Sgcp13mackenzie
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This document discusses industrial energy efficiency and the UK government's role in promoting it. It provides context on UK carbon budgets and targets, and outlines several government programs and policies aimed at reducing industrial emissions, including the EU Emissions Trading System, Climate Change Agreements, and the Industrial Energy Efficiency Programme. It discusses key challenges around industrial heat and the government's commitments to develop low-carbon roadmaps for heavy industries, support carbon capture and storage demonstration projects, and incentivize waste heat recovery.
Sgcp13mackenzie
- 1. Industrial Energy Efficiency – the role of Government Niall Mackenzie, Head, Industrial Energy Efficiency Programme, DECC 5th Annual Smart Grids & Cleanpower 2013 Conference 5 June 2013 Cambridge www.cir-strategy.com/events/cleanpower
- 2. 0 100 200 300 400 500 600 700 2008 2009 2010 2011 (P) 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 MtCO2e Progress against the UK carbon budgets Oct 2012 emissions projections Actual net UK carbon account Budget 1 indicative annual average Budget 2 indicative annual average Budget 3 indicative annual average Budget 4 indicative annual average UK strategy– framed by Carbon Budgets • Carbon budgets = cut of at least 34% in greenhouse gas emissions in 2020 (1990 levels) . • 4th carbon budget (2023-2027) = 50% over the period relative to 1990 levels. • 2050 goal = 80% 2
- 3. 3 The Carbon Plan (December 2011) sets out the Government’s plans to meet the fourth carbon budget, showing how doing so sets us on a plausible pathway to 2050 In the next decade… …the UK will complete the easy wins we have already begun, focusing on energy efficiency. We will also prepare for the future by demonstrating and deploying low carbon technologies Up to 2030 and beyond… … emissions from hard-to-treat sectors will need to be tackled – such as industry, aviation, shipping, and agriculture, while buildings and transport make use of decarbonised electricity supplies During the 2020s… …key technologies in low carbon heat and ULEVs will move towards mass roll out. A range of solutions for decarbonising ‘hard-to-reach’ sectors like agriculture and industry will need to be tested
- 4. For the fourth carbon budget we have set out ranges of ambition for four key technology areas that are consistent with 2050, deliverable and cost-effective 4 • Up to 2.5 million solid walls insulated by 2030 • Around 1.9 million other energy efficiency installations • Up to 5.2 million solid walls insulated by 2030 • Around 7.2 million other energy efficiency installations • 20% of new cars are electric or plug-in by 2030 • Overall new car fuel efficiency = 70gCO2/km by 2030 1.6 million renewable heat installations by 2030, delivering 87 TWh of low carbon heat (alongside 10 TWh via district heating) 8.6 million renewable heat installations by 2030, delivering 165 TWh of low carbon heat (alongside 38 TWh via district heating) Domestic retrofitting Low carbon transport Renewable heat Carbon intensity of generating electricity falls to 100 gCO2/kWh by 2030 Carbon intensity of generating electricity falls to 50 gCO2/ kWh by 2030 Low carbon power • 50% of new cars are electric or plug-in by 2030 • Overall new car fuel efficiency = 50gCO2/km by 2030 Low end of ambition High end of ambition
- 5. UK emissions & projections 1990 – 2030 What existing policies will deliver Source: DECC Updated Energy Projections 2012 Carbon budgets 5
- 6. A key component of our strategy is to reduce demand by promoting energy efficiency 6 Misaligned financial incentives Embryonic Markets Information Under- valuing energy efficiency The benefits of greater energy efficiency include: § Economic growth and productivity § Savings for customers § Emission reductions § Sustainable and secure energy The Energy Efficiency Strategy, published November 2012, has set out the four barriers in the UK economy to achieving these benefits as well as those actions that we are taking to address them The Green Deal addresses each barrier: § It drives the market for suppliers and installers § The bill payer funds the measure taken § Trustmark and impartial assessment report § ‘Golden rule’ means that expected savings cover costs
- 7. Industrial Energy Efficiency Programme Delivering reductions across half of all UK emissions Aim: To improve energy efficiency and reduce emissions from large energy users while improving UK industrial competitiveness Scheme Participants Projected impact EU Emissions Trading System Covers 46% of UK emissions 1,100 large industrial emitters in the UK (12,000 across the EU) and all airlines 243 mtCO2e reduction 2012-20 Covers 4% of non-traded emissions 2,000 large electricity users outside of the EU ETS 20 mtCO2e reduction 2012-30 Climate Change Agreements Cover 2% of UK emissions 9,000 energy intensive facilities – from steel manufacture to poultry farming ~ 11% improvement in energy efficiency 2008-20 7
- 8. EU ETS emissions/projections 2008-2030 Existing policies and measures Source: DECC Updated Energy Projections 2012 Emissions above the EU ETS cap mean allowances have to be bought, emissions below the cap lead to allowances being sold 8
- 9. The EU ETS remains critical for EU carbon reduction but needs reform • Future role of EU ETS – UK sees EU ETS as at the core of EU carbon reduction • Increased ambition – UK continues to press for a move to a 30% EU carbon reduction target by 2020 • Commission “backloading” proposals – will remove allowances from market in short term and sustain carbon price • “State of the European Carbon Market in 2012” publication from the Commission - medium term structural reform – active debate now beginning in Europe - Govt has started the dialogue with UK industry as how to reshape the ETS. 9
