Carbon Management Energy Efficiency Report

Transcription

1 Customer Advice Line RESTRICTED COMMERCIAL Carbon Management Energy Efficiency Report Assessment Of Energy Saving Opportunities For Aneurin Bevan Health Board Carbon Management Revisited 2010 Prepared for Steve Britton Estates Information Manager Prepared by Tim Crozier-Cole & Mark Taylor Aneurin Bevan Health Board / Bwrdd Iechyd Aneurin Bevan Camco Mamhilad House Block A Mamhilad Park Estate PONTYPOOL Torfaen NP4 0YP Overmoor Neston Corsham Wiltshire SN13 9TZ Tel Steve.Britton@wales.nhs.uk Tel +44 (0) tim.crozier-cole@camcoglobal.com Account manager Lucy Hoggins Tel Lucy.Hoggins@CarbonTrust.co.uk Product ID PO Reference Country Date Version P PO Wales 12 January Final

2 CONTENTS EXECUTIVE SUMMARY... 4 BACKGROUND... 4 BASELINE CONSUMPTION AND EMISSIONS... 5 ABHB VISION FOR CARBON MANAGEMENT... 6 TARGET FOR ABHB... 6 HOW CAN THE 20% TARGET BE MET?... 8 HOW MUCH WILL IT COST?... 8 STRATEGIC THEMES & RECOMMENDATIONS INTRODUCTION PROJECT OBJECTIVES BACKGROUND DOCUMENT STRUCTURE CONTEXT AND DRIVERS CONTEXT EXTERNAL STAKEHOLDERS AND FACTORS PROGRESS FROM THE STARTING POSITION BASELINE CONSUMPTION AND EMISSIONS CONSUMPTION OVERVIEW CARBON EMISSIONS BASELINE SCOPE CARBON EMISSIONS BASELINE BUSINESS AS USUAL PROJECTION TARGETS & BUSINESS CASE ABHB VISION FOR CARBON MANAGEMENT ABHB ENERGY POLICY TARGET FOR ABHB FINANCIAL VALUE AT STAKE HOW CAN THE 20% TARGET BE MET? INDICATIVE COST OF ACHIEVING THE TARGET CARBON VALUE AT STAKE CARBON REDUCTION OPPORTUNITIES INVEST-TO-SAVE PROJECT OPPORTUNITIES THIRD PARTY-FUNDED PROJECT OPPORTUNITIES FURTHER EMISSION REDUCTION OPPORTUNITIES STRATEGIC THEMES & RECOMMENDATIONS LEADERSHIP, GOVERNANCE AND RESOURCES DATA MANAGEMENT AND REPORTING ENERGY AND EMISSION REDUCTION PLAN AWARENESS RAISING AND CULTURE CHANGE FUNDING AND FINANCE Page 2

3 7. APPENDICES COST AND EMISSIONS BASELINE DATA ENERGY PERFORMANCE CONTRACT (EPC) REVIEW PRIVATE FINANCE INITIATIVE REVIEW PROJECT OPPORTUNITIES FURTHER DETAILS PROJECT STEERING GROUP COMPOSITION WORKSHOP INFORMATION IMPORTANT NOTICE: Whilst reasonable steps have been taken to ensure that the information contained within this Carbon Management Plan is correct, you should be aware that the information contained within it may be incomplete, inaccurate or may have become out of date. Accordingly, Camco Advisory Services Ltd, the Carbon Trust, its agents, contractors and sub-contractors and the Government make no warranties or representations of any kind as to the content of this Carbon Management Plan or its accuracy and, to the maximum extent permitted by law, accept no liability whatsoever for the same including without limit, for direct, indirect or consequential loss, business interruption, loss of profits, production, contracts, goodwill or anticipated savings. Any person making use of this Carbon Management Plan does so at their own risk. Queen s Printer and Controller of HMSO. Any trademarks, service marks or logos used in this publication are the property of the Carbon Trust, and copyright is licensed to the Carbon Trust. Nothing in this publication shall be construed as granting any licence or right to use or reproduce any of the trademarks, service marks, logos, copyright or any proprietary information in any way without the Carbon Trust prior written permission. The Carbon Trust enforces infringements of its intellectual property rights to the full extent permitted by law. The Carbon Trust is a company limited by guarantee and registered in England and Wales under Company Number with its Registered Office at: 6 th Floor, 5 New Street Square, London, EC4A 3BF Page 3

