UKETS - how to get out if you’re in
Being within the UKETS (previously EUETS) can be a significant cost to businesses. Whilst we don’t yet know what the UKETS carbon price will be, if it is similar to EU carbon prices every 10,000 tonnes emitted will currently cost businesses c. £400,000 p.a. But if you are ‘in’ it doesn’t automatically mean that you can never get ‘out’. Sometimes, relatively simple changes are all that is required to reduce your costs by a substantial amount. Read on to find out more.
Many businesses were first caught in the EUETS net when it launched back in 2005. In many cases the free allocation of allowances and low carbon prices meant that there was a begrudging acceptance of ‘just more paperwork’. Fast forward to 2021 and it’s a very different story:
Following Brexit we now have the UKETS
With the same qualifying criteria are the same as EUETS
At the time of writing this we don’t really know what UK carbon is going to cost
We do know it will be at least £22/t
There is a consensus / expectation that it will be similar to EU carbon which is currently c. 40 Euro/t.
With so many years having passed many businesses view the cost of UKETS as an unavoidable carbon tax begrudgingly paid almost without question. But it doesn’t have to be like this in every case.
UKETS in/out criteria
The key ‘in’ threshold is if you have combustion plant that has a combined fuel input >20MW. But not all plant has to be included in the 20MW total; for example:
Plant with <3MW fuel input
Plant such as back up boilers with appropriate interlocks in place.
Do you really need 20MW?
It can also be worth asking yourself:
Can the peak demand for heat, steam electricity etc. be smoothed out using energy storage?
Does the extra capacity that being >20MW gives you make you more money than the UKETS will cost you?
What about renewable fuels?
Even though schemes like the Renewable Heat Incentive (RHI) are closing it is worth noting that the combustion of renewable fuels such as biomass does not count towards the 20MW threshold. So there could be significant value in UKETS savings with/without the RHI.
An example
I worked on a project that had 40MW (yes double the threshold) of combustion plant and was in EUETS. They had:
3 large boilers
2 CHP.
The boilers were installed long before the CHP, they were sized for peak heat demand with a comfortable safety factor. They had significant heat storage and had invested heavily in energy efficiency measures. A review of the need for an EUETS permit included:
Heat demand study to identify peak demand, how it could be managed and the impact (if any) of limited supply
Possible equipment failure / availability issues
Combinations of interlocks and changes to burner capacities that would keep the site below 20MW.
The solution was to:
Decommission one boiler
Replace the burners on the other 2 boilers with slightly smaller ones
Install interlocks.
Evidence as required by the Environment Agency was collated and the EUETS permit was surrendered. Whilst the cost of the changes required was not insignificant the savings paid for them within 6 months.
If you would like to explore if you really do have to be in the UKETS get in touch for a down to earth, no nonsense chat.