- 10. Climate Change Agreements – a successful Government - industry partnership • Voluntary agreements open to energy intensive industries • Participants receive up to 90% reduction in Climate Change Levy if they meet energy efficiency targets agreed with Govt • Agreed Targets – industry has committed to deliver 11% improvement between 2008 and 2020 – sector specific targets agreed and shared out to installation level • Target setting based on penetration of technology to date, technical potential and agreed basis of commercially viable potential – more detail will be published shortly 10
- 11. Heat is the single biggest consumer of energy in the UK, & it’s mostly fossil fuel 11 Commerci al Industrial Domestic HeatOtherUKEnergy Gas oil solid resistive Gas oil solidresistive Gasoil resistive Heat supply (2008) Source: DUKES 0 TWh 712 TWh
- 12. March 2012: Strategic framework for heat • Main message of Strategic Framework: without changing the way we produce and consume heat, we will not meet our carbon reduction target or our renewable energy target. • Our Carbon Plan and almost all modelling work says that we will need to have near zero carbon heating for buildings by 2050. Industrial heat will need to cut its emissions down to around one third of current levels. • For buildings, this should be achieved by 1) energy efficiency measures like Green Deal and smart meters; 2) Renewable heat (mostly heat pumps) starting with most cost effective ie off the gas grid; 3) heat networks (district heating) in cities, with mix of different heat sources and heat customers. • For industry, this requires 1) efficiency improvements, but limits to what more can be done in some sectors; 2) fuel switching to bio or electricity (as the grid decarbonises); 3) industrial carbon capture and storage Committed to produce a Heat Policy paper “within 12 months”. 12
- 13. • 73% of industrial energy demand is for heat • Industry consumes 20% of all UK energy as heat • Heat is integral to industrial processes: melting, drying, pasteurising, distilling • Heat use is concentrated among six key sectors • Industry uses natural gas, coal/coke, electricity, biofuels and other (eg refinery gases, coking gas) • Need up to 70% abatement by 2050 -‐ 5 10 15 20 25 30 35 TWh Energy Consump1on in UK Industry by Sector and Fuel Electricity Natural Gas Oil Solid Fuel March 2013: “The Future of Heating: Meeting the Challenge” Chapter 1: Industry
- 14. Energy Efficiency Some scope to improve efficiency but much already implemented – eg under Climate Change Agreements? Fuel Switching Hydrogen, electricity, biomass technically feasible but innovation and implementation barriers. Industrial CHP Scope for more investment but what barriers exist/incentives needed Efficient, Low Carbon Heat in Industry Meeting the challenge Industrial Carbon Capture and Storage Scope for CCS in iron and steel; chemicals; cement; oil refining. Costs are uncertain. Technology uncertain - transfer from power sector? Need to use shared transport and storage infrastructure.
- 15. Efficient Low Carbon Heat in Industry – our commitments • Sector-specific ‘low carbon roadmaps’ for key industrial sectors, with BIS and industry – focusing on the most heat and CO2 intensive sectors. Runs over 2 years; Commitment from sectors Currently: DECC/BIS project planning and procurement • Developing further evidence on supporting CCS for industry - we will complete a techno-economic study by the end of the year with BIS; and to explore options for further supporting industrial CCS innovation incl through pilot demonstrations. • European Regional Development funding working with BIS to influence the £600m to support low carbon industry. • Recoverable waste industrial heat – building our evidence and investigating how to incentivise harnessing waste heat from industrial processes, alongside the 2014 RHI policy review. Selecting a contractor, reporting by end of the year. • Direct Fired Renewable Heat – explore support through the RHI 2014 review
- 16. 67% of industrial heat demand is in six key sectors. To date analysis suggests • Oil refining: 9 sites in UK, complex sites, biggest heat demand, 40% emissions from process, use CHP extensively, could use biomass (?), CCS suitable • Iron and steel: 7 sites in UK (3 blast furnaces, 4 EAF), big heat demand, highly integrated process, no potential for renewables (?), CCS suitable • Food and drink: 1000’s of businesses, 2nd biggest heat demand but not energy intensive, use CHP widely, could use biomass. • Pulp &paper: 50 sites in UK, lowest heat use, 50% use CHP, could use biomass. • Non-metallic minerals (including ceramics, cement and glass), multiple sites, direct fired heat use – no RHI, no CHP, CCS for cement • Chemicals: 100’s of businesses and processes, often clustered, CHP suitable, CCS suitable. Follow up work with sectors will start soon Efficient, Low Carbon Heat in Industry: Sector by Sector approach
- 17. The Renewable Heat Incentive: a first of its kind • The first scheme of its kind to provide support for the installation of renewable heating technologies – opened in November 2011 • 2049 applications to date: 1367 Accreditations • Heat generated and paid for under the scheme: 236GWh • Currently consulting on revisions to tariffs 17 Technology Current tariffs (1), (2) Reviewed tariffs (proposed for 2014/15) Biomass Boilers Small (up to 200kW) Tier 1: 8.6, Tier 2: 2.2 NO CHANGE Medium (200 to 1MW) Tier 1: 5.3, Tier 2: 2.2 Large (1MW and above) 1.0 2.0 GSHPs Small (up to 100kW) 4.8 7.2 (3) – 8.2 (4) Large (100kW and above) 3.5 Solar Thermal (up to 200kW) 9.2 10.0 (5) – 11.3
- 18. • www.gov.uk • niall.mackenzie@decc.gsi.gov.uk Further Information