4 EXECUTIVE SUMMARY This Carbon Management Plan has been produced by Camco for Aneurin Bevan Health Board (ABHB) with the support of the Carbon Trust in Wales. The objective of the Carbon Management Revisited Project was to review and refresh current carbon management practices at Aneurin Bevan Health Board (ABHB). Background When working in partnership with the Carbon Trust, in 2003 Gwent Healthcare Trust (GHT) embarked on a strategic carbon reduction project resulting in a comprehensive report and recommendations for GHT and the Health Estate in Wales. In partnership with the Carbon Trust, the newly formed Aneurin Bevan Health Board decided to review their original 2003 Carbon Management Plan and refresh their carbon policy whilst examining how overall carbon management in their organisation could be made more effective. Camco was selected to lead the project on behalf of ABHB and the Carbon Trust. The project ran from August to December ABHB Drivers for carbon management ABHB faces a number of drivers to reduce carbon emissions and energy consumption. Financial drivers. ABHB is currently facing substantial finance pressures and there is a need to contain energy costs. ABHB currently spends over 7.5m a year on utilities and transport fuel. The energy bill has more than doubled since 2002 as result of rising energy prices and steadily increasing energy consumption. Although a relatively small part of the Board s overall spend, it is very much a controllable spend. Further analysis of costs is shown below. Regulatory drivers, including the UK The Climate Change Act, the Welsh Assembly Government s 3% annual reduction target in greenhouse gas emissions, the Carbon Reduction Commitment Energy Efficiency Scheme (CRC), increasingly stringent Building Regulations and Display Energy Certificates. Linkages with the public health. These linkages exist at all levels, from within ABHB through to global public health challenges. ABHB has recently signed the Welsh Assembly Government s Sustainability Charter which pledges to link the central organising principle of ABHB to the pursuit of the long-term wellbeing of people and communities in Wales 1. ABHB is also a member of the Monmouthshire Local Service Board which has climate change as one of its priority areas for collaborative work. Reputational drivers. The public and the business community now accept the need to reduce carbon emissions, and indeed to drive wider efficiencies in the public sector. 1 See Page 4

5 Baseline consumption and emissions ABHB consumes approximately 154 GWh of energy per annum (based on 2009/10 figures), costing a total of 6.4m/yr. Water consumption adds a further 1.1m/yr to the utilities bill, bringing to total to cost of utilities and transport fuel to 7.5m/yr. Water cu.m, 1,090,282, 15% Fleet transport, 457,813, 6% Oil, 151,904, 2% Laundry - electricity, 55,563, 1% Laundry - gas, 253,174, 3% Electricity (excl. laundry), 2,889,815, 38% Gas (excl. laundry), 2,611,173, 35% Figure 1: Break down of 2009/10 utility and transport costs ABHB s carbon footprint in 2009/10 was 39,500tCO 2 /yr. This is equivalent to annual emission of approximately 7,000 houses and equates to 3.3tCO 2 /yr for each member of staff. Achievement of the UK Climate change Act will require UK per capita emissions (i.e. for an individual s entire lifestyle) to fall from the current 10tCO 2 /yr/person to approximately 6tCO 2 /yr by 2020 and 2tCO 2 /yr by Fleet transport, 959, 2% Oil, 1,394, 4% Water cu.m, 110, 0% Laundry - electricity, 288, 1% Laundry - gas, 1,991, 5% Electricity (excl. laundry), 15,602, 39% Gas (excl. laundry), 19,220, 49% Figure 2: Breakdown of 2009/10 carbon emissions by source (tco 2 /yr) Page 5

