2012

Carbon Emissions Reduction Target (CERT) Programme

ASHIQ DUNGARWALLA SUN: 091520593

ME3023: ENERGY EFFICIENCY

Ashiq Dungarwalla ME3023: Energy Efficiency 11/25/2012

Executive summary
Concentrations of greenhouse gases (GHG) like carbon dioxide in the atmosphere have increased rapidly as a result of massive industrialisation in the last century, causing the global surface temperature to rise of 0.74C in the 20th century [1]. Several emission reduction schemes have been developed at international and national levels to reduce this. From April 2008 to December 2012, Carbon Emission Reduction Target (CERT) was the main legislative driver for improving the energy efficiency of existing households in Great Britain and contributes to the UK's reductions commitment. The report focusses on how CERT policy has been delivered and to what extent energy efficiency measures offered under CERT have been taken up by households, focusing particularly on insulation and heating measures. It also looks at the main aims of CERT, what it covers, progress to date and an evaluation of the success of the programme so far.

The UK has ambitious carbon reduction targets promoted through the Carbon Emissions Reduction Target (CERT) programme. What evidence is there to suggest that these targets will be met?

http://www.decc.gov.uk/assets/decc/162_20090219180532_e_@@_certexecsummary.pdf

Contents
Executive summary .................................................................................................................... 2 Contents ..................................................................................................................................... 3 1.0 Introduction ......................................................................................................................... 4 1.1 What are Carbon Emissions? ........................................................................................... 4 1.2 Reduction of Carbon Emissions ....................................................................................... 4 1.3 What is CERT ? ................................................................................................................. 5 2.0 CERT Aims and Targets ........................................................................................................ 6 3.0 Progress to date ? ................................................................................................................ 7 3.1 Heating / Insulation: .................................................................................................... 8 3.2 Lighting: ....................................................................................................................... 9 4.0 CERT Has it been a success ? ........................................................................................... 10 5.0 Future Government Plans .................................................................................................. 10 6.0 Conclusions ........................................................................................................................ 11 7.0 References ......................................................................................................................... 12

1.0 Introduction
1.1 What are Carbon Emissions?
Carbon emissions, most notably carbon dioxide (CO2), are part of a collection of gases that adversely affect the quality of our air, increasing the greenhouse effect. When fossil fuels such as natural gas, coal or oil are burnt, carbon dioxide is released into the atmosphere and since carbon dioxide (CO2) is the most consequential of all the emissions, CEs can be alternatively referred to as CO2 emissions. As shown in Figure 1; it has reached a point where over 10,000 million metric tons of Carbon are being emitted globally. The effect of all this extra carbon dioxide in the atmosphere is that the overall temperature of the planet is increasing (global warming) causing the climate to change in unpredictable ways (from floods and hurricanes to heat waves and droughts).

Figure 1: Graph to show history of global carbon emissions

CO2 acts as a primary greenhouse gas (GHG) contributing to the global warming through the general everyday human activities such as, Driving cars to work. Using gas for cooking food, heating the offices and houses. Using electricity to light the houses and power the various communication devices.

1.2 Reduction of Carbon Emissions

Changes in CO2 emissions are influenced by factors such as population growth, economic growth, changing energy prices and new technologies. The most effective way to reduce carbon dioxide emissions is to reduce fossil fuel consumption by regulating carbon emissions through federal government mandates. There are two governmental controls of carbon emissions with the first; a

carbon tax, taxing companies directly based on the amount of carbon they put into the atmosphere. The goal of this carbon tax is to convince businesses and other organizations to reduce their total emissions. The second governmental control approach is referred to as cap-and-trade legislation. In this system, the government sets a cap on the maximum amount of emissions it will allow. From here, it then auctions off emissions allowances to companies until it reaches that cap. This system is designed to promote stricter emissions standards without directly taxing companies. There are a number of Government schemes throughout the world; all working together to reduce the carbon emission. Emissions trading scheme (ETS) is employed by Australia, Japan, USA, Korea and China. The Copenhagen-Accord by the Denmark and the Carbon Emission Reduction Target (CERT) by the UK. The policy we are interested in is the CERT; therefore the following part of this assignment focuses on CERTs input within the different energy sectors in the UK.

1.3 What is CERT ?

CERT [Carbon Emission Reduction Target) is the government's main domestic energy efficiency implementation to reduce carbon emissions within Great Britain. CERT was introduced in April 2008; and was the third in a series of legal obligations on the major gas and electricity suppliers dating back to 2002. CERT was extended on 30 July 2010, with a new higher emissions target and significant refocusing around supporting greater installation of insulation. The Department for Energy and Climate Change (DECC) is responsible for the policy and it is administered by the Office of Gas and Electricity Markets, Ofgem. The CERT programme sets an obligation on energy suppliers with 50,000 or more domestic customers to reduce carbon dioxide. For the CERT scheme, the government has set a lifetime saving target of 154 million tonnes of carbon dioxide. The focus is on carbon dioxide rather than energy to encourage the development of innovative measures such as biomass boilers in addition to standard insulation, energy efficient lighting and so on. The primary aim of the Carbon Emissions Reduction Target (CERT) is to make a contribution to the UKs target under the Kyoto Protocol and the Climate Change Act 2008 (to cut greenhouse gas emissions by 12.5%). Around a quarter of carbon emissions result from the energy used to heat and power homes. This makes housing, and in particular existing housing, an area for significant attention.

CERT maintains a focus on vulnerable consumers and includes new approaches to innovation and flexibility. However 68% of the total target must be achieved through installed insulation measures as suggested by the government therefore there will be a focus on funding these measures over others.

2.0 CERT Aims and Targets

In general, CERT obliges electricity and gas suppliers in Great Britain to help reduce carbon dioxide emissions from homes. Each supplier under the scheme must demonstrate that measures that it implements have led to a certain level of carbon dioxide (CO2) saving among its customers. CERT aims to promote things that: improve energy efficiency, for example, loft and wall insulation increase the amount of energy generated from renewable technologies such as wind turbines, solar panels and ground source heat pumps The energy companies are British Gas, Scottish Power, Scottish and Southern Electric, npower, EDF and Eon. The targets are based on their share of the domestic energy market so the bigger the company, the larger the carbon target they have to meet. The energy companies are not restricted to their own customers, which is why consumers receive promotions for free or subsidised insulation and CFL light bulbs from energy companies even though they are not a customer. It is expected that the energy companies have so far invested some sort of 2bn over the course of CERT. Government has a range of policies to reduce the UK's carbon dioxide emissions by 80 per cent by 2050. As part of the Kyoto Protocol, the UK committed itself to achieve the following harmful gas reduction targets, based on using 1990 harmful gas emissions levels as its benchmark: 1. By the end of 2012, the UK is committed to decrease its harmful gas emissions by 12.5% from the 1990 level 2. By 2020, the UK is committed to cut CO2levels by 34% compared to the 1990 level 3. By 2050, the UK is committed to cut CO2levels by 80% compared to 1990. Under CERT energy suppliers with more than 250,000 customers are obliged to promote things that improve energy efficiency such as loft insulation, draught proofing & so on, and increase the amount of energy generated from renewable sources such as Solar PV on roofs of homes to help the Government hit these obligations.

In addition, it was hoped that CERT would also reduce energy demand in the UK, reducing energy bills for homeowners in the process. It was also supposed to help those most vulnerable in our society (over 70s, or those on benefits) and to try and aid those currently in fuel poverty. While the CERT was only initially only meant to run until March 2011, it was extended by a further 21 months on 30th July 2010. The extension coincided with even more ambitious Government reduction targets with a refocus towards the support of insulation measures.

Increase the emissions target by 108 MTCO2 and setting a new target of 293 MTCO2; Inclusion of real time displays (RTDs) and home energy advice packages (HEAs) Provision of an incentive for the promotion of DIY loft insulation and professional loft insulation top up. Require obligated suppliers to meet 68% of the increase in target through professionally installed insulation products cavity and solid wall insulation.

3.0 Progress to date ?

The UK had ambitious carbon reduction targets promoted through the Carbon Emissions Reduction Target (CERT) programme. By the end of the fourth year, suppliers had delivered measures resulting in approximately 241.8 Mt CO2. This equates to 82.5% of the overall target of 293 Mt CO2. Of the 241.8 Mt CO2, around 44.5 Mt CO2 were achieved in the fourth year of the programme.

