Science-Based Targets: everything you need to know

Some large corporations are leading the way in a bid to tackle climate change with science-based targets. What are the benefits of committing to these emissions reductions and how can your business get involved?

WHAT ARE SCIENCE-BASED TARGETS?

Science-based targets came about as a result of the Paris agreement in 2015. In this legally binding treaty, 195 parties committed to limiting global warming to below 2 degrees Celsius compared to pre-industrial levels. Then in 2018, the Intergovernmental Panel on Climate Change said that global warming should not exceed 1.5 degrees Celsius.

To achieve this, GHG emissions must halve by 2030, and drop to net zero by 2050. A ‘science-based’ emissions target stays in line with the scale of reductions required to meet these objectives. These goalposts track progress and give the private sector a clear idea of how quickly they need to reduce their GHG emissions to prevent the worst impacts of climate change.

In the global race towards net zero, science-based targets will become crucial for business growth across the sectors. Not only do they help tackle climate change, but they boost a company’s competitiveness in a changing market.

A UNITED INITIATIVE

The Science Based Targets initiative (SBTi) was set up by CDP, World Resources Institute (WRI), the World Wide Fund for Nature (WWF), and the United Nations Global Compact (UNGC). The group supports companies that have set science-based targets. They have found that the positive effects for these businesses include increased innovation, strengthened investor confidence and improved profitability.

The STBi also:

  1. Defines and promotes best practice in science-based target setting via the support of a Technical Advisory Group.
  2. Offers resources, workshops and guidance to reduce barriers to adoption.
  3. Independently assesses and approves companies’ targets.

WHAT ARE THE BENEFITS OF SETTING SCIENCE-BASED TARGETS?

There are many benefits to setting science-based targets. By significantly reducing emissions, you are not only building a brighter future for the planet but a potentially profitable one for your business.

Here are some of the benefits of setting science-based targets:

  • Illustrate excellent CSR – For large corporates there is a growing responsibility to take action against climate change, science-based targets are a way to do this.
  • Deliver a competitive advantage – Integrating environmental policies into your business strategy helps your business stand out in a crowded marketplace.
  • Involve the whole company – Engage with internal and external stakeholders to help your business achieve or even exceed targets.
  • Reduce large costs – Lowering emissions often requires a closer look at your energy portfolio and making your utilities as efficient and low carbon as possible. This can result in significant savings for your business.
  • Investor confidence – 52% of execs have seen investor confidence boosted by targets. As TCFD recommendations come into play and climate-related risks become more important, this will only become more prevalent.
  • Increase innovation – 63% of company execs say science-based targets drive innovation.

HOW DO YOU SET A SCIENCE-BASED TARGET?

There are three approaches to setting a science-based target (SBT):

  1. Sector-based approach – The global carbon budget is divided by sector and emission reductions allocated to individual companies based on its sector’s budget.
  2. Absolute-based approach – All companies will equally work towards the same per cent reduction in absolute emissions.
  3. Economic-based approach – A carbon budget is equated to global GDP and a company’s share of emissions is determined by its gross profit since the sum of all companies’ gross profits worldwide equate to global GDP.

HOW CAN BUSINESSES GET INVOLVED?

For a business to get involved in the initiative there is a simple 4 step process to follow:

  1. Submit a letter to say you are committed to the scheme.
  2. Develop your own science-based target within 24 months.
  3. Submit your target for validation.
  4. Announce your target.

838 companies are currently taking science-based climate action and 343 companies have approved science-based targets.

HOW EIC CAN HELP

Creating science-based targets is essential for businesses of every size as we progress towards net zero targets. To create these targets, a business must first understand its consumption. At EIC we offer a range of comprehensive services that can help you help your business.

We are already partnering with leading UK private and public sector organisations – supporting them to transform their operations in line with ambitious targets. This will help them future-proof their business and save the planet.

EIC can assist in meeting your science-based targets by:

  • Establishing your carbon footprint to act as your baseline.
  • Provide recommendations to reduce your carbon impact.
  • Set your target to reduce your carbon footprint to meet the 1.5°C objective.
  • Create an ongoing Carbon Management Plan.
  • Create and publish all documentation required for the scheme.
  • Work with you to embed the strategy into your business.

To learn more about EIC’s carbon and net zero services, contact us today.

Targeted Charging Review (TCR) Guide

The Targeted Charging Review (TCR) changes will soon come into effect, starting with distribution charges in April 2022 and followed by transmission charges in April 2023.

We look at how these changes will impact consumers and how we can help businesses to prepare.

What does the review include?

Changes to DUoS and TNUoS

Distribution Use of System (DUoS) and Transmission Network Use of System (TNUoS) charges cover the costs of maintaining the electricity networks that supply your energy. Ofgem is implementing changes to these charges to ensure that costs are distributed fairly across all consumers.

Subject to Ofgem consultation, from April 2022 for DUoS and April 2023 for TNUoS a proportion of your DUoS and TNUoS charges will be based on a series of fixed charging bands.