6 Carbon emissions are normally categorised into three scopes: scope 1 for emissions from direct fossil fuel consumption, scope 2 for electricity consumption and scope 3 for emissions from procured products and services 2. The revision of the 2003 strategy is focused on scope 1 and 2 emissions only. Supply chain emissions are likely to add a further 60,000tCO 2 /yr to bringing ABHB s total (scopes 1, 2 and 3) footprint to approximately 100,000tCO 2 /yr. This is based on a NHS Sustainable Development Unit calculation that 59% of the NHS in England s emission results from its supply chain. ABHB vision for carbon management A clear, well-communicated vision statement concerning energy and carbon would be a helpful hook for awareness raising and for providing clarity of the purpose of the strategy. A vision statement was suggested in the original 2003 strategy; to our knowledge such a statement was not adopted by Gwent Healthcare Trust and similarly there is not yet one for ABHB. A vision statement for the Carbon Management revisited strategy could be: To be a leader in energy efficiency and carbon reduction within the NHS in Wales and within the community that we serve Energy Policy The Gwent Healthcare Trust adopted a formal energy policy for the period 2007 to This has now expired. We recommend that the scope of the revised ABHB energy policy document is confined to a statement of policy to be formally endorsed by the executive board and communicated to all staff. Detailed recommendations for its replacement are contained in Section 4.2. Target for ABHB The Gwent Healthcare Trust targets expired in March 2010 and further targets have not been set by Welsh Health Estates. The WAG 3% annual Greenhouse Gas emission reduction target is currently the main external target to which ABHB should respond. Based on the analysis in this report, we recommend that ABHB adopt an internal aspirational target as follows: A 20% reduction in carbon emissions by 2014/15 against a 2009/10 baseline. The scope of target is scope 1 and 2 emissions plus the emissions from water i.e. the direct use of fossil fuels, electricity and water for buildings, fleet transport and business travel, but excluding commuting and supply chain emissions. As an option, ABHB could consider adopting a lower (e.g. 15%) target for external communication whilst maintaining the 20% internal target. This would reduce the risk of failing to meeting a publically-stated target whilst maintaining an ambitious target to drive progress. 2 See the Greenhouse Gas Protocol (GHG Protocol) at Page 6

7 Value at stake A business as usual (BAU) scenario has been created in order to estimate the future costs and emissions up to 2014/15 based on current trends and plans. Similarly, a target scenario is proposed based on the assumption of a 20% reduction in energy consumption against a 2009/10 baseline as per the proposed five year target for ABHB, if achieved solely through energy efficiency. The value at stake is the difference between the energy costs of the business as usual scenario and those of a target scenario. Compared to the BAU scenario, achievement of a 20% reduction in utility and transport consumption would result in: A 600k reduction on 2009/10 utilities and transport bill, including the impact of the CRC 1.9m/yr savings in year 5 relative to the BAU scenario 6m cumulative savings over the 5 years. The projected scenarios are shown in Figure 3 below. The slight rise in 2014/15 is due to the introduction of Carbon Reduction Commitment related costs. 10,000,000 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000, / / / / / /15 Year Actual cost BAU cost Target cost Figure 3: Comparison of Business As Usual and Target Scenarios (financial) Page 7

8 Tonnes CO2 How can the 20% target be met? An extensive list of carbon reduction opportunities has been compiled during the preparation of this strategy. The opportunities have been obtained from ABHB Works and Estates current list of project opportunities supplemented by further opportunities identified during site visits carried out by Camco. Details are presented in Sections 5 and 7.4. Figure 4 below shows the BAU and target scenario compared to the aggregate reduction achieved by all quantified project opportunities listed in Section 5.1 (invest-to-save projects opportunities) and 5.2 (third party-funded projects). The aggregate emissions are labelled emissions in the chosen plan. It assumes that all projects are implemented in and that the savings are obtained from the following year onwards. The identified invest-to-save projects total almost 3,000tCO 2 /yr carbon reduction, equivalent to 8% reduction of ABHB s current baseline. The two third-party funded projects 3MWe of solar electricity generation and trigeneration at Royal Gwent Hospital - are estimated to yield a further 3,400tCO 2 /yr, 9% reduction of ABHB s current baseline. The total carbon savings of the quantified projects is 6,400tCO 2 /yr, which is approximately 900tCO 2 /yr short of the reduction required by This shortfall should be easily made up by the extensive list of further unquantified projects listed in Section ,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5, Year Predicted Business as Usual Emissions Target Emissions Emissions in chosen plan Figure 4: Carbon progress against target How much will it cost? The aggregate capital cost of the invest-to-save projects to achieve an 8% reduction on the 2009/10 baseline is approximately 900k yielding ongoing cost savings of 500k a year. This represents a practical first package of reduction projects. Page 8