Figure 2: Carbon savings achieved to the end of the 4th year

Figure 2 shows the cumulative carbon savings achieved year-on-year in the first four years of CERT, broken down by main measure type. There has been a relatively steady progression towards the

overall CER target from the beginning of the programme, though the rate shows slowed by 7% from Year 3 to Year 4. From the beginning of the programme, insulation accounts for 64.0% of total carbon savings. Lighting measures contributed the second highest savings, with 21.4%, heating equated to 8.3% and all other measures combined totalled 6.3%.

3.1 Heating / Insulation

Around a quarter of current emissions result from the energy used to heat and power our homes and this energy can be lost through heat transfer as shown by Figure 3; thus making housing an area of significant attention by the government.

Figure 3: Heat loss through housing

By the end of the fourth year of CERT, cavity wall insulation was the third most prevalent measure with over 2.1 million households benefitting. Suppliers also achieved nearly 50,000 installations of solid wall insulation. Most of these installations involved external solid wall insulation. Loft insulation was the most popular insulation measure installed, with nearly 3 million households benefiting from professional installations. In addition to this, nearly 91 million square metres of CERT subsidised DIY loft insulation was promoted (with approximately 2.2 million homes benefiting). There was an increase of 23% in DIY loft insulation carbon savings achieved in Year 4 compared to Year 3 of CERT. All insulation measures account for 64% of the carbon savings achieved by the end of the fourth year of CERT. Heating measures contributed just less than a tenth of the total carbon savings achieved. The majority of these carbon savings were delivered by shower regulators which physically impose a limit on how quickly water can flow through a shower head. This saves hot water and thus reduces

water heating costs as well as saving energy and carbon. Shower regulators are an innovation in the heating category and suppliers first promoted them during the first year of CERT. The second most popular heating measure was fuel switching e.g. replacing an electric heating system with a gas fired heating system. Fuel switching was promoted to just over 90,000 households, with over 20,000 in Year 4. This is an increase of 29.2% on carbon savings in the first three years of CERT. Insulation measures were delivered through a variety of routes including retail promotions, partnering with manufacturers and working with the governments Warm Front Programme. The vast majority, though, were delivered by direct promotion to private households and through partnerships with social housing providers. Energy companies have to carry out a minimum level of home insulation measures under the Carbon Emissions Reduction Target (CERT). The energy and climate department (DECC) proposes at least 65% of the increased CERT target for cutting household CO2 emissions must be met through cavity wall, solid wall and loft insulation. Ofgem's latest progress report on CERT, published in November, revealed that energy companies are already achieving 62% of their target through insulation.

3.2 Lighting
CFLs have been a very cost effective way for suppliers to achieve their targets, with 360 million distributed or sold with subsidy between April 2002 and December 2009. Compact fluorescent lamps (CFLs) have a much longer life span than traditional incandescent bulbs; generally an incandescent bulb life of around 1000 hours compared to a CFLs of 8,000 hours. Given the substantial volume of CFLs and LEDs credited under the scheme it was suggested to phase out the incandescent light bulbs through EU legislation because of the new energy efficient products. Suppliers delivered just over 300 million lighting measures in the first three years of CERT (over 350 million including EEC2 carryover). During the fourth year, there was very little lighting activity, with only one new scheme for LED lighting approved. Suppliers achieved a total of 44.2 Mt CO2 through lighting measures by the end of the fourth year of CERT. Nearly all lighting measures distributed were Compact Fluorescent Lamps (CFLs), which were distributed up to the end of the third year of CERT with only a small number of energy efficient halogens, and LEDs been promoted during CERT. Lighting accounted for 21.4% of the total carbon

savings achieved. There have been a total of 23 lighting schemes under CERT, with each supplier having at least one lighting scheme. Carbon savings achieved through lighting were largely achieved in the first three years of CERT. This activity has been delivered in CERT through a number of delivery routes including partnerships with leading retailers, giveaway promotions, newspaper promotions and through partnerships with social housing providers. It can be concluded that overall insulation has been the most effective measure of the CERT scheme as it saved approximately 135 Mt CO2, which equates to 56 % of the total savings till date. The second most effective measure is the distribution of the CFL lamps which accounted for 14.5% of the net CO2 savings.