The band you are placed into will depend on your average annual consumption for non-half hourly (NHH) sites or average capacity for half-hourly (HH) sites, calculated over the two year period from October 2018 to September 2020.

TNUoS charges for non-domestic consumers will be based on a series of fixed charging bands set for the whole country, as seen in the table below.

For DUoS charges, domestic consumers will pay a single residual charge set for each distribution area. Non-domestic consumers will be charged based on the same set of fixed bands as TNUoS but with charges varying for each distribution area. Ofgem will review and may revise these charging bands and their boundaries so that they can be implemented alongside new electricity price controls, with the next (RIIO-3) starting in April 2026.

TCR Fixed Charging Bands with latest TNUoS forecast
Table 1. TCR Fixed Charging Bands with latest TNUoS forecast (National Grid, May 2021)

Changes to Triads

The largest component of Triad charges is called the Transmission Demand Residual (TDR), and this is the charge that will change from April 2023, becoming a fixed charge rather than being determined through Triads. Triad charges will continue to apply to the forward-looking components of TNUoS charges, which are known as the Transmission Demand Locational charges, although these represent less than 10% of the total TNUoS charge.

Triad periods are the three highest winter peak periods. They are retrospectively calculated in March each year and form the basis of the transmission network component (TNUoS) of large companies’ energy bills. By reducing consumption or switching to onsite generation during forecast Triad periods, some firms can save large amounts of money on their bills.

The removal of the TDR leaves two full Triad seasons to take place over Winter 2021/22 and 2022/23. Beyond that, the incentive for Triad avoidance will be greatly reduced. And companies that are taking action to reduce costs during Triad periods could see an increase in their electricity bills.

What impact will this have on consumers?

The TCR changes are set to benefit larger consumers with half-hourly (HH) meters, whilst domestic and NHH sites will see a small rise in costs. Consumers outside of London are expected to experience a rise in DUoS fixed costs. This will be partially offset by a decrease in DUoS unit costs. Most HH sites will also benefit from a drop in TNUoS costs. Whereas domestic and NHH sites face a potential rise in TNUoS costs.

Average TCR change for a HH customer

The graph below shows that southern areas are more likely to see a larger decrease in costs than northern areas. HH sites in London, for example, will see TNUoS and DUoS costs decrease by an average of 36%. Whereas HH sites in Scotland will only see an average decrease of 7%. Incidentally, London is also the only area where domestic and NHH sites will see a net benefit from the TCR changes.

Consumers currently taking Triad avoidance action will not see the cost reductions shown below, as that benefit ends in April 2023. Similarly, sites that have a capacity level which is set too high are likely to face an increase in costs, as they could be placed into a higher charging band. Extra-high voltage sites are not included in the graph below, as they are subject to site-specific tariffs and need more detailed analysis.

Average % change in costs due to TCR

How EIC can help

The figures calculated above are based on an average consumer in each charging band. The analysis covers a wide range of consumers with varying demand profiles and cannot easily be applied to individual consumer costs.

The best way to determine exactly how the TCR will affect your business is with our Long Term Forecast Report. This provides your business with a specific breakdown of electricity costs over a 5, 10, 15 or 20 year period. This valuable report will allow you to confidently plan your long-term budget and avoid any nasty surprises.

To learn more read about our Long Term Forecast Report service or contact us today.

COP26: what we need to achieve at the climate conference

The Covid-19 pandemic brought humanity’s vulnerability into sharp focus, emphasising the importance of international collaboration. Now, as extreme weather events wreak havoc around the world, the climate emergency is beginning to receive global recognition. This could spur real change at the COP26 conference, which will be held in Glasgow this November.

The summit is likely to be shaped by a new report from the Intergovernmental Panel on Climate Change (IPCC). The report warns that there is now a very small window to reduce emissions before exceeding the emissions limit of 1.5°C, as set out in the Paris Agreement. With this in mind, the gravity of COP26 cannot be overstated.

We look at the expected objectives for COP26, and how these crucial policy shifts could impact businesses across the UK.

Ambitious targets for 2030

So far, the focus has been on achieving net zero by 2050. But countries are now being asked to come forward with ambitious emissions reductions targets for 2030.

According to the new IPCC report, global CO2 emissions need to decrease by about 45% below 2010 levels by 2030. Otherwise, if they continue to rise at the current rate, global temperatures are projected to increase by more than 1.5°C between 2030 and 2052.

The UK has a significant part to play in this effort. Despite making up less than 1% of the global population, the UK is historically the fifth-largest contributor of carbon emissions in the atmosphere.

For the private sector, this will most likely result in a greater emphasis on science-based targets. Science-based targets aim to reduce emissions, through concrete, corporate objectives. These shorter-term goalposts are designed to track progress for businesses, providing greater transparency on the road to net zero and beyond.

Prioritising adaptation

The IPCC report warns that even with global decarbonisation efforts, it will take decades for the planet to recover. This doesn’t mean that achieving net zero by 2050 and staying within the 1.5°C limit wouldn’t result in immediate benefits (such as improved air quality). But it could take twenty to thirty years for global temperatures to stabilise.