9 The list of unquantified projects in Section 5.3 are likely to have similar investment cases. By simple extrapolation, this suggests that meeting the 20% target will require about 2.25m of investment. However, we would expect that beyond a certain point, perhaps between 10% and 20% carbon reduction, the cost of carbon reduction per tonne will tend to increase as the best and most obvious projects are already implemented. The 2.25m estimate may therefore be an underestimate and there is likely to be a role for the more capital intensive Third party finance projects listed in Section 5.3. These projects yield carbon savings, but it is assumed that a share of the financial savings would be used to pay off capital effectively borrowed from the private sector. Strategic themes & recommendations The ABHB carbon management strategy is organised in to five themes as follows: Theme 1: Leadership, governance and resources Theme 2: Data management and reporting Theme 3: Energy and emission reduction plan Theme 4: Awareness raising and culture change Theme 5: Funding and finance Each theme contains as a series of recommendations, supported by its rationale, who should lead it, the suggested timing and its priority. Priority 1 and 2 recommendations are those that we consider to be vital to the success of the strategy in the near term. There is a degree of sequential logic priority 1 and 2 recommendations need to be implemented before many of the longer-term, priority 3, 4 and 5 recommendations can go ahead. The recommendations in Theme 1 Leadership, governance and resources strengthen and reinvigorate the organisational aspects of carbon management within ABHB. They formalise some of the roles already in place and ensure that staff have the mandate and resources they need to implement the strategy. Theme 2, Data management and reporting, is an essential foundation for enhanced carbon management within ABHB. To build upon the considerable achievements to date, ABHB must put in place the infrastructure and processes to manage physical energy use at a higher level of resolution than is currently the case. This entails investing in automatic metering, sub-metering within sites, as well as the software to handle and analyse the data generated. The automation of invoice validation through e-billing should free up staff resources to focus on identifying and implementing projects. Works and Estates already recognise this and some of these activities are already underway. Theme 3 Energy and emission reduction plan, focuses maintaining the pipeline of energy and carbon reduction projects to be taken forward for implementation as resources allow. ABHB already maintains a list of potential projects. This project list has been reviewed by Camco as part of developing this strategy and additional projects identified. The recommendations in this theme also seek to complete the essential feedback loop for effective project implementation: physical verification that savings are being made and sustained once equipment and initiatives are in place. This will be enabled by the actions in Theme 2 coupled with a more systematic approach to project monitoring and post project appraisal. Of particular importance is applying this rigour to all aspects of Energy Performance Contracts (EPC), which currently cover ABHB s two largest carbon emitters Nevill Hall and the Royal Gwent hospitals (see Section 7.2 for a further commentary of current Energy Performance Contracts). Page 9

10 Theme 4, Awareness raising and culture change, focuses on the people side of the strategy. This aspect is particularly important for ABHB with 12,000 staff across almost 100 sites. Our recommendations in this area are led by a strong theme that emerged from the stakeholder interviews and subsequent workshop to discuss the draft carbon management plan: staff need to take individual responsibility for the energy that they use; a highly centralised approach to energy management is not practical. Analogous with the implementation of a strong health and safety culture, carbon management needs to become a part of everyone s job, right across the organisation from porters to the board. The recommendations in this theme comprise creating a well structured communications plan, supported by the provision of relevant information on energy use and mechanisms to recognise achievement. Examples of good practice need to be celebrated and rolled out to other sites. Visible leadership from the top will be critical. The culture change campaign has to work with the particular drivers of the NHS i.e. patient care being the number one priority and the general public service ethos that motivates staff. The already established Local Energy Representatives (LER) network is also a key asset to the strategy in this area. In the longer term there is scope to expand the LER role into wider sustainability issues. Another excellent idea from the stakeholder workshop is to undertake a pilot project to create best in class examples of particular functions or areas (e.g. a typical ward) within ABHB as a benchmark for others to follow. Again monitoring infrastructure and processes is necessary for this, hence the importance of Theme 2 recommendations. Finally, Theme 5 covers funding and finance. Whilst some carbon reduction can be achieved through no and low cost measures, it is an inescapable fact that investment will be required to achieve the proposed target. The invest-to-save projects identified in this study amount to 900k with an average payback period of about two years and several projects have payback periods of under a year. With current budget constraints, it is clear that ABHB will have to be opportunistic and innovative in obtaining funding for projects. A list of quick payback projects should be maintained to use up any spare capital budgets. GHT/ABHB has already made good use of Energy Performance Contracts (EPCs) and there is further potential for this approach. The previous Central Energy Fund administered by Welsh Health Estates, from which GHT benefited 500k, is now closed. The SALIX interest-free loans are the nearest alternative and we strongly recommend that ABHB quickly appraises this option which a view of obtaining some of the 2.6m of funds to be allocated by SALIX by the end of March In the medium term there may be possibilities to share some financial savings with specific departments or sites. This would provide an additional driver for efficiency and support culture change in those areas. Again this will be enabled by the recommended energy monitoring and targeting systems. We recommend that approaches are piloted first, as some experimentation may be needed to create the best system Page 10

