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www.brc.org.uk
25-in-5
Unlocking
energy
efficiency
through smart
regulation
We believe that by simplifying the complex pol...
25-in-5: Unlocking energy efficiency through smart regulation
An unprecedented challenge
1
The UK is facing an unprecedent...
25-in-5: Unlocking energy efficiency through smart regulation 
The retail industry has long been a leader in energy effici...
25-in-5: Unlocking energy efficiency through smart regulation
What are the opportunities from
simplification and harmonisa...
25-in-5: Unlocking energy efficiency through smart regulation 
What are the opportunities from simplification and harmonis...
25-in-5: Unlocking energy efficiency through smart regulation
what are the challenges?
4
The retail industry faces a numbe...
25-in-5: Unlocking energy efficiency through smart regulation 
How can we tackle the energy
trilema?
5
The complicated and...
25-in-5: Unlocking energy efficiency through smart regulation
What will the BRC do to help
retailers?
6
The BRC will help ...
25-in-5: Unlocking energy efficiency through smart regulation 
https://www.gov.uk/government/uploads/system/uploads/attach...
Energy in Retail
Energy costs set
to significantly
increase by 2020
£3.3bn
77%
of total energy
consumed in
2013
Electricit...
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25-in-5 - Unlocking Energy Efficiency

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25-in-5 - Unlocking Energy Efficiency

  1. 1. www.brc.org.uk 25-in-5 Unlocking energy efficiency through smart regulation We believe that by simplifying the complex policy landscape the retail industry could realise further energy reductions to deliver an overall reduction in the order of 25 per cent by 2020
  2. 2. 25-in-5: Unlocking energy efficiency through smart regulation An unprecedented challenge 1 The UK is facing an unprecedented challenge to enable security of supply while delivering on climate change goals. The retail industry strongly supports these objectives and has led the way in energy efficiency and investment in low carbon technologies. There are three key challenges for the UK in its’ future energy supply and market. Energy efficiency is a vital measure in tackling the energy trilema and underpins objectives in capacity, consumption and cost. It will also enable the UK economy to grow sustainably as more investment in energy efficient products and services drives green growth. Currently the complex and inaccessible policy landscape is leading to widespread confusion and disengagement in relation to energy efficiency. As a result there is a significant lack of confidence in energy efficiency investment creating a major barrier to our ability to successfully tackle the energy trilema. This has led to a shortfall in jobs and skills needed to deliver on energy efficiency within the retail industry further impacting on the retail industry’s ability to deliver enhanced action in energy efficiency. The energy trilema Climate Change – Represents one of the most significant challenges being faced by society today. The ways in which we generate and consume energy plays a fundamental role in avoiding dangerous climate change and mitigating the impact of climate change in future generations – Carbon reduction Energy Security – The UK is facing reductions in capacity due to a lack of investment in energy infrastructure in the UK. Coupled with an increasing population this is likely to lead to much more frequent power outages as generation capacity is outstripped by rising demand – Investment in energy mix diversity Affordability – Volatility in the energy markets and the need for significant investment in UK energy infrastructure will mean energy costs continue to rise for the foreseeable future, placing an increasing burden on retail operational costs – Energy demand reduction . 2. .
