Environment and Regenerationscrutiny Committee

AGENDA ITEM NO: 6

ENVIRONMENT AND REGENERATIONSCRUTINY COMMITTEE

1st April 2009

REPORT FROM STRATEGIC DIRECTOR PHILIP WALTON

CONTACT OFFICER – RACHEL SPURR (01978 292259)

COUNCIL PRIORITIES 2009/2012 – Outcome, Key Measures and 2009/10 Actions Challenge

REDUCING CARBON EMISSIONS AND ENERGY USE

PURPOSE OF THE REPORT

1.1To provide Members with an opportunity to challenge the overall outcome and key measures being proposed for the Council Priority ‘Reducing Carbon Emissions and Energy Use’, and commenton the potential key actions being considered for this priority.

2.INFORMATION

2.1As part of the Council’s Service Planning and Priority Setting process, individual Scrutiny Committees have a key role to play in challenging the outcome, measures/targets, actions/milestones being proposed for Council Priorities for the coming year.

2.2As part of the development of the Council’s priorities for 2009 to 2012, the proposed focus and considerations for the ‘Reducing Carbon Emissions and Energy Use’ priority were presented to Members for review and challenge at Environment and Regeneration Scrutiny Committee on 5 November 2008. Members endorsed the proposed focus of the priority and agreed to receive and consider further progress reports, including a challenge of the outcome, measures and actions for this priority, and the targets and milestones being set.

2.3Development of this informationhas been ongoing since thenand Members were presented with the proposed overall outcome,key measures, and a selection of potential actions at an All Member Workshop Held on 3 March 2009. This information has been further refined based on the findings from the workshop and is presented in Appendix 3 and Appendix 4 for review and challenge by Environment and Regeneration Scrutiny Committee. A summary of the key findings from the workshop can also be found in Appendix 5.

The Carbon Reduction Commitment

2.4There are a number of key drivers for reducing our carbon emissions and energy use, details of which can be found in Appendix 2. However perhaps the most important of these is the Carbon Reduction Commitment, full details of which can be found in Appendix 1.

2.5The Carbon Reduction Commitment (CRC) is a new statutory cap and trade scheme for carbon dioxide emissions in the UK, which Wrexham County Borough Council will fall under. The scheme starts in April 2010 and is designed to provide a financial incentive to reduce carbon emissions in large public and private sector organisations.

2.6The scheme requires organisations to purchase allowances to cover their estimated carbon emissions at the start of each year at a cost of £12 per tonne of CO2. For Wrexham this would amount to a sum of £200,000 based on our 2007/08 emissions, which totalled 16,580 tonnes.

2.7At the end of the year organisations are then required to report their actual carbon emissions. If their actual emissions equal their estimated emissions and therefore the allowances that they purchased, then they will receive all of that money back. Moreover if they are lower, then they may be eligible to a bonus dependent upon their position in an annual league table.

2.8However if their actual emissions are more than they estimated, then they will have to buy extra emission allowances. At first these extra allowances will be available to buy at a fixed price of £12 per tonne. However at the end of this period a capped phase will begin, whereby the amount of allowances available to buy will reduce by 3 to 5 percent per year. At this point allowances will begin to be bought and sold between organisations via an auction system and it is estimated that their value could reach between £23 and £27 per tonne.

2.9The Carbon Reduction Commitment (CRC) is therefore a clear financial driver for significantly reducing our carbon emission and energy use and having clear and accurate data on our carbon emissions.

Outcome/Key Measures Challenge

2.10The long term outcome for the carbon reduction priority is to significantly reduce carbon emissions and energy use across Wrexham County Borough by 2020. To measure our progress towards achieving this outcome, three key measures are proposedshown in Appendix 3, along with the key potential actions being considered for this priority shown in Appendix 4.

2.11It should be noted that targets are not presented for this priority at this time, as they will be dependent upon the results of arigorous baselining exercise, which will be carried out during 2009/10. Baseline information is expected to be available towards the end of 2009/10, at which time targets will be proposed and brought to Environment and Regeneration Scrutiny Committee for consideration and challenge.