11 1. INTRODUCTION This Carbon Management Plan has been produced by Camco for Aneurin Bevan Health Board (ABHB) with the support of the Carbon Trust in Wales. 1.1 Project objectives The objective of the Carbon Management Revisited Project is to review and refresh current carbon management practices at Aneurin Bevan Health Board (ABHB). The Carbon Trust scope of works states that the project objectives are: a) Firstly, to support the client to review their current carbon reduction project list and identify any additional projects necessary to ensure it can meet or potentially exceed internal carbon reduction targets and contribute towards national targets. b) Secondly, to provide guidance on the key areas that will require updating in the ABHB Carbon Management Plan and assist the organisation in preparing and integrating updated energy targets and a carbon policy to reflect the new scope of the Health Board. 1.2 Background When working in partnership with the Carbon Trust, in 2003 Gwent Healthcare Trust (GHT) embarked on a strategic carbon reduction project resulting in a comprehensive report and recommendations for GHT and the Health Estate in Wales. In October 2009, Gwent Healthcare Trust was superseded by Aneurin Bevan Health Board as part of NHS reform in Wales which amalgamated 14 NHS trusts into seven health boards. In partnership with the Carbon Trust, the newly formed Aneurin Bevan Health Board decided to review their original 2003 Carbon Management Plan and refresh their carbon policy whilst examining how overall carbon management in their organisation could be made more effective. Camco was selected to lead the project on behalf of ABHB and the Carbon Trust. The project ran from August to December Document structure The main body of this document is structured as follows: Section 2 sets out the context and drivers for the revised carbon management plan. Observations are also made about ABHB current position as the starting point for the revision. Section 3 presents the business case for action in financial and carbon reduction terms. This includes the carbon baseline and value at stake calculation, i.e. how much money could be saved through energy reduction. Section 4 sets out the proposed vision and targets for next 5 years. Section 5 is the heart of the plan and contains the recommendation actions organised into five themes as follows: Page 11

12 Theme 1: Leadership, governance and resources. Theme 2: Data management and reporting Theme 3: Energy and emission reduction plan Theme 4: Awareness raising and culture change Theme 5: Funding and finance The appendices provide further detail and supplementary information, covering a review of Energy Performance Contracts, Private Finance Initiative sites, details of identified projects and stakeholders involved in the creation of this Carbon Management Plan. Page 12

13 2. CONTEXT AND DRIVERS 2.1 Context ABHB faces a number of drivers to reduce carbon emissions and energy consumption. Broadly these can be split into four main areas: Financial drivers. ABHB is currently facing substantial finance pressures and there is a need to contain energy costs. Aneurin Bevan Health Board currently spends over 7.5m a year on utilities and transport fuel. The energy bill has more than doubled since 2002 as result of rising energy prices and steadily increasing energy consumption. Although a relatively small part of the Board s overall spend, it is very much a controllable spend. Further analysis of the financial case for action is shown in Section 3. Regulatory drivers. The Climate Change Act has set a target for the UK to reduce carbon emissions by 80% by 2050, and by 34% by In Wales, the Welsh Assembly Government has set a target for a 3% annual reduction in greenhouse gases from These targets are now filtering down to organisations of all sizes through various regulatory instruments such as the Carbon Reduction Commitment Energy Efficiency Scheme (CRC) and increasingly stringent Building Regulations affecting new and refurbished buildings. In addition, European legislation passed in July 2010 requires Display Energy Certificates for more buildings with the threshold being reduced down from the current 1,000m 2 to 500m 2 in 2013 and 250m 2 in Linkages with the public health. These linkages exist at all levels, from within ABHB through to global public health challenges. At an organisational level, energy management is integral to providing healthy and comfortable conditions for patients and staff. At a local level, carbon management links in with public health through promoting active lifestyles and providing leadership within the local community. ABHB has recently signed the Welsh Assembly Government s Sustainability Charter which pledges to links the central organising principle of ABHB to the pursuit of the long-term wellbeing of people and communities in Wales 3. ABHB is also a member of the Monmouthshire Local Service Board which has climate change as one of its priority areas for collaborative work with other local public sector organisations. At the global level, the ABHB s carbon management contributes to combating climate change and its severe effects felt by populations across the globe. Reputational drivers. The public and the business community now accept the need to reduce carbon emissions, and indeed to drive wider efficiencies in the public sector. 2.2 External stakeholders and factors Welsh Health Estates Welsh Health Estates (WHE) is an all-wales NHS organisation committed to promoting and facilitating the delivery of high standards in patient care in Wales through the built environment. Its stated mission is to champion modern and sustainable healthcare environments. WHE administered a Central Energy Fund which provided approximately 4.6m for energy saving projects to the then 14 NHS Trusts across Wales from 2004 to WHE sought funding from the Welsh Assembly Government for a further round of the Central Energy Fund in 2010, but we understand that this application was unsuccessful.. 3 See Page 13