  3. 3. 25-in-5: Unlocking energy efficiency through smart regulation The retail industry has long been a leader in energy efficiency and has contributed a great deal to innovation and investment in energy efficient technologies and solutions. We aim to harness this experience and knowledge to empower retailers to unlock enhanced action in energy efficiency with the wider industry. Since 2005 the BRC has been working with leading retailers on achieving deeper energy and carbon reductions through enabling enhanced action on energy efficiency. Under the A Better Retailing Climate initiative BRC members have made significant progress in reaching key targets on energy efficiency and carbon reduction. However we know we can do more and following our initial progress under A Better Retailing Climate, signatories are working towards more ambitious targets for 2020. Carbon emissions from stores were reduced by 33% between 2005 and 2012 accounting for growth. Absolute emissions were reduced by 8% Carbon emissions from store deliveries were reduced by 27% between 2005 and 2012. 33% 27% 8% Reducing Absolute carbon emissions from operations by 25% based on 2005 levels Reducing energy consumption from buildings by 50% based on 2005 levels Reducing transport emissions from store deliveries by 45% based on 2005 levels 25% 50% 45% What is retail currently doing to tackle the energy trilema? 2
  4. 4. 25-in-5: Unlocking energy efficiency through smart regulation What are the opportunities from simplification and harmonisation of policy? 3 Key Retail Energy Facts Retail is the second highest energy consuming industry in the UK1 The cost of energy and carbon to retail in 2013 was £3.3bn Electricity represents 77 per cent of total energy consumption in the retail industry and 90 per cent of overall energy costs Lighting in 2013 used 43 per cent of total electricity and is by far the leading source of energy consumption Carbon associated with retail energy consumption in 2013 was 16MtCO2e, representing around a fifth of emissions from all businesses in the UK • • • • • In 2014 the BRC undertook exploratory analysis of energy consumption and costs to the retail industry and what the current trajectory of energy costs could look like in 20202 . Using government wholesale energy cost projections and baseline data for the retail industry energy consumption in 2013 our analysis suggested that costs for the industry could increase significantly by 2020 to at least £4.4bn. Our initial analysis showed that a minimum of £4.1bn of cumulative energy and carbon costs to the industry could be avoided if all retailers in the UK adopted a 25 per cent reduction in energy consumption by 2020 from 2015. As this analysis only took into account wholesale energy costs, this benefit will be much higher if other aspects that are included in energy cost are taken into consideration such as transport, distribution and transmission costs.
  5. 5. 25-in-5: Unlocking energy efficiency through smart regulation What are the opportunities from simplification and harmonisation of policy? Key opportunities from energy efficiency Increasing the energy efficiency of operations remains the most cost effective way of reducing energy cost in relation to operating profits and will save significant amounts in operating costs for the long term Unlocking energy efficiency would tackle energy and carbon reduction as well as ensuring the retail industry is economically sustainable for the future Our initial analysis shows that a minimum of £4.4bn in additional energy spend is expected in the retail industry over the next five years, demonstrating the scale of investment in retail energy efficiency that could be unlocked if policy addressing energy and carbon were harmonised Smart regulation would generate significant economic growth as well as delivering huge potential for additional employment in an energy efficiency industry in the UK and export of expertise on a global market Enhanced action in energy efficiency would lead to greater stability in the UK economy as well as helping to protect the UK against future economic downturn • • • • • smart policy supporting energy reduction: the 25% goal 3,000 3,200 3,400 3,600 3,800 4,000 4,200 4,400 4,600 Baseline 2014 2015 2016 2017 2018 2019 2020 EnergyCosts(£m) Total Cost BAU (£s) Total Cost 25% reduction (£s) Our analysis shows that the impact on the retail industry of an increase in energy costs of this magnitude could be significant and may lead to retailers seeking other ways of reducing operational costs in order to remain economically viable. Energy efficiency is therefore not just a vital component in tackling energy security and climate change, but is also a key driver of economic growth and stability.
  6. 6. 25-in-5: Unlocking energy efficiency through smart regulation what are the challenges? 4 The retail industry faces a number of major blockages to enhanced action on energy efficiency which slow down deployment of technologies, widens the skills gap and stifles innovation and investment. By removing these blockages retail could leverage a much greater level of investment in energy efficiency over the next five years not just supporting energy and climate change objectives but also contributing to deeper and more sustained economic growth and delivery of jobs across both the retail industry and the wider economy. Smart regulation would enable a much wider understanding of the benefits of energy efficiency within the retail industry and would leverage much higher levels of investment. Through simplifying and harmonising policy, government could outline energy and legislative risks more clearly as well as highlight both the potential financing models available as well as the clear opportunities presented by energy efficiency. Key barriers to energy efficiency The current policy landscape is extremely complex and is not well aligned to objectives as set out under the Climate Change Act and leads to confusion in whether to address energy efficiency, carbon reduction or investment in low carbon technologies and generation There are a vast number of policies addressing energy reduction and carbon management, leading to widespread confusion and lack of certainty in low carbon investments stifling innovation and investment in energy efficiency Access to finance for energy efficiency is limited and capacity to raise capital internally is restricted as the opportunities and benefits of energy efficiency are not well understood as a direct result of the overly complex policy landscape The complexity of the suite of policies addressing energy and carbon reduction has led to a fractured approach to energy efficiency, impacting on skills and development within retailers and disengaging them from the benefits of having energy management teams within their organisation The vast set of current reporting requirements under existing and planned policy, are not aligned damaging the strategic focus and delivery and severely restricting investment in energy efficiency • • • • •