Critically, some of the damage could be irreversible. According to the report, numerous climate-related weather events will continue to cause disruption for centuries to come. This means that adaptation will be just as important as mitigation efforts.

Adaptation methods involve adjustments to ecological, social or economic systems in anticipation of climate change. These can range from building flood defences and early warning systems to changes in government policy and redesigning communication systems.

These methods can coincide with mitigation methods, which focus on reducing emissions.

Given the current state of play, it makes sense that adaptation and resilience are principle themes at the upcoming COP26 event. These are key considerations for large businesses hoping to thrive in the future.

Reforestation and conservation

UK Prime Minister Boris Johnson has promised new domestic pledges and plans to garner international commitments on “coal, cars, cash and trees”.

He said: “We want COP26, the UN great summit, to commit to restoring nature and habitat and ending the massacre of the forests, because trees are among our best natural defences against climate change. To be net-zero for carbon you must be net-positive for trees and by 2030 we want to be planting far more trees across the world than we are losing.”

The UK has faced criticism in the past for having the lowest levels of tree cover, compared to its European neighbours. Forests currently cover just 13% of the country. To reach its net zero target, the Committee on Climate Change has said that tree cover in the UK needs to rise to 17% by 2050.

Mobilising green finance

According to a new analysis from WWF, the UK government’s committed spending is currently well below the required rates to meet its legally binding net-zero emissions target.

Financing green initiatives is essential to combatting climate change, and mobilising green finance is a key objective for COP26.

Achieving our climate goals will require public finance for the development of infrastructure and private finance for innovation and technology. In this transition every company, bank, financial firm and investor will be expected not only to follow, but to lead change.

How can EIC help your business to prepare?

We can provide a bespoke, adaptable roadmap to net zero for your organisation – ensuring carbon compliance and long-term financial stability along the way. Our comprehensive energy and carbon services help guide organisations towards a more sustainable future.

Our goal is to help companies navigate the transition to a low carbon economy. We recognise that while policy decisions drive decarbonisation, every business has a part to play.

To learn more about our net zero and sustainability services, contact us at EIC today.

Football clubs and the path to net zero

With COP26 on the horizon, as well as the release of an alarming new report from the IPCC, the UK’s net zero target has become more urgent. This will mean more organisations will be expected to join in and stay ahead of changing policy. This is not lost on Premier League football clubs, many of whom have already committed to net zero targets. Some have even succeeded in achieving radical emission reductions.

There are numerous advantages to becoming a net zero football club. It provides a significant reputational boost and has the potential to cut long-term costs. It is clear that carbon reduction is quickly becoming a mandatory part of any business strategy.

We look at what it means to become a net zero football club and why it matters.

UN Sports for Climate Action Framework

The UN Sports for Climate Action Framework aims to support and guide sports organisations towards a more sustainable future. Similar to science-based targets, this is a voluntary framework setting out identifiable objectives for those looking to display climate leadership.

The framework sets out five principles for signatories:

  1. Promote environmental responsibility.
  2. Reduce overall climate impact.
  3. Educate for climate action.
  4. Promote sustainable consumption.
  5. Advocate for climate action.

The Premier League sustainability table

These principles have been reflected in a table published by BBC Sport and the Sport Positive Summit ranking Premier League clubs. In 2020, football teams at the top of this sustainability table included Tottenham Hotspur, Arsenal and Manchester United, amongst others.

Points were awarded for:

  • Clean energy (2 points)
  • Energy efficiency (2 points)
  • Sustainable transport (2 points)
  • Single-use plastic reduction or removal (2 points)
  • Waste management (2 points)
  • Water efficiency (2 points)
  • Plant-based or low-carbon food options (3 points)
  • Communications & engagement (3 points)

One bonus point was available for each of the following:

  • The club actively engages fans towards positive behavioural change that reduces environmental impact in their own lives.
  • The club is a signatory to the UN Sports for Climate Action Framework.
  • The club tracks and reports on the percentage of fans taking different modes of transport to games.

This criteria demonstrates the level of action football clubs are expected to take beyond simply offsetting their carbon emissions. By including energy, waste and water management as well as social engagement and scope 3 emissions reporting, these principles promote real change.

Where to start

Once you have pledged your commitment to net zero, it is important to spread the word. This can be a valuable boost to your reputation, but it also helps to get staff, suppliers and fans involved in making your business more sustainable.

The next step is to calculate your carbon footprint and map a path to net zero. This is where EIC comes in.

Our carbon team has worked closely with Premier League football clubs, helping them to calculate their emissions, mapping a route to net zero, and supporting them on their journey.

Our extensive list of sustainable services includes:

  • Sub-metering and monitoring
  • Carbon footprinting
  • Carbon compliance and management
  • Energy data insights and support
  • Support for efficiency measures
  • Onsite generation guidance
  • Green procurement
  • Energy and carbon reporting
  • Waste management
  • Sustainable water solutions
  • Support with installing EV infrastructure

Why become a net zero football club?