14 Alongside this initiative, WHE set an overall target of a 15% reduction in primary energy consumption across the NHS Trusts by 2009/10 on base year (or an equivalent reduction in carbon dioxide emissions). Energy performance indicators for buildings were also set normalised by heated volume. The targets were GJ/100m 3 of heated space for new buildings and GJ/100m 3 for existing buildings. The time period for these targets has now expired and they have not yet been renewed. The latest monitoring report indicates that the 15% target will be missed by a wide margin by all trusts/health boards. The most recent edition of WHE s Estates and Facilities Performance Management System (EFPMS) report for reports that primary energy consumption for the sector grew by 2.2% against the baseline 4. All trusts met the normalised GJ/100m 3 performance indicators, but have reported a greater heated volume (12% increase over the base year). Similarly, trusts report increased demand for electricity intensive clinical services such as diagnostic imaging. Monmouthshire Local Service Board (LSB) The Monmouthshire LSB has set climate change as one of its priorities. The LSB has only recently been formed and thus to date this has yet to cascade down to any particular actions with ABHB. However the LSB has signed up to the 10:10 Campaign which pledges that all member organisations will target a 10% reduction in carbon reductions over the period of one year starting in The Carbon Reduction Commitment The CRC Energy Efficiency Scheme was initially proposed as a cap and trade carbon reduction scheme for the largest UK based energy users, not already covered by the European Emissions Trading Scheme. Organisations that fall under the scheme will need to monitor their emissions and purchase allowances to emit carbon dioxide. It was originally designed to reward those organisations that could show they were becoming more efficient through the use of a league table and recycling of all funds with financial rewards and penalties for relevant performance. The scheme commenced in April of 2010 but has now been reviewed by the new government who have decided to remove the recycling element which has turned the CRC into the equivalent of a new energy tax. The NHS in Wales is due to participate in Phase 2 of the scheme which commences in April of Under current proposals this would see ABHB having to purchase emission permits for stationary emission sources. The price of permits is mooted to be 12/tCO 2 which would amount to an estimated cost to ABHB of 460k a year. However, the final form of the CRC scheme is still unclear and there is a possibility that the Welsh Assembly Government will implement a Welsh version of the scheme which may retain the recycling element. 2.3 Progress from Gwent Healthcare Trust / ABHB has been very active as regards energy and carbon management since the creation of the original strategy in Highlights include: Adoption of an Energy Policy Investment of 500k in energy efficiency projects with grant funding from the Central Energy Fund New or reinstated Combined Heat and Power (CHP) units with contract energy management Establishment of the Local Energy Representatives network 4 The NHS Estate in Wales, Estate Condition and Performance Report 2008/9, Welsh Health Estates, Page 14

