66
ENERGY & THE ENVIRONMENT
CUMULATIVE IMPROVEMENTS IN ENERGY EFFICIENCY Energy Saved
32% 35% 38% 40% 42%
01-02 03-04 05-06 07-08 09-10 Energy Issues
Producing pulp and paper intrinsically requires energy. With the high cost of energy being such a key industry factor, mills continue to focus on increasing the energy efficiency of production – both by incremental improvements to process efficiency and, in some cases, major investments to fundamentally change the source of energy used.
Climate Change Agreements In 2001, the Government introduced a new tax - the Climate Change Levy (CCL) - on the use of energy in the commercial sector. The Paper Industry successfully persuaded Government that energy intensive users could not remain competitive if paying the new tax. This led to the development of Climate Change Agreements (CCAs) through which sector wide energy efficiency targets were agreed, and an 80% discount to the CCL tax is applied upon achievement of the targets.
CPI continues to manage the paper sector CCA, involving all UK paper mills. To date the CCL discount has saved the industry £150,000,000 helping it to remain competitive in the global marketplace for paper.
CCAs have biennial targets, which require full reporting to the Department of Energy and Climate Change (DECC), of energy use for each participating installation. 2010 saw the end of Milestone Period 5 (M5 – October 2009 to September 2010). As in all previous milestone periods, the sector passed the energy efficiency target through the direct energy performance of mills. However, DECC link performance of both mills and third party Combined Heat and Power (CHP) sites to the CCA target, with any over achievement in the European Union Emissions Trading System (EU ETS) being counted back to tighten the CCA target. This ‘double counting’ adjustment drove the sector into a net failure for the first time, though over-achievements in previous milestones have been used to ensure
the sector remains compliant. This ensures mills continue to receive the CCL discount through 2011. However, Treasury has decided the entire CCL discount for CCA compliance will fall to 65% for all participants from April 2011.
CPI has succeeded in persuading Government that CCAs should continue. It has been recently announced they will be extended through to 2023 subject to agreement of a further set of energy efficiency targets.
CCA Performance The sector has energy efficiency targets based on the amount of energy required to generate one tonne of produce, expressed in kilowatt hours.
Baseline figures calculated for 1990 were used for target setting, and percentage improvements in energy efficiency are quoted against this (1990) baseline.
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