounting rules (2) Gross calorific value (GCV) basis in Gigajoules - use specific supplier factors where possible, own analysis of non-standard (on-site fuels) or specific or nearest standard factor (consistency the key). Secondary fuels must be on a primary fuel input basis: –Average Grid generation efficiency factor: x2.6 –CHP plants - algorithms to assess inputs to non-renewable (gas-fired) schemes that on-supply and/or export to the grid and to all renewable schemes Throughput measure(s) –See Bottom-Up Data Survey for throughput measures for product group(s)

Responsible Care ‘you can’t live without us’ Electricity from the grid 3rd party high efficiency electricity & steam generators Other steam - from chemical plants? On-site generation of electricity and steam by CHP Process energy consumption for chemicals production by-products P P P P P P F F F Final consumption (F) F e e d s t o c k s Site boundary P F Primary fuels (P) Oil Gas Coal Waste Renew- ables

Responsible Care ‘you can’t live without us’ EU Emissions Trading Scheme (EU ETS) Targets – “CCA Target Facility” excludes energy regulated by the EU ETS within the CCA Facility (usually leaving grid electricity) Whole CCA Facility entitled to CCL relief, recertified if meet both 1.CCA Target Facility Target 2.EU ETS permit requirements Therefore eliminates policy overlaps with no loss of CCL relief – simplification? Problem of volatile grid imports if CHP is “carved-out” - some have opted to use CHP Special Reporting Method (SRM) to address this: – Throughput measure = throughput (eg: tonnes) x grid intensity factor – Where grid intensity = grid use / (CHP + grid power) – delivered basis

Responsible Care ‘you can’t live without us’ Target currency Novem in energy (energy efficiency) –Relative target provides for growth but difficult to meet in a recession –Novem eliminates product mix distortions Absolute energy –Absolute target suited to falling throughput and / or large efficiency gains, –Target is tightened if throughput falls below 90% of baseline (2008) levels

Responsible Care ‘you can’t live without us’ Product mix approach (Novem) – Pure efficiency measure, free of product mix distortions – Target can be adjusted for actual product mix at reconciliation Relative energy target ratio (EER) =  [projected throughput(s) x target SEC(s)]  [projected throughput(s) x 2008 SEC(s)] expected energy consumption reference use (baseline adjusted for expected throughput) Energy efficiency = Specific Energy Consumption (SEC) = energy consumption, GJ throughput (eg: in tonnes)

Responsible Care ‘you can’t live without us’ Novem approach is free of product mix distortions Relative energy ratio = 2013/14 energy consumption reference energy consumption Site target EER= 3.0 / 3.0= P.mix approachEER= 15,000 / 18,000= 0.833

Responsible Care ‘you can’t live without us’ Summary / conclusions CCAs are a more sustainable instrument for industry to contribute to carbon reductions Supporting data for Underlying Agreement commitments is in the Bottom-Up Data Survey Changes and updates – are there any to notify – baseline data errors, eligibility, contacts? Are there preparations needed for performance reporting? –Dry-run this year –Formal exercise (2 Feb 2015 to 20 Mar 2015)