Stationery Energy and Industrial Processes (SEIP), Technical Advisory Group (TAG), Notes of 7th meeting held on 3 June 2008, 9:30 – 12.30 at The Treasury, Wellington

Present: Mark Storey (Co-Chair), Chris Baker (Co-Chair), Hans Buwalda, John Carnegie, Ray Deacon, Roger Fairclough, David Fletcher, Stuart Frazer, Ray Deacon, Phillip Millichamp, George Riddell, Michael Rynne, Doug Watson.

Suzi Kerr (Convenor of Cluster B of the CCLF).

Officials: Dave Brash, Tim Denne, Mark Dean, Robin Brasell, Megan Taylor & Jan Catley (meeting secretary).

Apologies: Carmen Blackler, James Flexman, Craig Palmer.

Notes of the previous meeting on 6 May 2008 were accepted as a fair and correct record.

Feedback On Data Issues

Mark Dean (MED) spoke to paper SEIP 23, an update on data issues.  Matters highlighted were:

  • The updated emission size distribution graph (with IP emissions & a notional electricity emission included).
  • It was noted that some slides in SEIP 23 contain confidential information and should not be released publicly in their current form.
  • It was noted that the top 18 firms had annual emissions of about 11 Mt and the next 80 firms of about 1.4 Mt.  It was suggested that when considering emissions growth from 2005 to 2010 the focus should be on the top 20 firms.
  • Inferences about emission intensities were then discussed by combining emission and revenue data from the 2006 MEUS survey and revenue data from the Annual Enterprise survey.
  • In discussing the suitability of the data for eligibility and allocation discussions it was noted that the EECA SME/EIB database based on audits was useful for smaller firms.
  • The draft brief (also labelled SEIP 23) for bottom up firm data was discussed – the Co-Chair summed up noting
    1. MED’s work was progressing satisfactorily,
    2. the proposed additional survey may not be required, &
    3. there is interest in obtaining projections of future emissions

Actions:

  1. Agreed that it would be beneficial to collect information on projections of emissions from the top 18-20 firms, plus any prospective new entrants.
  2. Roger Fairclough and Hans Buwalda to discuss the need for a targeted survey of a group of existing emitters from firms below the top 20 – to complement the CCLF case studies.
  3. Mark Dean to action a letter being sent out to top 18 firms requesting authorisation enabling access to use the data they have already provided to SNZ in the 2006 survey.

Sub-group on eligibility & allocation

Hans Buwalda spoke to SEIP 24, reporting on the combined eligibility and allocation sub-group’s last meeting. Discussion focussed primarily on the revised allocation methodologies (SEIP/25). 

It was highlighted that the UK’s approach to allocation for Phase II of the EU ETS, including provision of new entrants and move towards benchmarking, may provide some useful insights.  After the meeting the following link was circulated to members:  http://www.defra.gov.uk/environment/climatechange/trading/eu/operators/phase-2.htm

Summing up, the Co-Chair noted that the meeting broadly accepted the 5 variants presented in SEIP/25 and that he would like the next meeting to consider a sub-set of decisions.  It was suggested that next steps include:

  • a better understanding of how benchmarking could be applied (i.e. are there off-the-shelf numbers),
  • an understanding of forward projections (and the implications for the updated output approach)
  • consideration of the best entities (firm, plant or product). Lessons from the DEFRA approach are likely to be a useful input.

Action:

  • SEIP 25 to be further revised and turned into a proposal covering firm/ plant/ sector/ product/ process.  Future projections and benchmarks will also need to be considered.

Report from sub-group on methodological issues

John Carnegie reported on progress of the methodologies group (SEIP 26, SEIP 27, & SEIP 28) noting material was provided as a work-in-progress as the data is still incomplete.  He noted the focus of the team’s work on: process definitions, obvious points of measurement, & emission factors, as well as the inevitable trade-off between simplicity (low compliance costs) and accuracy.   A further meeting was planned for 2-3 weeks time upon Carmen’s return.

The following points were raised in the discussion that followed:

  • The need to add urea and methanol manufacturing to the set of processes considered;
  • The thresholds applied (suggested 5%) depend on the number of categorisations of for ex ample coal;
  • Suggestion that the sub-group consider refining in their methodologies discussion since the NZRC NGA was finite;
  • A question was raised about alternative fuels and waste to energy conversion.

Actions:

  1. Philip Millichamp & Stuart Frazer to discuss and report to the sub-group on the pros and cons of the sub-group addressing refining.
  2. Michael Rynne to elaborate on the waste to energy issues for the sub-group & MfE to consider. 

Proposal for a sub-group working on electricity emissions

It was agreed to establish a new sub-group to work on price pass-through issues in the electricity market.  A useful starting point is to review earlier work relating to both electricity factors (tCO2e/GWh) and emission charge pass through.  

Action:

Robin Brassel to liaise with MED to pull together an overview of earlier work.

Update on CCLF, Cluster B and Select Committee

Dave Brash reported back on the recent Cluster B and CCLF meetings.  Suzi Kerr, in her role as co-ordinator of Cluster B of the CCLF, outlined the work the cluster has been doing on allocation issues and the leakage case studies in particular.

 A general update was provided by officials and industry attendees. 

The last CCLF focused on:

  • business opportunities including voluntary opportunities,
  • a report back from Cluster B on macroeconomic modelling, leakage case studies, economic regrets and intensity within a cap. 

Suzi Kerr noted the technical capability of SEIP TAG in working on detailed allocation issues. She commented that she will consider the respective roles of the TAG and CCLF going forward. Suzi also agreed that she would continue to participate in future meetings of the TAG and its allocation sub group to the extent she can, in order to help ensure the respective groups complement each other.

The timing of the Select Committee process was outlined.  Report back is due on 16th June.  The Bill then goes through the Committee stages and through second and third readings (estimated to be in July).

Outline of interim TAG report

An outline of the interim report was circulated for discussion.  It was agreed that the outline was OK. There was a brief discussion over whether to continue working on the TAG interim report at this stage or wait until the Select Committee has reported back.  After some discussion it was agreed to carry on as planned and subsequently revise if necessary.

Action:

  1. Both co-Chairs will act as lead authors and circulate a first draft by 19 June. There will be a special meeting of the TAG to discuss the interim report on the 25th of June.

Other business

There was a brief discussion about reporting standards that might be applied to cover ETS reporting.   There are international ISO standards that are extensive but do not specify ‘how to do it’. It was suggested that there may be a tension between the Governments preference to ‘keep it simple’ and the EU’s approach based on ISO standards.

Next meeting date (to focus on the Interim Report) is Wednesday 25 June at The Treasury

Next monthly meeting on Tuesday 1 July at The Treasury.

Last updated: 15 September 2008