2.12Members are now asked to review and challenge the overall outcome and key measure information shown in Appendix 3 and consider the potential keyactions presented in Appendix 4. The following questions may assist members in this activity:

Does the outcome accurately reflect the aim of this priority?

When looked at all together, will the key measures give a rounded view of performance in this area and support delivery of the desired outcome?

Do the key potential actionsreflect any extra funding being invested, or conversely, any budget cuts?

Next Steps

2.13Following Member’s consideration and challenge of the information inAppendix 3and Appendix 4, information will then finalisedfor this priority for the Council Plan. The extract of the minutes from this Scrutiny Committee will be appended to the report to Executive Board in April where approval will be sought for the Council Plan.

RECOMMENDATIONS

Members are asked to review and challenge the proposed outcome and key measures for the Council Priority Reducing Carbon Emissions and Energy Use and comment on the potential key actions being considered for this priority.

BACKGROUND PAPERS

Executive Board Report - PAW/10/09

Environment and Regeneration Scrutiny Committee Report – PAW/24/08S

Executive Board Report – CPFO/107/08

Full Council Report CFPO/123/08

WEBSITE INFORMATION

None

Report Number: PAW/21/09S

Appendix 1

The Carbon Reduction Commitment

What is the Carbon Reduction Commitment?

The Carbon Reduction Commitment (CRC) will be a new statutory cap and trade scheme for CO2 emissions in the UK
The scheme was designed by the UK Government and devolved administrations including the Welsh Assembly Government, to help generate a shift in awareness, behaviour and infrastructure.
The scheme will start in April 2010 and is designed to cut carbon emissions from primarily large non-energy intensive public and private sector organisations.

Who will be affected?

Any public and private organisation in the UK that produces more than 6000 megawatt hours of electricity per annum (including schools for local authorities), or which has a half hourly meter will come under the scheme.
The only exceptions will be for emissions that are already covered by the Climate Change Agreement or the EU Emissions Trading System.
As WrexhamCounty Borough Council’s emissions are over 6000 megawatt hours of electricity per annum we will be liable under the scheme.

How does it work?

The scheme provides a financial incentive to reduce carbon emissions by placing a price on them.
Organisations whose emissions exceed the 6000 megawatt threshold will have to register as participants in the CRC.
Organisations will then be required to purchase allowances to cover their estimated carbon emissions at the start of each year at a cost of £12 per tonne of CO2. (Therefore if the scheme were already in existence, for 2007/08 we would have been required to pay just under £200,000 for our £16,580 tonnes of carbon emissions.)
Organisations then need to monitor and record their emissions and report their actual emissions at the end of the year.
At the end of the year if an organisations actual carbon emissions for that year equal their estimate and allowances purchased at the start of the year, then they will receive all of that money back.
Moreover if they are lower, then they may be eligible to a bonus dependent upon their position in an annual league table.

How does it become costly?

However if an organisations emissions are more than they estimated then they will have to buy extra emission allowances.

For the first three years extra allowances will be available to buy at the fixed price of £12 per tonne of CO2.
However at the end of this period the capped phase begins and there is no longer a limitless supply of allowances at a fixed price.
Allowances will be bought and sold between organisations via an auction system on the secondary market and it is estimated that their value could reach between £23 - £27.
The political goal is an 80% reduction in carbon emission by 2050 based on a 1990 baseline, and this is the target that will drive the cap that will be set for the CRC.
Therefore we can expect the emission allowances that we are allowed to purchase and therefore the allowances that are available to purchase on the secondary market will reduce by somewhere in the region of 3 to 5 percent per year.
Reported emissions also will be publicised in an annual performance league table which identifies the best and worst performers and best performers will be eligible to claim bonuses, thereby adding to the incentive to do well.

What happens when?

