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Peter Brabazon

Sustainable Energy IrelandGlasnevin, Dublin 9Tel: 01- 8369080Fax: 01- 8372848

www.sei.ie

Update on Negotiated EnergyAgreements Pilot ProgrammeUpdate on Negotiated EnergyAgreements Pilot Programme

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Negotiated Agreements PilotNegotiated Agreements Pilot- Presentation format- Presentation format

• Introduction and Context• Pilot Project Details

• The Role of Audits

• Progress and Next Steps

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Energy AgreementsEnergy Agreements

An agreement between an individual

firm or group of firms and the state

aiming to achieve substantial energy

and emissions reductions “beyond

business-as-usual”

An agreement between an individual

firm or group of firms and the state

aiming to achieve substantial energy

and emissions reductions “beyond

business-as-usual”

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Policy contextPolicy context

• Climate change

• Kyoto Protocol

• EU: Burden sharing arrangement

• Ireland: +13% by 2008 - 2012

• National Climate Change Strategy – Oct ‘00

• Industry – One million tonnes CO2 reduction

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National policy contextNational policy context

• Integrated strategy

• Early action to meet targets

• Burden sharing and equity across all sectors

• Market instruments with appropriate supports

• Industry – taxation, agreements, best practice, emissions trading

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Tax & AgreementsTax & Agreements

National Climate Change Strategy (Oct 2000): - Targeted taxation measures- Negotiated agreements linked to

taxation measures- Industry overall: 1Mt CO2 reduction

Minister for Finance (Dec 2002):Carbon/energy tax to be introduced from end 2004, with full consultation

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Negotiated AgreementsNegotiated Agreements• Aim to provide fairness, flexibility while building

competiveness

• Firms agree to take certain actions or to meet specific targets

• Equity in context of market instruments

• Incentives for participation

• Flexibility for firms while meeting national objectives

• Can be individual or group basis

• Can be across all activity, or technology specific

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Agreements in IrelandAgreements in Ireland

• Core element of strategy

• Signalled connection to energy/climate levy

• Firm level, multi-year, legally binding agreements

• Energy management systems a minimum

• Best international practice, beyond business as usual

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Negotiated Agreements PilotNegotiated Agreements Pilot- Presentation format- Presentation format

• Introduction and Context

• Pilot Project Details• The Role of Audits• Progress and Next Steps

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Negotiated Agreements PilotNegotiated Agreements Pilot

• Initiated by SEI in February 2002

• Completion date – planned end June 2003

• Draft, non-binding agreements

• Ongoing consultation includes IBEC (business

representative body) and relevant Government

Departments

• Aims to inform policy makers for development

and implementation of full measure

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NA pilot project involves:NA pilot project involves:Draft agreements with:-

1. One major energy-using company

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• Aimed at very large energy consumers with unique

processes or activities

• Based on full audit of all energy practices

• Criteria negotiated and agreed

• Audit and criteria used to develop list of possible

actions

• Draft agreement based on identified desirable

actions

Individual agreementIndividual agreement

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Aughinish Alumina

Individual agreementIndividual agreement

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NA pilot project involves:NA pilot project involves:Draft agreements with:-

1. One major energy-using company

2. A representative group of 15 companies across industry, focusing on a shared end-use technology (thermal energy)

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• Capturing key elements of energy use across

industry

• Pilot agreement focuses on generation and

distribution of hot water and steam

• Audits to understand existing practices, develop

standards and identify opportunities

• Discussions with suppliers/installers

• Agreement based on actions and practices

Technology agreementTechnology agreement

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Aer Rianta, Dublin

Cadbury, Coolock, Dublin

Dawn Meats, Co Mayo

GE Superabrasives, Dublin

Glanbia Ballyragget, Co

Kilkenny

Green Isle Foods, Naas, Co

Kildare

Hewlett Packard, Leixlip, Co

Kildare

Kepak, Co Meath

Millipore, Carrigtwohill, Cork

Smurfit Paper Mills, Dublin

St James’s Hospital, Dublin

Transitions Optical,Co Galway

Tyco Healthcare, Mulhuddart, Dublin

Unilever BestFoods Ireland, Dublin

Yeast Products, Dublin(15)