For decades, the climate emergency has been met with apathy and reluctance. Now, there is real momentum to take action before it is too late. Unfortunately, some organisations are continuing to do the bare minimum in an effort to appear greener without making significant changes. But this ‘greenwashing’ will not support their transition to a net zero economy. The businesses that will thrive are those that embrace efficiency, reducing consumption and waste from every corner of their organisation.

By doing this, not only will football clubs become part of a net zero future – they can become leaders too.

The Smart Export Guarantee (SEG) explained

The Smart Export Guarantee (SEG) came into effect on 1st January 2020, replacing the Feed-in Tariff (FiT). These schemes offered payments to businesses with installed onsite generation, a vital part of the UK’s journey to net zero.

Onsite generation can offer businesses various benefits, including self-sufficiency and environmental sustainability – and as the technology becomes less expensive and more efficient, the advantages will only increase. While these green solutions are not suitable for every business, they are becoming more prevalent in this time of economic recovery.

Here are some FAQs regarding the new scheme and how it works:

What is the Smart Export Guarantee (SEG)?

The SEG offers payment to small-scale renewable energy generators for excess electricity that is exported to the National Grid. To do this, suppliers with at least 150,000 domestic customers will be required to provide a minimum of one tariff offer to small-scale low-carbon generators.

Do I need to apply for the Smart Export Guarantee?

If you are a small-scale energy generator with either solar PV, wind, CHP, Hydro, or Anaerobic digestion, installed in England, Scotland or Wales with a capacity up to 5MW (or up to 50kW for micro-CHP), you may fit the criteria for the SEG.

For next steps and more info download our SEG Guide

What if I already get the Feed-in Tariff (FiT)?

If you signed up for FiT before the 31 March 2019 deadline, your payments will continue until your contract runs out. The SEG is mostly for companies or households with new renewable energy installations, or for those who missed the FiT deadline.

There is no FiT subsidy for newly installed renewable energy technologies after this date. Backdated applications will also not be accepted.

What is the difference between SEG and FiT?

Whilst the SEG is replacing the Feed-in Tariff, there are differences between the two schemes. The Feed-in Tariff included both export and generation tariffs, but the SEG only provides the former. In other words, with the SEG you will only receive tariffs for the renewable energy you don’t use. This means that customers may not see the same financial benefit for the renewable energy they are generating as solar panel owners initially did with FiT. (Tariffs will vary across regions depending on network requirements.)

There is also a scheme for renewable heat technologies for both domestic and non-domestic purposes, known as the RHI and non-domestic RHI. This government scheme provides financial incentives for the installation of renewable heat technologies. Eligible technologies include biomass heat, solar thermal and heat pumps.

How do I know if on-site generation is right for my business?

On-site generation can often provide energy security: a worthwhile commodity in a volatile market. It can also help businesses avoid non-commodity costs, which can make up almost 60% of your energy bills.

At EIC, we already support our clients with initiatives that incentivise clean energy use, assisting clients with navigating the transition to a net zero landscape. We can help guide you towards the most efficient and cost-effective energy management plan. This can mean exploring on-site generation options, as well as other sustainable solutions that can reduce your carbon emissions and energy costs.

For businesses that have set or plan on committing to a net zero target, EIC would be happy to engage with you. Our carbon team works with businesses to put together an adaptable and bespoke roadmap, outlining the sustainable steps required to reduce your carbon footprint. Along the way, we will ensure you stay compliant with changing legislation, allowing you to make the most of schemes such as the SEG.

To understand more about our energy and carbon services contact us at EIC.

A circular economy – is your business ready to benefit?

The rise in extreme weather events around the world has lit a fire under the global climate movement (quite literally). This is especially true in the UK, where COP26 will take place this October. For this reason, many consider a circular economy to be the best approach in navigating a post-Covid economic recovery.

A circular economy is based on resource efficiency and would help propel the UK’s path towards net zero. Fortunately, a research programme initiating the country’s shift to a circular economy launched in May. The initiative, encompassing 34 universities and 200 industry partners, aims to ease the transition away from taking, making and disposing.

We take a look at what the circular economy means and how UK businesses stand to gain from this approach.

What is a circular economy?

A circular economy is designed to make resources as sustainable and efficient as possible. This means reducing, reusing and recycling resources as much as possible to extend their value and reduce waste.

The main principles behind a circular economy are:

  • Design out waste and pollution.
  • Keep products and materials in use.
  • Regenerate natural systems.

While it is clear that a circular economy can benefit the UK from an environmental perspective, the advantages of this transformation aren’t just climate-related: UK businesses stand to gain as well.

A 2015 study has shown that a circular economic approach could offer costs savings of over half a billion euros by 2030 in Europe alone. It stands to reason that this approach would also benefit those businesses seeking to make financial savings through increased efficiency.

Why should we accelerate our transition to a circular economy?

Each year, Earth Overshoot Day creeps progressively closer. This is an annual milestone, marking when we have used up the natural resources that can be regenerated in a single year. In 2019 and 2021 it fell on 29 July, the earliest date on record.

This means that until the end of the year, the global economy is operating in what is being called an “ecological deficit”. Humanity currently uses 74% more resources than the planet is able to regenerate each year – the equivalent of 1.7 Earths.

In this global culture of waste and inefficiency, the UK is far from unimpeachable – our own national Overshoot Day fell on 19 May this year. The need to transition to a circular economy is becoming more urgent.

How can I prepare my business for a circular economy?

Think about which resources are critical to your business and how you could use them more efficiently. Here are a few areas to consider:

Utilities & Energy

Utilities are usually an excellent starting point, as most businesses need electricity, water and heating. Investing in metering and sub-metering technology across your sites means that you can track these resources and identify areas of waste. A study from the non-profit Club of Rome concluded that installation services for these types of improvements would be central to realising a circular economy in Europe.

Onsite generation may also be a pragmatic energy option for your business. This sustainable solution offers self-sufficiency and energy stability. Onsite generation can play a significant role on the road to net zero. Not to mention, you can avoid rising non-commodity costs which make up a large portion of energy bills.

Waste Management

Waste management is another easy and pragmatic step for businesses looking to adopt a circular approach. The UK generated 222.2 million tonnes of total waste in 2018. Of that, commercial and industrial waste accounted for almost a fifth (19%). This demonstrates the pressing responsibility on these sectors to adopt responsible waste management practices.

Sustainable Design

In November 2020, the UK government invested £22.5m into five new circular research centres. At the heart of this new funding scheme was the development of sustainable design and disposal principles. These centres will explore and improve the processes of several heavily polluting sectors in the UK.

Sectors under the microscope include textiles, metals, construction, chemical production and electronics waste. Construction alone produces a shocking 154m tonnes of mineral waste per year – enough to fill 30,000 Olympic swimming pools.

How can EIC help?

At EIC, we support the transition to a circular economy by leading our clients towards efficiency and sustainability. Our comprehensive services cover metering and monitoring, waste management, carbon compliance, and even guidance regarding onsite generation.

Whether you are looking to take the first step in becoming more circular, or revolutionising your business to be as sustainable as possible, EIC can help.

To learn more about how we can help you accelerate the shift to a circular economy, contact us at EIC today.

What the new IPCC report means for big energy users

Authored by a group of 234 scientists from 66 countries, the latest IPCC report warns that we have very little time to deliver the emission cuts we need to prevent the worst impacts of climate change.

This comes just months before the COP26 climate conference is set to take place in Glasgow. Consequently, the report is predicted to play a significant role in shaping future policy – much like the IPCC’s last report influenced the Paris Agreement.

This could mean radical change for energy intensive industries over the next decade. Given the urgency indicated in the report, businesses should prepare for this sooner rather than later.

Expect a rise in climate-related risk factors

In the UK’s 2020 Roadmap and Interim report, the government announced its intention to make the TCFD-aligned disclosures mandatory across the economy. This will mean accounting for any business risks related to global warming, including threats posed by extreme weather events.

Over the past decade, we have seen a rise in destructive wildfires, devastating heat waves and flooding on a massive scale. This is already impacting business supply chains, transportation and employee health and safety. In this new report, the IPCC draws a definitive link between global warming and the frequency and intensity of these events. This means that as temperatures continue to climb, these calamities will only worsen, putting businesses at further risk.

The report also indicates that even with the required emission reductions, it could take two to three decades for global temperatures to stabilize. This means that, at least for the moment, extreme weather events must be planned for in the long term.

That the disclosure of these climate-related risks will become mandatory for UK businesses is indisputable. But, it is just as important to mitigate these risks as much as possible now.

Net zero targets will become more important than ever

The IPCC report has been referred to as a “wake-up call”, and this could mean a radical overhaul of energy intensive industries. As the UK government ramps up its decarbonisation efforts, large companies will be expected to follow suit. This means setting ambitious net zero targets.

For big energy users, the route to net zero will not be straightforward. Yet, there are many advantages to becoming a net zero or carbon negative organisation. For one thing, it puts you ahead of the curve when it comes to compliance with carbon legislation. It can also maintain your competitiveness in an increasingly green marketplace (both investors and consumers alike).

Perhaps most importantly, especially in a time of economic recovery, reducing your waste and embracing resource efficiency lays a clear path to financial stability. This circular economy approach is considered key to creating a thriving, net zero future.

Carbon offsetting won’t be enough

Many big energy users have turned to carbon offsetting to reach their emission reduction targets. However, the IPCC report states that the oceans and forests that once served as a buffer by absorbing CO2 will become less effective, if emissions continue to rise at the current rate. This means that while it is still crucial to develop reforestation and conservation projects, they are not silver bullets.

Instead, companies will be pushed to reduce their emissions as much as possible before turning to offsets solely as a last resort. In this effort, clean energy methods such as green procurement, onsite generation and energy efficiency will play a large role. Responsible waste management, low-carbon transportation and sustainable product design will also be crucial.

We are running out of time

If there is one key takeaway from this new IPCC report, it is the urgency of our state of affairs. Over the last century, temperatures have risen to 1.1°C above pre-industrial levels. If it continues at this rate, the global temperature is projected to increase by more than 1.5°C between 2030 and 2052. This means that the pathway laid out in the Paris Agreement is slipping out of reach.

The promising news is that scientists now have a better idea of what will work. With more accurate projections and a clearer picture of what the future holds if temperatures continue to rise, we are better equipped to drive change. But this change needs to happen now.

How can EIC help?

Our comprehensive energy and carbon services help guide organisations towards a more sustainable future. We can provide a bespoke, adaptable roadmap to net zero for your organisation – ensuring carbon compliance and long-term financial stability along the way. Our extensive energy management services cover everything from metering and monitoring to controls and carbon footprinting.

Our goal is to help companies navigate the transition to a net zero economy. We recognise that while larger policy decisions will drive nationwide decarbonisation, every business will play an important part.

To learn more about our net zero and sustainability services, contact us at EIC today.

REGO prices rise amidst post-Brexit uncertainty

The Renewable Energy Guarantees of Origin (REGO) scheme was designed to provide consumers with transparency about the portion of electricity their suppliers source from renewable generation.

How do REGOs work?

Renewable energy generators are issued with one REGO certificate for every megawatt hour (MWh) of renewable output. This certificate is then sold with an energy contract to prove to the final customer that a share of their energy was produced from renewable sources.

Why are REGO prices rising?

In recent weeks the cost of REGO certificates has increased dramatically, leading to rising renewable electricity contract renewal prices. There are a number of factors driving the increases, including:

  • Lower levels of renewable generation than expected in the UK in the 2020–21 period, reducing the number of REGOs available on the market
  • Higher levels of demand for renewable electricity
  • End-of-year purchasing by suppliers to meet their obligations
  • Uncertainty surrounding the acceptance of European Guarantees of Origin certificates (GoOs) in future
  • Increase in wholesale electricity prices that continue to recover to pre-pandemic levels

These factors mean that customers securing renewable electricity contract renewals are likely to see their prices increase.

Are REGOs used for greenwashing?

REGOs have faced criticism for allowing greenwashing. This is because some suppliers buy power on the wholesale market, which is a mix of all sources including fossil fuels and nuclear. They then separately acquire REGOs to label this power ‘green’. Scottish Power and Good Energy have recently called for regulatory reforms to close these “loopholes” in the market.

Despite these calls for reform, a recent Cornwall Insight’s survey found that 74% of participants felt there had been no improvement in REGOs regulations.

How can EIC help?

The sharpest insights are crucial in today’s volatile markets. We work to ensure that our clients are aware of key market movements and are ready to capitalise on every opportunity.

The EIC Market Intelligence team has extensive knowledge of the electricity and carbon markets and the fundamentals driving them. Interpreting this information is a key component of a successful energy management strategy.

EIC can help your business stay ahead of the curve with market insights and smart procurement so you can make energy management decisions with confidence. To learn more, contact us at EIC today.

The UK Transport Decarbonisation Plan: EIC responds

The long awaited UK Transport Decarbonisation Plan, published 14 July 2021, sets out a net zero timeline for all domestic transport in the UK. The plan brings forward the ban on petrol and diesel vehicles to 2030. And aims to decarbonise the aviation sector by 2050, among other things.

How will the plan impact the country?

Transforming the transport sector is essential for achieving net zero emissions in the UK. And could greatly benefit our cities and towns. While some are saying the plan is not progressive enough, Transport Secretary Grant Shapps says it is “just the start”.

“Transport is not just how you get around. It is something that fundamentally shapes our towns, cities, and countryside, our living standards and our health. It can shape all those things for good, or for bad. Decarbonisation is not just some technocratic process. It’s about how we make sure that transport shapes quality of life and the economy in ways that are good.” Shapps said.

“It’s not about stopping people doing things: it’s about doing the same things differently. We will still fly on holiday, but in more efficient aircraft, using sustainable fuel. We will still drive, but increasingly in zero-emission cars.”

Highlights of the plan include:

  • End the sale of new petrol and diesel cars and vans from 2030.
  • The government’s own fleet of vehicles will transition to electric vehicles from 2027. As an interim step, 25% of the fleet will also change to ultra-low emissions vehicles by December 2022.
  • Petrol with up to 10% ethanol (E10) blend will be introduced as standard petrol from September 2021 in the UK.
  • End the sale of new petrol and diesel heavy goods vehicles (HBVs) and buses by 2040 (subject to consultation).
  • Plan to bring aviation sector’s emissions to net zero by 2050.
  • Plan to commit to the 2040 target for domestic aviation and airport buildings and operations in England

EIC’s expert analysis

Victoria Pollard, a Carbon Compliance Manager at EIC, weighs in:

The changes required to transform the transport sector go beyond switching your domestic vehicle to a plug in electric. The shift to low carbon transportation will require a comprehensive review of our public and commercial transport and radical infrastructural change. The transport decarbonisation plan is a progressive stride in this direction.

A ‘modal shift’ is being seen as the most cost effective choice to begin this effort. A ‘modal shift’ essentially means driving gradual changes from one form of transportation to another.  Making petrol more expensive, for example, as a way to encourage the use of public transport. This method can be an effective way to change consumer perception, raising questions like, is there a need for multiple cars per domestic dwelling, or even any cars?

