Carbon Reduction Commitment Energy Efficiency Scheme Overview

1. Carbon Reduction Commitment Energy Efficiency Scheme Overview ecoelite UK Ltd 44 Mulgrave Road London SE18 5TY Tel: 0208 854 2878

2. Brief Background on CRCEES What is the CRCEES? A UK Carbon Emissions Trading Scheme to cover the non-energy intensive sector, covering 5,000 Organisations When does it start? To be introduced on 1st April 2010 Why do it? To Cost effectively deliver carbon emission reductions in the UK to meet the saving of 1.2 million tonnes of CO2 per year by 2020 What Organisations does it apply to? Mandatory entry into the scheme will be organisations using 6GWh of electricity or more from half hourly supplies How does it work? Once eligible for the scheme all emissions will be reportable under the scheme both from direct and indirect supplies

3. Source: DECC “The CRC Energy Efficiency Scheme Userguide 2010

4. Administration & Regulation of the scheme • The CRCEESScheme will be administered by the following regulators: • In England and Wales(EA) “Environment Agency” • In Scotland (SEPA) “Scottish Environment Protection Agency” • In Northern Ireland (NIEA) “Northern Ireland Environment Agency”

5. Basic Overview Flow Chart 3 year Introductory Phase – 01/04/2010 to 31/03/2013 Unlimited number of allowances at a fixed price of £12 per tonne of Carbon. ‘Full’ Phase – 01/04/2013 Allowance allocations will be capped and volumes determined by auction. Cap will be tightened over time, reducing the number of allowances & encouraging energy efficiency & emissions reduction policies. Following monitoring year end there will be a 3 month reconciliation period to allow participants to settle their accounts and submit their data. Once reconciliation period finalised participants will receive their bonus or penalty payments accordingly.

6. Eligibility Organisation whose electricity consumption through HH meters greater was than 6,000,000 kWh (6GWh) in the base year (2008) •  Will qualify as a full CRC Participant • All remotely read meters that produce HHD qualify, therefore AMR/Smart meters will be included. • Once eligible, all emissions sources will be reportable under the scheme. Electricity, gas, oil, LPG excluding transport, domestic accommodation and unconsumed supply.

7. Source: DECC “The CRC Energy Efficiency Scheme Userguide 2010

8. Registration Organisations that have one or more half hourly electricity meters (HHM) settled on the half hourly market; But use less than 6GWh of electricity from half hourly supplies in 2008 Will not qualify as a full CRC Participant • But will have to make an information disclosure and provide the Administrators with details of its HHMs settled on the half hourly market. • If electricity consumption equals or exceeds 3,000 MWhover the course of 2008 the organisation will be required to disclose its total half hourly metered electricity

9. CCA’s can give CRC exemption 3 circumstances when an organisation can be exempt from CRC due to CCA “Climate Change Agreement” coverage:- Single entity exemption – if an organisation is not part of a group and has a CCA that covers over 25% of its relevant emissions. Subsidiary exemption – if an subsidiary is part of an organisation and one of your members has a CCA, then that subsidiary may qualify for CRC exemption. Residual group exemption – if, after exempting a member or members under the subsidiary exemption an organisation’s half hourly electricity consumption in the footprint year is less than 1,000MWh, then your entire organisation would be exempt from that phase of CRC .

10. The Publicised League Table • The position in the league table is going to be dependant on 3 metrics: • The Absolute Metric • % emissions change from baseline • (0% in year 1, 45% in year 2 & 60% in year 3) • The Early Action Metric • The Carbon Trust Standard or equivalent • The extent an organisation has installed AMR beyond the legal limit • (100% in year 1, 40% in year 2 & 20% in year 3) • The Growth Metric • Emissions in relation to the growth or decline of the organisation • (0% in year 1, 15% in year 2 & 20% in year 3)

