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Energy & Carbon Update March 2018

News from Inenco’s energy and carbon compliance team

Further reductions in UK greenhouse gas figures confirmed

The Department for Business Energy and Industrial Strategy (BEIS) has recently published its latest annual analysis of UK greenhouse gas (GHG) emissions. This covers data from the 2016 calendar year. Owing largely to the replacement of coal-fired electricity generation with cleaner sources, transport, rather than energy supply, is now the largest contributor to the UK’s GHG emissions.

Emissions from energy supply fell by 17% and now make up a quarter of the UK’s total. Transport is now the largest source of emissions, at 26%. Emissions from businesses, which represent 17% of the total, saw a 5% year-on-year fall. Total emissions have fallen by 5% compared to 2015, meaning that the UK is on track to meet the Second Carbon Budget, covering the period 2013 to 2017.

The summary can be found online at


CRC updates

The final forecast sale, for optional advance purchase of Carbon Reduction Commitment (CRC) allowances for reporting year 2018-19 will open in April.

Allowances will cost £17.20, compared to £18.30 in the retrospective sale, meaning there is a 6% absolute discount. As use of the forecast sale entails paying 15 months sooner – in June 2018 rather than September 2019 – the real-terms discount will be smaller. Note that the Environment Agency (EA) has confirmed that there will be no refunds for surplus allowances held at the end of the CRC phase, for which reason Inenco recommends cautious use of the forecast purchase option.

Finally, the annual CRC subsistence fee for the final reporting year will be invoiced in the next few weeks. This will be posted to the invoice contact listed on your CRC Registry.


CCA application deadline

We are in the penultimate target period of the current Climate Change Agreement (CCA) phase. As new entrants cannot join the scheme in the final two months of a target period or during the final target period (January 2019 to December 2020), this means that the deadline to join the current CCA scheme is by the end of October 2018. As the application process can take some time we would recommend that any organisations that feel they may be eligible for a CCA should submit an application a.s.a.p. and certainly before the end of May. Our dedicated CCA team can advise on and support you through the application process.


CDP: changes to 2018 Climate Change Disclosure

Several changes have been confirmed to Carbon Disclosure Project (CDP) reporting in 2018. Many of these involve the alignment of the climate change questionnaire with the Taskforce on Climate Related Financial Disclosures (TCFD) recommendations. New questions increase the focus on governance, risks & opportunities, and strategy. Other new questions cover carbon pricing, climate scenario analysis, and the integration of risk assessments into financial planning.

The trend towards a sector-specific approach continues, with separate questionnaires for the energy, transport, materials, and agriculture (including food, beverages and tobacco) sectors. Other changes include a more streamlined response format for smaller companies, and improved alignment with other reporting protocols such as Dow Jones Sustainability Index and the Global Reporting Initiative (GRI).

The 2018 questionnaire is already available online, while the guidance and scoring methodology will be available from the 18th of March. The response deadline remains the 31st of July.

Organisations intending to respond to CDP this year could carry out a gap analysis by comparing last year’s response to this year’s questionnaire and scoring, when the latter becomes available next week. Inenco’s expert team can assist with the preparation of CDP submissions.


EUETS compliance deadlines for calendar year 2018 have been confirmed.

2018 emissions must be reported by the 11th March 2019, while the deadline for surrendering allowances will be the 15th March 2019, six weeks earlier than usual.

The 2019 free allocation may either be identified with a country code or suspended from being issued to UK participants; this is subject to confirmation, and would mean that participants would not be able to surrender allowances issued in 2019 to cover 2018 emissions. Related, it is expected that the proposed two-year “implementation period” from March 2019 will see the UK’s continued EU Emissions Trading System (EUETS) participation for the remainder of Phase III. Further updates are expected as the UK’s long-term position is clarified.

In other EUETS news, the last few weeks have seen EU carbon allowances prices (EUAs) consistently above €10, well above historical norms. Inenco recommends taking this into account when budgeting for possible allowance purchases. This is especially important in conjunction with the query over the 2019 free allocation mentioned above.

Finally, a data error in ETSWAP in early January may have seen the wrong carbon factors for gas applied, meaning that reported emissions may not be fully accurate. This affects the following gas regions: Northern, North East, South West, Wales North, Wales South.

The EA recommends that any EUETS participants in these regions who input their ETSWAP annual emissions report on or before the 18th January double-check the emissions factors used, and if necessary, delete and re-input the relevant data.


Support Programme for Industrial Heat Recovery 

BEIS recently consulted on proposals for a support programme for recovery and re-use of waste heat from industrial processes in England and Wales. There is potential support both for on-site feasibility studies, and for capital funding to support project implementation. BEIS may offer up to 50% match-funding for feasibility studies, while implementation may see match-funding up to 30% – in both instances, there is the possibility of higher support for SMEs.

The government response to the consultation is expected this year, and will set out the timetable for applications. Inenco will provide further information when the response is published.


EU non-financial reporting directive

The EU non-financial reporting directive has recently come into force. This affects listed companies and financial institutions with more than 500 employees, and requires reporting of certain social, environmental and employee-related information for financial years starting on or after 1st January 2017. Companies reporting to existing UK standards should already be meeting the criteria but it would be prudent to check.

Further information can be found on: