23/9/03 Negotiated Agreements
Media Information 23rd Sept. 2003
New report shows negotiated agreements can help Irish industry reduce exposure to carbon tax while improving CO2 emissions
Negotiated Energy Agreements with industry in Ireland have the potential to reduce a company's exposure to carbon tax, and to achieve a reduction in CO2 emissions twice that achieved by a tax alone, thereby protecting the competitiveness of Irish industry. That is according to David Taylor, Chief Executive of Sustainable Energy Ireland, who was announcing details of a major new report today in Dublin.
The report produced by SEI highlights the results of an 18-month pilot study testing the application of negotiated agreements with industry in Ireland. Commenced in early 2002 and brought to a successful conclusion by mid-2003, the pilot programme involved the active participation of 26 companies.
Negotiated Agreements are agreements between an individual firm, or group of firms and the Government aiming to achieve substantial energy and emissions reductions “beyond business-asusual”.
The approach is based on firms committing to strong action and adopting best international practice in energy efficiency and reducing greenhouse gas emissions. Such agreements are already in place in a number of EU member states, including the UK, Netherlands and Denmark.
The energy sector contributes to over 60% of Ireland's greenhouse gas emissions, while industry now accounts for 25% of all energy related CO2 emissions. As a result, there is considerable potential for emissions reductions within the industrial sector through improved energy efficiency.
The Negotiated Energy Agreements pilot study developed and tested a framework of negotiated agreements suitable for conditions in Ireland. The aim of the programme was to develop agreements in a collaborative manner with the participating companies, to test these agreements for acceptability, and to explore their likely impacts, costs, efficiencies, and interactions with issues such as competitiveness.
-morePage
2 of 4
The National Climate Change Strategy proposes the introduction of a carbon / energy tax on all fossil fuels. In order both to maximise the emissions abatement benefit, and to mitigate the negative impact of such a tax on industrial competitiveness, negotiated agreements can play a vital role.
Among the key findings of the pilot programme are:
- Significant energy efficiency gains of between 5.4% and 17.1% achieved by participating companies. This equates to total potential reductions in industrial annual CO2 emissions of 640,000 tonnes. The results of the pilot study are in line with the higher end of what has been agreed in other agreements measures across Europe
- The total savings achieved by participating firms outweigh the total costs invested for project implementation Speaking about the pilot report, Mr. Taylor said, "As climate change becomes a more pressing environmental policy issue, Government is in the process of considering and implementing a range of measures, including the proposed introduction of a carbon tax in 2005, while remaining committed to adopting the most effective means to meeting our international commitments.
Considering the present and future needs of industry, it is vital to have recourse to a variety of approaches that allow firms the flexibility appropriate to making their full contribution to this goal, while minimising the cost and competitiveness impacts".
He continued, "The Negotiated Energy Agreements Pilot Programme has established the viability and potential efficacy of a negotiated agreements measure as part of a climate change policy for Ireland, achieving greenhouse gas abatement impacts significantly beyond those likely to arise from a tax alone. It can also protect competitiveness by offering a tax exemption structure for participating firms, and especially for energy intensive firms or firms with large energy costs. Based on its collaborative approach, firms also view the agreements as desirable, and are willing to commit to investments with much longer paybacks and costs per tonne of CO2 than a "business as usual" approach".
Going forward, based on an analysis of Irish industry, approximately 650 sites could potentially participate in negotiated agreements, representing over 40% of all energy use in the industrial sector. This would result in annual savings of 640,000 tonnes of CO2.
-morePage
3 of 4
Sustainable Energy Ireland was established on May 1st, 2002, as a statutory authority charged with promoting and assisting the development of sustainable energy and is funded by the Irish Government under the National Development Plan 2000-2006 with programmes part financed by the European Union.
-ends-
For further information please contact:
Diarmuid O'Neill
Edelman
01-6789333 / 087-6699933
Editors Notes:
About the Report
The Negotiated Energy Agreements report, produced by Sustainable Energy Ireland, sets out the findings of a special pilot programme with industry. It was commenced in early 2002 and was brought to a successful conclusion via a set of notional agreements by mid-2003. The report describes the results from the project, assesses these results and draws a series of lessons for the design of agreements for industry. It relies on international comparisons, where appropriate, to provide a comparative assessment of the efficiency and effectiveness of the agreements framework. Most importantly, it makes suggestions for use in developing a
national policy framework for negotiated energy agreements.
What was involved in the Pilot Programme?
Following selection of participants, energy auditing was carried out across all participating industrial sites and a recommended list of actions agreed to achieve the key outputs, including potential tax rebates. In order to conduct a set of negotiations in circumstances where no policy decisions have yet been taken with regard to the levels or structure of a carbon / energy tax, it was necessary to draw up a "notional" set of assumptions against which to negotiate, including a carbon taxation rate of €17.50 per tonne CO2 on all
energy streams, and a rebate or tax exemption of 80% of tax liability for compliance with the terms of the agreement.
The pilot study tested three different types/ strands of agreements:
1) single company agreements;
2) Collective Agreements (Pharmachem sector); and 3) Technology Agreements (Thermal Energy)
Acknowledgements
SEI gratefully acknowledges the contribution made to the project by the 26 participating companies.
Without this contribution, the pilot would not have been possible. SEI is also grateful to IBEC, IPCMF and all other bodies that contributed with advice, feedback and assistance at various points in the pilot.
List of participating companies
1 Individual Agreement
Aughinish Alumina Limerick
2 Collective Agreement
GlaxoSmithkline, Cork Ltd Currabinny, Carrigaline, Co. Cork
Cambrex Profarmaco Cork Ltd Little Island, Co. Cork
Janssen Little Island, Co Cork
Leo Laboratories Crumlin, Dublin 12
Micro-Bio (Ireland) Ltd Fermoy, Co. Cork
Novartis Ringaskiddy Ltd Ringaskiddy, Co. Cork
Pfizer Ireland Pharmaceuticals Little Island, Co. Cork
Pfizer Ireland Pharmaceuticals Loughbeg, Co. Cork
Servier Laboratories Arklow, Co. Wicklow
Wyeth Newbridge, Co. Kildare
3 Technology Agreement
Aer Rianta Dublin
Cadbury Coolock, Dublin
Dawn Meats Co Mayo
GE Superabrasives Dublin
Glanbia Ballyragget, Co Kilkenny
Green Isle Foods Naas, Co Kildare
Hewlett-Packard Leixlip, Co Kildare
Kepak Co Meath
Millipore Carrigtwohill, Co Cork
Smurfit Paper Mills Dublin
St James's Hospital Dublin
Transitions Optical Tuam, Co Galway
Tyco Healthcare Mulhuddart, Co Dublin
Unilever BestFoods Ireland Dublin
Yeast Products Dublin