4.0 CERT Has it been a success ?

Energy efficiency was the immediate priority of CERT to support ways of heating buildings / fuel homes without emitting carbon. Overall the Carbon Emissions Reduction Target scheme has resulted in over 2 million households receiving professionally-installed loft insulation between April 2008 and March 2011, while 1.6 million households received professionally-installed cavity wall insulation. It delivered measures resulting in carbon savings of some 197 MTCO2 to March 2011 achieving the expected level of carbon savings; but now is 67% of the overall target of 293 MTCO2 since raised by the CERT extension. The main social benefits from measures installed under CERT were reductions in household energy fuel bills contributing to the improvement of fuel poverty and risk off ill health caused by cold homes. CERT particularly provided help to those on low incomes or with disabilities by focusing 40% of energy savings on priority households. Additionally, the policy granted a wider economic benefits including employment in the energy efficiency market and supply chain.

5.0 Future Government Plans

Suppliers have continued to use a range of delivery mechanisms to deliver the obligation in the fourth year of CERT. These have included partnering with organisations such as social housing providers and charities, promoting measures direct to households, partnering with manufacturers and retailers, linking in with government programmes such as the Warm Front Programme and installing measures in new build properties in partnership with housing developers.

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The Green Deal accompanied by ECO targets for suppliers is the next preferred Government policy and regulations in the private rental sector, reason being to encourage the uptake of more costly energy efficiency measures with longer payback rates than those currently delivered under CERT, in order to meet the countrys future carbon budgets. The combination of these policies enables a more market-focussed approach to delivering these measures, where competition amongst Green Deal providers is likely to drive beyond the levels expected under CERT. Throughout this transition the Government will work closely with industry to address the principal risks, including the impact of anticipated increases in energy costs, to ensure that UK industry remains internationally competitive. It has been suggested that in the 2020s, the Government wants to see competing nuclear power systems to deliver energy at the lowest possible cost. Through the Renewable Heat Incentive (RHI) and Renewable Heat Premium Payment, over 130,000 low carbon heat installations are expected to be carried out by 2020. At the same time the Government will work with local authorities, where appropriate, to lay the foundations for district heating networks, particularly in urban areas with more densely packed demand for heat. This should enable the long-term delivery of heat from low carbon sources. As part of this Carbon Plan, the Government is launching a new 2050 Calculator, to enable a more informed debate about UK energy choices and develop a national consensus on how to move to a low carbon economy. The Government will also use this plan to build more consensus globally on how moving to a low carbon transition is a practical and achievable goal.

6.0 Conclusions
Improvements to the UKs energy efficiency will reduce the Greenhouse Gas emissions, improve energy security, mitigate fuel poverty, increase productivity and reduce the costs of meeting the UKs renewable energy target. Government intervention is justified by the success off previous policies, the CERT scheme, and the fact that new polices are in play to address cost-effective energy efficient measures. To make this transition, industry, the Government and the public need to be pulling in the same direction. For industry, the global low carbon market is projected to reach 4 trillion by 2015 as economies around the world invest in low carbon technology. The innovation challenge for industry is in business models as well as technologies, with electric vehicles, renewable electricity and solid wall insulation requiring upfront investment, but delivering large savings in operating costs.

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Overall this report has found that CERT has provided a flexible framework which has stimulated cost-effective delivery of lower cost home energy efficiency measures,

particularly loft and cavity wall insulation. As a continuation of previous supplier obligations, it was felt by stakeholders to have formed part of a long-term framework which has facilitated the development of innovative delivery channels and partnerships. While CERT has not been driven directly by the needs of fuel poor households, stakeholders felt that it has made some positive long-term impact to reduce fuel poverty. However, they did not believe that CERT has managed to deliver measures which are more costly or problematic for geographical or technical reasons (i.e. solid wall insulation, hard to treat properties, very rural areas).

7.0 References
[1] Allianz, Allianz Knowledge Site, 6 2 2009. *Online+. Available: http://www.knowledge.allianz.com/environment/climate_change/?112/facts-andpredictions-from-the-ipcc. [Accessed 28 11 2012].

http://www.decc.gov.uk/assets/decc/11/tackling-climate-change/carbon-plan/3751-carbonplan-executive-summary-dec-2011.pdf

http://www.energysavingtrust.org.uk/Take-action/Find-a-grant/About-CERT

http://www.which.co.uk/energy/energy-saving-products/guides/your-light-bulb-concernsanswered/free-energy-saving-light-bulbs/

http://www.bettergeneration.co.uk/grants-and-funding/carbon-emissions-reductiontarget.html 12

http://www.ofgem.gov.uk/Sustainability/Environment/EnergyEff/Documents1/CERT_Annual_Report _2012.pdf+

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