  7. 7. 25-in-5: Unlocking energy efficiency through smart regulation How can we tackle the energy trilema? 5 The complicated and overlapping policy landscape is the single most difficult barrier to navigate and overcome in unlocking enhanced action in energy efficiency. The underlying goal of the energy and carbon policy should be to broaden energy efficiency out from the specialist areas of an organisation and place them in the hands of board members and key decision makers. It is vital that policy is harmonised in order to enable a wider level of accessibility and to simplify often complex policy measures whilst at the same enabling a clearer and confident platform on which to base investment decisions. Significant levels of finance are being absorbed to satisfy a vast suite of policies and compliance requirements when they could be put to better use through investing in energy efficient and low carbon technologies. Key areas of policy harmonisation A complex policy landscape has a resulting impact on the credibility and reliability of long term decisions and leads to higher risks in investment in energy efficiency as well as further fragmentation of future policy objectives The misalignment of reporting principles and routes within current policies leads to largely onerous and overly complex reporting processes which leads to confusion and a lack of confidence in consumption and emission figures In order to create a coherent investment environment, which enables us to reach our energy and carbon targets, policy needs to be stable and robust for the long- term and deliver simplicity in order to ensure the message is consistent Policy simplification will not require substantial changes in existing or planned legislation but could deliver benefits through aligning reporting principles across policy to deliver certainty in reporting and in better communication of and accessibility to incentive mechanisms aimed at unlocking energy efficiency This approach could help to reduce the skills gap and accelerate understanding and enhanced investment in energy and carbon reduction technologies • • • • •
  8. 8. 25-in-5: Unlocking energy efficiency through smart regulation What will the BRC do to help retailers? 6 The BRC will help retailers of all sizes reduce energy consumption from within their business, saving them costs and helping them to make their contribution to improving energy security and our environment. The BRC will provide retailers with a package of information and toolkits that will help them achieve a 25 per cent increase in energy efficiency within their operations. As part of the 25 in 5 vision the BRC pledges to Provide an online energy hub for energy efficiency advice for retailers of all sizes to help them reduce their energy consumption and to provide sharing of best practice and experience in retail energy efficiency Outline the business case for energy efficiency within the retail industry, enabling the wider industry to understand the opportunities for cost reduction through energy efficiency and the impact on their business of future energy costs increases Provide toolkits and guidance sourced from leading retailers in energy efficiency that will enable the wider industry to understand their energy consumption and make their first steps in managing their energy consumption and associated energy costs Develop a suite of clear and easy to understand case studies that demonstrate low cost and often revenue neutral approaches to energy efficiency within retail operations Highlight the key technologies on the pathway to reducing energy consumption and building resilience to increasing energy prices • • • • •
  9. 9. 25-in-5: Unlocking energy efficiency through smart regulation https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/277021/20140204_2012_UK_Greenhouse_Gas_Emissions_ Final_Figures.pdf https://www.gov.uk/government/publications/updated-energy-and-emissions-projections-2014 1. 2. Working together to tackle the energy trilema 7 We share the government’s objectives in climate mitigation and energy security and believe there are significant benefits in adopting a harmonised approach. To support this, we will continue to work with government to Raise awareness of the opportunities and benefits that exist in reducing energy consumption and spend through adopting effective energy efficiency approaches Work in collaboration with government on policy simplification and harmonisation to enable a greater level of accessibility to the wider sector and to ensure a stable and long term platform on which to deliver energy reduction Support smart regulation through the alignment of policy objectives and reporting protocols enabling more agile and cost effective compliance while also unlocking investment in energy efficiency Deliver a long term story for energy efficiency for the UK, supporting the development of an energy efficiency industry for the UK to enable growth in employment and the wider economy • • • • further information For further information, please contact: Andrew Bolitho Policy Advisor - Energy BRC andrew.bolitho@brc.org.uk or visit www.brc.org.uk/retail-energy
  10. 10. Energy in Retail Energy costs set to significantly increase by 2020 £3.3bn 77% of total energy consumed in 2013 Electricity accounted for Retail emmitted from energy use in 2013 - nearly a fifth of all UK carbon emissions 16MtCO2e A 25% reduction in energy across the retail industry could: by 2020 £ £4.1bn Avoid additional costs of Reduce emitted carbon by over 4MtCO2e Reduce energy consumption by 10,400GWh Ener gy costs in 2013 £3.3bn 2ndhighest energy consuming industry in the UK 43% of all electricity use is for lighting £4.4bn

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