The UK government and British energy-intensive industries (EIIs) have agreed to extend energy-efficiency improvement targets to 2020.

The 2020 targets extend those previously agreed under the voluntary Climate Change Agreements (CCA) scheme (which expired in March 2013) and aim to deliver an overall 11 per cent energy efficiency improvement across all industry sectors, against ‘agreed baselines’.

Around 9,900 industrial sites covering 51 energy-intensive sectors of industry including steel, aluminium, glass, aerospace and farming have agreed to the target extension.

Since Monday (1 April), the CCA now provides EIIs with a rebate to the Climate Change Levy of up to 90 per cent if they meet energy efficiency improvement targets (up from 65 per cent). The Climate Change Levy is a tax on certain energy fuels in an attempt to incentivise energy efficiency.

According to the Department of Energy and Climate Change (DECC), if the targets are reached, the industries involved could save up to £300 million on the Climate Change Levy.

The DECC went on to say that various methods will be utilised in order to meet the targets, including ‘high efficiency motors, variable speed drivers, energy efficient boilers, improved energy management systems and process optimisation’.

Targets could save £300 million

The agreement comes shortly after the European Commission (EC) launched a public debate on how best to design a new international agreement to combat climate change, as it claimed that previous industry energy efficiency targets across the EU were ‘not enough’ to keep global warming below two degrees. This was the target set in the Copenhagen Accords of 2009 on limiting man-made global warming.

As such, many UK industries have now agreed to improve energy-efficiency by varying degrees (dependent on sector) by 2020.

The laundries sector have to achieve the biggest increase under the 2020 targets, raising energy efficiency by 25 per cent, followed by the pig farming industry (22.7 per cent) and the egg-processing firms (20 per cent).

Other improvement targets outlined in the CCA scheme include:

• Plastic: 17.0 per cent
• Wood panel: 8.8 per cent
• Steel: 6.2 per cent
• Packaging & Industrial Films Associations: 5.9 per cent
• Glass & Glass manipulators: 5.0 per cent
• Aluminium: 2.8 per cent

According to the DECC, if all 51 sectors met their new commitments, by 2020 carbon dioxide emissions would be reduced by 19 million tonnes, primary energy consumption would be reduced by approximately 100TWh and participants could have saved an estimated £300 million a year on the Climate Change Levy.

The mineralogical and metallurgical industries are excluded from the Climate Change Levy, with the government stating that it will ‘look very closely at the impact the proposed metallurgical and mineralogical process exemptions will have on the CCAs scheme and carefully consider retaining a link with CCA energy efficiency targets, as some in industry have suggested’.

However, there has been some concern voiced by members of the industry over the government’s carbon-reduction policies, with the Confederation of Paper Industries (CPI) saying that the introduction of several carbon cutting policies including the EU Emissions Trading System, the introduction of the Carbon Price Floor and ‘new and challenging’ Climate Change Agreement targets in 2013 could make certain energies in the UK so expensive that it would drive EIIs, such as paper, out of the country.

Targets ‘demonstrate commitment to growth’

Commenting on the new agreements, Gregory Barker, Minister for Climate Change, said: “I am really impressed by the commitment shown by the UK Energy Intensive Industry to improving their competitiveness and energy efficiency. This partnership with government demonstrates our commitment to growth.”

The government previously held consultations in January and March 2012 in order to receive industry feedback on the CCA scheme. It published its own response to the consultation in January 2013.

Ray Gluckman, Chair of the CCA Working Group of the UK Emissions Trading Group (ETG) said: “The ETG appreciates the extensive consultation undertaken by DECC on this important element of climate change and energy efficiency policy. This has enabled industry to work with government and the Environment Agency to help streamline and improve the operation of CCAs.

“The targets are challenging but provide industry with some degree of certainty over the goals to be achieved over the next eight years.”

Full breakdown of the new 2020 CCA improvement targets: