Memorandum submitted by BT
1. EXECUTIVE
SUMMARY
1.1 Individual electricity products/tariffs
should be labelled with environmental impact information; including
CO2 intensity information of a quality appropriate for use in
CO2 footprint reporting.
1.2 This should be achievable by: extending
the current Fuel Mix Disclosure requirement down to the individual
product/tariff level; and enhancing the calculation methodology
so that it utilises actual, rather than standardised, CO2 information.
1.3 Attributes of electricity—such
as actual CO2 intensity, and other environmental impact information—should
be tracked through the electricity system using a tracking system
consistent with the European E-TRACK standard.
1.4 Regulation of the labelling of electricity
with environmental impact information (including CO2 intensity)
should be sufficiently robust to ensure that the existence of
financial premiums for differentiated products is justified. Third
party auditing of relevant evidence against power supplied should
occur annually with defined penalty/refund requirements for non-compliance.
2. INTRODUCTION
TO THE
SUBMITTER
2.1 BT consumes approximately 2.2 TWh of
electricity in the UK each year (circa 0.7% of total UK electricity
consumption). A majority, 98% of this, is sourced from Renewable
or Low Carbon generation (42% LEC-backed Renewable, and 56% LEC-backed
Good Quality CHP), making BT one of the largest consumers of green
electricity in the UK.
2.2 Procurement of this low and zero carbon
electricity is one part of BTs strategy towards meeting an ambitious
target of an 80% reduction in CO2 emissions (compared with a 1996
baseline) by 2016. Other aspects of this strategy include: investment
in carbon saving energy efficiency initiatives across BT's network,
estate, data centres, fleet, and business travel; and construction
of 250 MW of wind capacity at BT sites across the UK.
3. PRODUCTS REQUIRING
LABELLING: ELECTRICITY
3.1 Most products are labelled with details
of their ingredients, many products are labelled with energy performance
information, and some products now contain carbon footprint information.
However electricity products/tariffs are not labelled with their
ingredients or their associated carbon footprint information.
3.2 Electricity consumption is one of the
largest components of the environmental impact (and carbon footprint)
of a business or household. Therefore, the choice of which electricity
product/tariff to procure has the potential to be one of the single
most significant decisions that a household or business can make,
with respect to its environmental impact.
3.3 Fuel Mix Disclosure (FMD) currently
requires electricity suppliers to disclose their average overall
fuel mix each year, as a percentage of supplied electricity sourced
from each of the following five categories of fuel type: Renewable;
Nuclear; Gas; Coal; and Other. BERR publishes standardised environmental
impact factors (in g CO2/kWh and grams of high level radioactive
waste per kWh) for each of these five fuel-type categories. Suppliers
use these standardised factors to estimate the average overall
environmental impact of all electricity that they supply each
year; publishing this alongside the percentage breakdown of their
fuel sources.
3.4 However FMD does not require suppliers
to provide either: the Fuel Mix or the estimated environmental
impact of the individual products/tariffs sold to householders
and businesses. This means that FMD information cannot typically
be used by households and businesses to differentiate between
products/tariffs on the basis of associated environmental impact,
carbon footprint, or type of fuel (although a small number of
suppliers do, voluntarily, provide fuel mix and environmental
impact information for each of their tariffs).
3.5 BT recommends that the provision of
Fuel Mix and environmental impact information should be compulsory
for all electricity, at the individual product/tariff level, and
that a transparent and robust system for the transportation and
auditing of the required information should be applied universally
across the UK electricity system.
4. WHAT SHOULD
BE SHOWN
UNDER A
LABELLING SYSTEM
FOR ELECTRICITY
4.1 The Carbon Footprint associated with
consumption of electricity should be shown under a labelling system
for all electricity.
4.1.1 In an electricity market in which some
products/tariffs are differentiated as low or zero carbon (LZC),
and in which consumers of such LZC electricity are able to reduce
their reported carbon footprint accordingly, no organisation should
report the carbon footprint associated with its electricity consumption
on the basis of an average national CO2 factor for grid-supplied
electricity.
4.1.2 Combining the differentiation of LZC
electricity with the application of an overall average CO2 factor
results in a "double-counting" of the CO2 benefit of
that LZC electricity. This is because the carbon benefit has been
counted both in the carbon footprint reporting of the consumer
of the LZC electricity product/tariff, and as a component of the
overall national average CO2 factor used by other consumers.
4.1.3 The UK system currently combines differentiated
LZC products/tariffs with the application of an average national
CO2 factor by consumers of standard electricity products/tariffs.
It therefore "double counts" carbon benefit from grid-supplied
LZC electricity.
4.1.4 This double counting problem could
be removed by either:
— preventing the differentiation of LZC
electricity; or
— labelling all electricity with its associated
carbon footprint.
4.1.5 BT recommends that all electricity
consumed should be labelled with its associated carbon footprint.
Estimated or historical carbon footprint information should be
provided for each product/tariff at the point of sale; and actual
CO2 information should be calculated annually and provided to
householders and businesses retrospectively.
4.1.6 In this way organisations will be able
to report accurately their carbon footprints in a way that is
free of double counting, and that provides actual CO2 Footprint
information that should be consistent, overall, with the national
GHG emissions database.
4.2 Information outlining the other aspects
of the environmental impact associated with individual electricity
products/tariffs should also be shown under an environmental labelling
scheme, as should the type of fuel from which the power has been
sourced.
4.3 Other aspects of environmental impact
which could be shown as part of an environmental labelling scheme
for electricity include:
— a clear indication of whether the
product/tariff is "Nuclear-free" (including, if it is
not nuclear-free, the high level radioactive waste associated
with the product/tariff in grams per kWh);
— a clear indication of whether the
product/tariff is sourced from Renewable generation; and
— an indication of whether there is
any "additional environmental benefit" associated with
the product/tariff (over that which would have occurred had the
householder/organisation not purchased this electricity).
5. THE REGULATION
OF ENVIRONMENTAL
LABELLING FOR
ELECTRICITY
5.1 The Carbon Footprint information provided
to businesses and households should be calculated using actual
CO2 information.
5.1.1 As noted in paragraph 3.3 above, Fuel
Mix Disclosure (FMD) currently requires each Supplier to annually
disclose an estimated overall average CO2 intensity relating to
the electricity that they supply. This estimate is calculated
by assigning, at point of generation, a standardised emissions
factor to each of the five categories of fuel type; and by utilising
these factors to estimate CO2 intensity at the point of supply.
5.1.2 The FMD methodology for estimating
CO2 intensity in this way is inadequate for use on a label of
the carbon footprint associated with consumption of electricity
from an individual product/tariff. There are three reasons for
this:
— price premiums could not be justified
on the basis of information calculated using the current FMD methodology;
due to: a lack of transparency of the calculation process; and
the likely lack of a liquid market in FMD evidence (Generator
Declarations, and Renewable Energy Guarantees of Origin (REGOs))
under current practices;
— the use of standardised emissions factors
for each category of fuel type will prevent any demand for LZC
electricity products from signalling, to generators, a market
demand for lower carbon techniques & technologies to be adopted
within each fuel type category;
— estimation of carbon intensity, using
standardised emissions factors in place of actual CO2 data, is
likely to make this carbon information inappropriate for use in
carbon footprint reporting. This will be because of the reputational
risk, upon carbon reporting organisations, of reported information
being inconsistent with national data.
5.1.3 BT therefore recommends that the carbon
information provided to households and businesses should be based
on actual CO2 emissions data rather than standardised factors.
5.2 Attributes of each unit of electricity
generated—including type of fuel, associated environmental
impact, and actual CO2 intensity—should be tracked through
the electricity system to the point of supply/consumption.
5.2.1 A European standard—the "E-TRACK"
standard—has been developed for the purpose of tracking
consistently all electricity attributes through the electricity
system. This standard is beginning to be adopted in the policies
of member states, and in policy development at the EU level.
5.2.2 Tracking of UK electricity using a
system that is consistent with the E-TRACK standard should: help
prevent double counting of attributes, and aid consistency between
the UK & European electricity markets, and between future
UK & European electricity market policies.
5.2.3 Tracking of actual CO2 intensity through
the electricity system should:
— improve the quality of CO2 intensity
information at point of supply;
— provide a robust mechanism for consumer
demand for low carbon electricity to be signalled by the market
to generators; and
— support consumer trust in a market for
low carbon electricity through improving transparency.
5.3 Regulation of the labelling of electricity
with environmental impact information (including CO2 intensity)
should be sufficiently robust to ensure that the existence of
financial premiums for differentiated products is justified.
5.3.1 Third party auditing of relevant evidence
against power supplied should occur annually for an annual reporting
period.
5.3.2 Where all power supplied is not matched
with appropriate evidence, residual values should be assigned
by a third party certification body. These residual values should
be calculated using a transparent methodology following "settlement"
of all available evidence.
5.3.3 Where a product/tariff has been sold
on the basis of a stated environmental impact attribute (such
as having CO2 intensity of less than 200g CO2/kWh), but does not
meet this upon settlement of evidence against power supplied,
the supplier should be required to make up any shortfall by either
purchasing additional evidence, or refunding consumers of that
product/tariff appropriately.
5.3.4 Evidence of electricity attributes
should be available for purchase by businesses and third parties—in
addition to suppliers—so as to encourage the development
of liquid markets for this evidence; and to thus improve transparency
and consumer confidence in price premiums.
25 January 2008
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