Technology agreementTechnology agreement

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NA pilot project involves:NA pilot project involves:Draft agreements with:-

1. One major energy-using company

2. A representative group of 15 companies across industry, focusing on a shared end-use technology (thermal energy)

3. A group of 10 similar companies from same sector (pharmachem)

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• Collective efficiency

• A group of firms with largely similar

processes

• Audits to develop general understanding

• Criteria for action agreed

• List of desired actions developed

• Draft agreement based on identified actions

Collective agreementCollective agreement

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GlaxoSmithkline, Co Cork

Cambrex Profarmaco, Co Cork

Janssen, Little Island, Co Cork

Leo Pharma, Dublin

Micro-Bio, Fermoy, Co Cork

Novartis, Ringaskiddy, Co Cork

Pfizer, Loughbeg, Co Cork

Pfizer, Little Island, Co Cork

Servier Laboratories, Arklow, Co Wicklow

Wyeth Medica, Newbridge, Co Kildare (10)

Chemical / Pharmaceutical SectorChemical / Pharmaceutical Sector

Collective agreementCollective agreement

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Pilot project – approach:Pilot project – approach:

• Collaborative approach with industry• Action-based, firm-level agreements• Use of energy audits to identify what actions

required to bring companies to best international practice

• Negotiation to ensure realistic/ acceptable draft agreements

• Exploration of links between bottom-up (action- based) approach and overall reduction targets

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Pilot project – main steps:Pilot project – main steps:1. Company/group recruitment/selection

2. Development of energy audit templates

3. Selection of energy auditors

4. Energy audits in each firm

5. Development of negotiation framework

6. Negotiations themselves

7. Exploration of resource/system needs for full NA system (info systems, monitoring, benchmarking, etc)

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Negotiated Agreements PilotNegotiated Agreements Pilot- Presentation format- Presentation format

• Introduction and Context• Pilot Project Details

• The Role of Audits• Progress and Next Steps

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The templatesThe templates

• Setting out the special requirement of the pilot project audits

• Standardising scope

• Establishing compliance and data quality checks

• Standardising reporting

• Not standardising assessment, analysis, creative input

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Special featuresSpecial features

• Data quality checks

• Specific reference to best practice

• 6 year payback in first analysis

• No distinct payback categories

• Identifying Special Investigations

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Using the templateUsing the template

• Auditor contracted to the firm to provide audit for energy strategy

• Some special requirements for the pilot project additional to the firm’s needs

• Template sets out project approach specific data needs

• Quality assurance by SEI

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Negotiated Agreements PilotNegotiated Agreements Pilot- Presentation format- Presentation format

• Introduction and Context• Pilot Project Details• The Role of Audits

• Progress and Next Steps

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ScheduleSchedule

• June 29th 02 Individual Meeting, Dublin

• July 10th 02 Collective Meeting, Waterford

• 16th July 02 Technology Meeting, Dublin

• 11th October 02 Joint Meeting, Portlaoise

• 1th December 02 Auditor Briefing, Dublin

• 14/15 January 03 Training for Group Reps

• 27th-31st January 03 Site visits by FES/SEI

• 11th February 03 Meeting with Group Reps

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Looking ahead - some priorities:Looking ahead - some priorities:

• Inform policy development

• Explore ability of agreements to ‘deliver’ on top-down emissions objectives

• Explore impacts on industry

• Benchmark against intl. best practice

• Options for monitoring/compliance

• Explore options for codes of practice

• Inform and develop the broader industrial sector

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Next stepsNext steps

• Collation and analysis of audits

• Commencment of negotiations

meetings

• Provisional deadline of 30th April

• Production of final report in June

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Indications so far:Indications so far:• High level of cooperation/commitment from

industry• Industry sees agreements as vital, in the context

of taxation• Indications that agreements could add

significantly to impact of taxation on emissions reduction

• Possible to move between bottom-up and top-down approaches

• Strong/positive support from auditors to audit approach

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Peter Brabazon

Sustainable Energy IrelandGlasnevin, Dublin 9Tel: 01- 8369080Fax: 01- 8372848

www.sei.ie

Update on Negotiated EnergyAgreements Pilot ProgrammeUpdate on Negotiated EnergyAgreements Pilot Programme