2009/10 - baseline our carbon footprint
April 2010 to September 2010 - register for the scheme
April 2011 - purchase double allowances in arrears for 2010/11 and in advance for 2011/12.
July 2011 - report 2010/11 carbon footprint
October 2011 - receive recycling payment for allowances bought in arrears for 2010/11 (or purchase extra allowances if actual emissions are great than estimated emissions and allowances purchased)
April 2012 – purchase allowances for 2012/13
July 2012 - report 2011/12 carbon footprint
October 2012 - receive recycling payment for allowances bought for 2011/12 (or purchase extra allowances if actual emissions are great than estimated emissions and allowances purchased)
April 2013 onwards - as above but from this date onwards carbon allowances will begin to be capped and allowances will begin to be bought and sold between organisations via an auction system on the secondary market.

Implications:

We need to reduce our carbon emissions by at least 5 percent per year

We need to have clear and accurate data on our carbon emissions
We need to have the skills to forecast our carbon outturn
We need to communicate the implications of the CRC to Members, Staff and the wider community
If there is likely to be a substantial reduction in emissions at the end of a given year, we will need to plan in order to sell those allowances at the best price.
Conversely if there is likely to be a significant rise in emissions in a given year then we will need a strategy is needed to buy allowances as cheaply as possible over the year.

Appendix 2

Drivers for Carbon Reduction

Environmental Drivers

The UK Climate Change Impact Programme have projected a number of potential negative impacts of climate change in Wales up to 2080. These include increased risk of flooding, storm damage, habitat loss, water resource changes and subsidence to mention but a few.
These environmental pressures are going to make delivery of services to the community difficult. For example erosion of roads would increase maintenance requirements, localised flooding would prohibit collection and disposal of refuse and recycling, and energy use would vary dramatically, to match changing seasonal requirements.

Policy Drivers

The climate change bill puts into statute the UK’s target to reduce carbon dioxide emissions by a minimum of 60% by 2050 and at least 26-32% by 2020 against a 1990 baseline (although they are now being advised this should be increased to 80%).
The Welsh Assemble Government’s (WAG) One Wales progressive agenda for Wales sets out a commitment to achieve annual carbon reduction emissions of at least 3% a year by 2011.
The Welsh Commitment to Address Climate Change developed by WAG commits individual authorities to work to adapt to the effects of climate change and reduce emissions of greenhouse gases.
The Consortium of Local Authorities in Wales (CLAW) promotes energy efficiency and is developing an energy management agenda in response to the National Assembly for Wales’ Energy Review.

Reputation Drivers

Public buildings and institutions are now required to prominently display a Display Energy Certificate (DEC) which grades and provides information to visitors about the energy performance of these buildings.
The new Carbon Reduction Commitment which requires authorities to purchase allowances for their total CO2 emissions, will also involve authorities emissions being published annually in a performance league table.
National Performance Indicators relating to carbon emissions and energy use are published alongside that of other authorities in Wales, as part of the Welsh Performance Measurement Framework.
The Consortium of Local Authorities in Wales has a Sustainability Award which promotes and rewards excellence in the field of sustainable development in Wales.
A recent public opinion poll carried out by the Local Government Association found that over three quarters of people agree that Council's have a key role to play in tackling climate change, 70% believed that climate change should be one of the top five priories for their Council, and 62 percent stated that they would be more likely to vote for a candidate committed to tackling climate change in a local election.

Financial Drivers

Carbon Reduction Commitment - Please see Appendix 1 above.
National Assembly for Wales Energy Review - Estimates that Welsh Local Authorities spend in excess of £40 million per annum on energy and that there is the potential to save 20% of this amount, or £8 million, throughout Wales. With rising energy and fuel costs this further increases our financial incentive for reducing energy use.
Carbon Trust Value at Stake Study for Wrexham - The value at stake study carried out for Wrexham County Borough Council by the Carbon Trust, which calculates the financial difference between doing nothing (business as usual with no further carbon reductions) and hitting an aspirational target of 70% reduction in emissions, estimates that the cost to the authority of doing nothing would be somewhere in the region of £11.1 million taking everything into account.