But is a modal shift really viable? There are many options for public transport or zero emission transport out there, but this is usually perceived as more of an inner city option. And while the UK’s size has always afforded easy commuting to various parts of the country, this would not be an easy transition for those living in more rural areas.

This concept also relies on public transportation being able to rapidly change from traditional petrol/diesel to an electrified network, which could prove challenging. Commercial vehicles and long distance public transport like coaches are unsure of how and when they will be able to achieve decarbonised transport options. Electric batteries are not yet seen as an option for these sized vehicles as their charge times are currently commercially unviable.

One thing is clear, the private and public sectors need to work as one to ensure the whole transportation spectrum is considered in the decarbonisation plan.

To learn more about how EIC can help you on your path to net zero, contact us today.

Net zero: can the UK reach its 2050 target?

In June 2019, parliament passed legislation requiring the government to reduce the UK’s net emissions of greenhouse gases by 100% relative to 1990 levels by 2050. This would make the UK a ‘net zero’ emitter.

This was once seen as a fairly ambitious target. Especially considering the previous commitment to an 80% reduction within the same timeframe. However, it has now become clear that achieving net zero by 2050 is imperative to tackling the catastrophic effects of climate change.

How close is the UK to reaching net zero?

To reach ‘net zero’, the UK must significantly reduce its emissions while simultaneously offsetting those that can’t be avoided. In this effort, the pandemic served as a hidden blessing. Thanks to reduced traffic, travel, waste and energy consumption, there was a record-breaking 10.7% fall in the UK’s carbon emissions in 2020. This resulted in a 48.8% reduction in greenhouse gas emissions from 1990 levels, a milestone in the country’s net zero journey.

Yet despite this, the UK is set to breach its fifth carbon budget by at least 313Mt of carbon dioxide equivalent (CO2e) according to research done by Green Alliance. And as workplaces open and travel resumes again, emission levels could return to pre-Covid levels. This could make meeting the sixth carbon budget, which recommends a reduction of 68% by 2030, challenging.

Is this achievable?

A recent report by The National Grid Electricity Operator (ESO) outlines 4 potential scenarios for decarbonisation in the UK. These were designed in part to lay out steps to meet the sixth carbon budget, and 3 of the scenarios see us reaching net zero by 2050. But, while this sounds promising, the report also explains that drastic changes are required to achieve future emissions targets.

The National Grid ESO’s head of strategy and regulation Matthew Wright said, “Our latest Future Energy Scenarios insight reveals a glimpse of a Britain that is powered with net zero carbon emissions, but it also highlights the level of societal change and policy direction that will be needed to get there.

“If Britain is to meet its ambitious emissions reduction targets, consumers will need a greater understanding of how their power use and lifestyle choices impact how sustainable our energy system will be – from how we heat our homes, to when we charge our future cars – and government policy will be key to driving awareness and change. 

“Britain is making significant progress towards achieving net zero. The fundamental changes outlined in our latest FES insight show just how important a coordinated approach will be between policymakers and industry if we’re to capitalise on that momentum.”

What does this mean for businesses?

The UK ramping up its decarbonisation efforts will impact businesses and communities of all sizes. If the recently published Transport Decarbonisation Plan is any indication of policies to come, the general public should prepare for drastic changes. The plan outlines the Government’s approach to decarbonising the highest-emitting sector. It includes bringing the ban on petrol and diesel cars and vans forward from 2035 to 2030. As well as a consultation on zero-emission bus fleets and lorries by 2040.

Other expected changes could include higher energy efficiency standards and extended mandatory carbon reporting. A recent example of this is the extension of mandatory display of annual energy certificates in all larger office buildings. This means that businesses will have to prioritise their energy management in the future. Fortunately, reducing waste and boosting your green credentials often results in both financial and reputational benefits.

How can EIC help?

At EIC we help businesses monitor and manage their energy and carbon with sustainability in mind. Our in-house team can guide you through energy monitoring, carbon footprinting, green procurement and compliance legislation. We are already partnering with leading UK private and public sector organisations – supporting them to transform their operations in line with ambitious targets.

Our aim is to provide you with holistic energy management and sustainable solutions. Helping to carry your business into a green future.

Contact us at EIC for a bespoke net zero roadmap for your organisation.

Mandatory display of annual energy certificates to be extended

In a new scheme proposed by the government, all larger commercial and industrial buildings will be mandated to display annual energy certificates. This will initially affect offices over 1,000m2of which there are approximately 10,000 in England and Wales. However, the proposal includes plans to extend to more varied sites in the future, including smaller buildings. So, why the change and how might it impact businesses in the UK?

What does the proposal include?

Currently, large commercial buildings are required to display an Energy Performance Certificate (EPC) only if their total useful floor area is over 500 square metres, is frequently visited by the public, and an EPC has already been produced for the building’s sale, rental or construction. EPCs measure the building emission rate (kgCO2/m² per year) and primary energy use (kWh/m² per year) for the core HVAC and building fabric assets.

