Climate Change Agreements

Finishing Group Sector

th 7 December 2023

Climate Change Agreements Matt Grudgings

Introduction

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Energy Market update Non-Commodity costs Climate Change agreements Min Met Exemptions Q&A

Current

Current Energy Markets?

Energy Drivers Fundamentals remain strong Sentiment on Gaza conflict is reducing Storage in EU/UK is very good (EU 98%, UK 99%) LNG deliveries are strong COP 28 is encouraging

Future

Forward Curve 2023-2027-Wholesale markets

Non Comm Costs

Non Commodity Costs

Background

What is a Climate Change Agreement? Ø CCA is a voluntary agreement between the site and the EA via a trade association. Ø Object is to agree a reducing energy/carbon target (every 2 years).In exchange for a reduction in the Climate Change Levy (CCL). Ø BCEL manage the CCA agreements , on behalf of ALFED and submit data for the end of target periods to the EA. Ø Energy and production data is required for a metric to be reported to the Trade Association Ø CCL and conversion factors change every year Ø Currently gas is 0.00672 & electricity is 0.00775/£kWh Ø Alternative schemes are available. Ø CCA’s have been extended to 31st March 2027 Ø See….https://www.gov.uk/guidance/climate-change-agreements--2

Mechanics of a CCA/Min Met Background Ø CCA’s operate in two-year target periods Ø They reduce the CCL element payable on gas by a maximum of 89%, and electricity by 92% Ø An alternative mechanism is the Mineralogical & Metallurgical exemptions (or Min Met). Ø Min Mets allow up to 100% exemption of CCL on eligible processes. Ø Exemptions include-production of aluminium from alumina, hot dipping (galvanising), electroplating & anodising of metals, heat treatment of metals Ø Similar process to CCA’s-PP10/11’s need submitting annually, on CCL rate change or supplier change. Ø Benefits-wider range of qualifying energy uses. Ø No Targets for reduction in target periods.

Thank you Questions?