Appendix 3

Outcome and Key Measures

The overall aim of this priority is to reduce carbon emissions and energy use, optimise energy efficiency and use renewable energy where possible in Wrexham County Borough.

We will do this by applying the following Principles to our business:

We want to be a leader in good practice in Wales for this subject
We want to positively influence our employees’ behaviour in work and elsewhere in relation to this subject
We want to carry out our community leadership role to positively influence partners and the public in relation to this subject
We want to effectively manage rising energy costs to reduce potential negative impact on service delivery

As such we will work towards:

Outcome: / A significant reduction in carbon emissions and energy use across Wrexham County Borough by 2020

We will measure our progress towards achieving this outcome using three key measures:

Measure 1: / Percentage reduction in carbon emissions from Wrexham County Borough Council’s activities against the baseline year
Measure 2: / The total amount of money saved from the reducing carbon emissions and energy use project
Measure 3: / Percentage increase in people across the County Borough who feel they have changed their behaviours to reduce their ‘carbon footprint’

Targets will be set for these three key measures towards the end of 2009/10, based on the results of a rigorous baselining exercise, which will be carried out during that year. The proposed targets will be brought to Environment and Regeneration Scrutiny Committee for consideration and challenge at that time.

In addition to the three key measures listed above there will also be operational measures for each of the areas of activity covered by the action plan - organisational development and governance, cross cutting, WCBCBuildings, Waste, Street Lighting, Transport, and Housing. These measured will also be developed during 2009/10 based on the results of the baselining exercise.

Appendix 4

Potential Actions

Please note that this is a draft list of aspirational, potential actions that are being considered for this priority, in order to give you an indication of the type of projects that may be carried out under this priority. More exact details and timeframes for these activities will be scoped out during the baseline year 2009/10.

Potential Actions for 2009/10

1 / Work with the Energy Saving Trust to produce a carbon footprint baseline for all WCBC activities and their impact on the wider community.
2 / Work with the Carbon Trust to produce a carbon footprint baseline for WCBC buildings, transport and waste.
3 / Work with WLGA, Forum for the Future, Energy Saving Trust, Carbon Trust and businesses to research and share best practice from other organisations.
4 / Identify recommended projects to produce a Carbon Management Plan for the Authority, establishing clear systems to measure targets and promote annual progress.
5 / Produce a Funding and Procurement Strategy, based around identifying the long term investment requirements and sources of external funding for all project themes.
6 / Develop guidance to identify the requirements of the Carbon Reduction Commitment, and how WCBC can develop resilient and more renewable energy sources to ensure future supply.
7 / Build the existing annual £200k Invest to Save energy conservation budget into an overarching funding recycling framework.
8 / Produce a Communication and Engagement Strategy to create lasting cultural and behavioural change in Staff, Members and the community.
9 / Support a carbon neutral community to act as an examplefor the County Borough.
10 / Ensure staff are able to use appropriate and sustainable transport by developing work place travel plans for WCBC.
11 / Work with our LSB partners to co-ordinate a sustainable travel plan for the County Borough.
12 / Extend and promote the Warm Wales scheme to tackle fuel poverty, and improve energy efficiency in peoples homes.
13 / Develop the WCBC maintenance program to maximise the energy efficiency of our housing stock through combi boilers, window and door replacements and solar water heating.
14 / Calculate and separate WCBC’s organisational waste footprint from the community waste footprint.
15 / Produce a street lighting strategy, investigating carbon saving through maximising how efficiently we operate the street lighting network.
Evaluate:

Switch off non essential lighting /signs in communities.

Deploy timers to introduce part time lighting
Develop an invest to save program to improve the energy efficiency of our streetlighting
Collaborate with north Wales Authorities to renegotiate the tender process as a joint maintenance and renewal program.
Carry out Health Impact Appraisal on reducing street lighting

Potential Actions for 2010/12 – 2020