11. CRCEES Timeline Introductory Phase Source: DECC “The CRC Energy Efficiency Scheme Userguide 2010

12. How will the CRC scheme work? 2011 – First year reporting and allowance sale • Reconciliation period between April and July to collate and report emissions data for compliance year 1 • April – First sale of allowances for Year 2 of the introductory phase • April – Start of second CRCEES compliance year • July –First annual report is due for submission

13. How will the CRC scheme work? 2012 -Introductory Phase Continues • Allowances will be capped, this cap will be tightened over time, this will reduce the amount of allowances available and encouraging energy efficiency and emission reduction policies across the participating organisations. • April– Start of third compliance year and second sale of allowances • July – Organisations must report their second year’s emissions and surrender the equivalent allowances to the government • October – Organisations will receive their first recycling payment. 2013 – Start of Capped Phase

14. Franchisees • Under the CRCEES franchisors are responsible for the energy use of all their franchisees, even if the franchisee is owned by another CRCEES participant. • Franchisees will need to give the franchisor data about their energy use. In most cases this is done once a year and the franchisee can request an annual energy statement from its energy supplier

15. Landlord/Tenant Issues • Whoever is the ‘counterparty to the energy supply contract’ i.e. the organisation whose name is on the bill, will be responsible for emissions in the CRCEES. • Where the landlord is part of a CRCEES organisation and is the counterparty to the energy supply contract for the energy supplied to its tenant(s), then the landlords CRCEES organisation will be responsible for the tenants energy use emissions • Where the tenant is the counterparty to the energy supply contract, and is part of a CRCEES organisation, then the tenant CRCEES organisation will have responsibility for the energy use emissions of the tenant. • The Government aims to encourage landlord organisations to work collaboratively with their tenants to influence the way tenants use energy to meet the requirements of this scheme.

16. CRC Compliance Service • We can provide support to assess how much a client is covered by this scheme and can advise on the best approach going forwards to meet compliance. • A structured compliance programme will offering the following: • Set up and baseline data collection • Data collection and Monitoring of all emissions in the scheme. • Procedure setting with designated CRCEES representatives of an organisation. • Auction and carbon trading TBC • End of year reporting and carbon compliance

17. How can we help? – Set up and Registration Set up and Registration • We can provide the following support for clients that are going to be captured by CRCEES:- • Reporting of 2008 electricity consumption data for the CRCEES qualification process. • Full analysis of the organisations footprint and CRC footprint emissions as required. • Online registration process and any options which may be beneficial to the client, including any coverage interface with other legislative schemes • Advise and support on the Early Action Metrics (SMART Metering and Carbon Trust Standard or equivalent) • Provide a complete audit trail (Evidence pack for compliance)

18. Monthly Data Collection and Monitoring Monthly Data Collection and Monitoring Procedures • Collect energy usage data from the relevant sources. • Validate all records and calculations to check consistency. • Keep an audit trail of all utility data, internal readings and delivery notes. • Offer advice to forecast the clients emissions in the introductory phase. • Track and report any likely costs/gains from year to date performance, including regular updates on the price of carbon and outline factors affecting this price (In the capped phase) • Provide early warning of over emitting and advise on actions • Ensure that all relevant data is in place in preparation of a possible audit • Provide quarterly/monthly performance reports and legislation updates

19. Annual reporting and reconciliation Annual Reporting and Reconciliation • Obtain annual summary statement for each supply directly from energy supplier • Report total annual energy usage and supplier details for each supply point • Provide full audit trail for each supply point • Help the client with the auction process and any other buying/selling activities TBC • Assist in the annual reporting and surrendering of allowances to cover emissions • Ensure each annual evidence pack is completed • Provide support during possible verification

20. Other Services Offered Other Services Offered in conjunction with CRCESS Compliance: • Energy Audits • Energy Procurement • Energy Bill Validation Services • SMART Metering • EPC’s and DEC’s • SAP & SBEM Calculations • BREEAM “Environmental Assessment Method for non domestic buildings” • Please contact ecoelite on +44 0208 854 2878 for further information on the CRCEES compliance service and other services listed above.