EPCs are valid for 10 years, once an EPC reaches the ten year point and expires, there is no automatic requirement to produce a new one. A further EPC will only be required when the property is next sold, let or modified.

In October 2019, the Government told the Climate Change Committee that it would consult on introducing a new scheme that would rate commercial and industrial buildings based on their actual energy consumption and carbon emissions.

As a result of this, the government launched a new consultation called ‘Introducing a Performance-Based Policy Framework in large Commercial and Industrial Buildings in England and Wales’. This is the first step towards introducing a national performance-based policy framework that aims to reduce energy consumption and emissions.

How does this differ from DECs?

A Display Energy Certificate (DEC) rates public sector buildings over 250m2 based on actual energy consumption, so why not simply expand this to commercial buildings? According to the proposal, the new rating framework will look to modernise and go beyond what (DECs) currently offer.

Why the change?

Larger office buildings use over 53% of the energy used by all commercial and industrial buildings. This means that more frequent audits and stricter oversight will help to root out waste and reduce overall consumption. Success from similar policies has already been seen in countries like Australia who reduced consumption by 34% in 10 years with the National Australian Built Environment Rating System.

In this global push for energy efficiency and retrofitting, the UK is falling behind. Since 2016, similar requirements have been mandatory in all non-residential buildings over 500m2 throughout the European Union.

What are the benefits of the proposal?

Mandating more frequent energy evaluations will help to identify areas of inefficiency or, at the very least, raise awareness around energy consumption. While retrofitting the UK’s predominantly old building stock is a daunting task, the benefits could be enormous. This initiative alone is predicted to save British businesses over £1 billion annually and reduce carbon emissions by 8m tonnes when completed.

The Government is also considering including waste, water usage and air quality standards. None of these are currently required for either EPCs or DECs, and could lead to further cost savings for businesses.

How can EIC help?

The government plans to introduce the new rating system in 3 phases over the 2020s. The 1st phase is aimed at the office sector and has been planned to start in April 2022. EIC helps its clients stay informed and prepared for policy shifts such as these. In a net zero economy, staying ahead of the curve will be crucial to business resilience and growth.

As emission reduction targets become more important, energy reporting will become an essential part of managing a successful business or property. EIC can help you stay compliant with fast-changing legislation by streamlining and simplifying any and all of your energy admin. Our energy specialists have extensive experience with EPBD requirements including DECs, EPC and TM44 certification. We can go beyond mandatory reporting and certification to ensure you are as sustainable and energy-efficient as possible.

EIC can help you stay ahead of the curve. To find out more contact us today.

UK ETS: what you need to know about reporting

The UK was a founding member of the EU Emissions Trading Scheme when it first launched in 2005. As the world’s first major carbon market, it was designed to incentivise the reduction of carbon emissions in a cost-effective way. Following Brexit, the UK established its own Emissions Trading Scheme (UK ETS) to further drive down emissions and maintain the UK’s competitiveness in a green global market.

How does the UK ETS work?

The UK was influential in the design of the EU ETS. So, it came as no great shock that when the UK ETS launched in May 2021, it looked very similar to its predecessor.

The system still works on the ‘cap and trade’ system. This means that a cap is set on the total amount of certain greenhouse gases that can be emitted by installations covered by the system. The cap is reduced over time so that total emissions fall in line with the UK’s net zero target.

This cap is converted into tradable emission allowances. For each allowance, the holder has the right to emit one tonne of CO2 (or its greenhouse gas equivalent). After each year, large energy users must give up enough allowances to cover all their emissions or face a fine.

What does it mean for companies that apply?

Facilities with installed combustion equipment above the 20MWth threshold are required to monitor and report their emissions each year. They then must surrender allowances to cover their reported emissions.

A portion of allowances will be issued for free to eligible installations (typically energy intensive industries or aviation). This follows the same approach as the EU ETS. If they are likely to emit more than their allocation, companies can take measures to reduce their emissions or buy additional allowances.

If a company decides to reduce its emissions, it can keep the spare allowances to either use the following year or sell them on. In this way, the ETS helps to monitor emissions from energy intensive industries and incentivises carbon conscious strategies. And it’s been a successful driver of reductions. Between the launch of the EU ETS in 2005 and 2019, emissions from installations covered by the scheme have declined by about 35%.

This is promising progress for the fight against climate change, and the UK ETS is expected to be even more ambitious in readjusting its cap. This will mean tighter restrictions on emission reductions in future carbon reporting, especially for big energy users.

uk ets timeline

How can EIC help?

EIC has a team of dedicated Carbon Consultants and Data Analysts who provide an all-encompassing UK ETS service. We provide you with guidance and support: interpreting complex legislation and keeping you up to date with any policy shifts. You will be assigned a dedicated Carbon Consultant who will help you navigate the reporting and compliance process with ease.

Our in-house carbon team has extensive experience with reducing energy consumption, costs and emissions for our clients. This means we can keep you ahead of the curve and prepare your business for future reporting requirements.

To learn more about how EIC can help you with reporting for UK ETS, contact us today.