15 Creation of the Energy and Environmental website Introduction of software for invoice validation Gwent Healthcare Trust s performance against WHE energy performance targets during this period is shown in the table below. The results mirror that of the NHS in Wales as a whole - the primary energy target was missed by a wide margin, but the normalised performance target by heated space was met. Welsh Health Estates targets % reduction in primary energy consumption against average base year. Outcome Not achieved. 4% increase in energy consumption. Achieved GJ per 100 cubic metres of heated space for new buildings GJ per 100 cubic metres for existing buildings. Achieved Table 1: Gwent Healthcare Trust performance against WHE energy targets The starting position 2010 Site visits where conducted during October and November 2010, including six interviews with stakeholders across the Health Board. A summary of the Camco s perceptions on ABHB s starting position for the revision of the carbon management plan are shown in Table 2 below. Carbon Management Area Policy and targets Responsibility Reduction projects General awareness and attitude towards Camco perception The current energy policy expired in December 2010 The 15% primary energy / carbon reduction target also expired at the end of 2010, so ABHB now needs to refresh its own the target. The WAG 3% target is the most relevant national target to take into account. Carbon and energy management is inherent within ABHB s ISO14001 environmental management system The energy budget is held by ABHB Works and Estates department. In general, devolution of the financial energy budgets to sites or specific activities is complex and is not favoured. This creates an inherent disconnect between those that use energy and those that pay for it. The current Energy Manager is due to retire in early 2011 and replacement is as yet unconfirmed. Board sponsor for Carbon Management was appointed in early 2010, but she does not have line management responsibility for energy manager or energy budget holders 500k+ investment in energy efficiency projects over the last seven years. Still scope for optimisation of kit in use and for further projects. Patient care is the number one driver for staff. Some excellent examples of good energy housekeeping but site- Page 15

16 Carbon Management Area energy and carbon Data management Communication and training Finance and investment Procurement Camco perception dependent rather than standard practice across ABHB. General staff attitude - energy/carbon is generally seen as Works and Estates issue, particularly on the large sites where responsibility is unclear. Billing software system in place (TEAM), scope to introduce physical monitoring and targeting. Manual data input, scope for automation. Local Energy Representative network in place, but the role is voluntary and is not formally integrated into individuals duties. Lack of visual communication / leadership from senior management on energy issues, e.g. no mention of 10:10 campaign or WAG 3% target. ABHB currently faces a budget deficit. No specific fund for carbon / reduction projects PFI & EPC some disconnect between operation and who pays the bills. With the exception of Combined Heat and Power (CHP), estimated rather than verified savings. Procurement has yet to be focused on from a carbon perspective. Table 2: Perceptions of the starting position for revised Carbon Management Strategy Page 16

17 3. BASELINE CONSUMPTION AND EMISSIONS 3.1 Consumption Overview ABHB consumes approximately 154GWh energy per annum (based on 2009/10 figures), costing a total of 6.4m/yr. Water consumption adds a further 1.1m/yr to the utilities bill, bringing to total to cost of utilities and transport fuel to 7.5m. This is broken down in Table 3 below: Utility Energy Consumption Cost kwh/year % /year % Electricity 29,210,824 19% 2,945,378 39% Gas 115,279,636 75% 2,864,347 38% Oil 5,239,903 3% 151,904 2% Coal % Other 3,995,460 3% 457,813 6% Total Energy Water and effluent Total utilities and transport 153,725, % 6,419,442 85% 410,541m 3 /yr - 1,090,282 15% - 7,509, % Table 3: Breakdown of ABHB energy and utility consumption and costs, data The average unit cost for electricity and gas is currently 10.1p/kWh and 2.5p/kWh respectively including VAT and standing charges. These values are used in all energy cost calculations in this report. The gas and electricity costs above also include the Climate Change Levy and are in terms of delivered energy. Figure 5 below shows the breakdown of costs by end use. Page 17

18 Water cu.m, 1,090,282, 15% Fleet transport, 457,813, 6% Oil, 151,904, 2% Laundry - electricity, 55,563, 1% Laundry - gas, 253,174, 3% Electricity (excl. laundry), 2,889,815, 38% Gas (excl. laundry), 2,611,173, 35% Figure 5: Breakdown of 2009/10 utility and transport costs 3.2 Carbon emissions baseline scope ABHB s carbon emissions have been calculated from the utility and transport data. In carbon accounting terms, the emissions assessment scope comprises WBCSD 5 scopes 1 and 2 factors plus water: ` Natural gas, oil, transport fuels (scope 1) Grid electricity & water (scope 2) Water (scope 3) No data was available on other scope 3 (supply chain emissions) however an estimate is made below extrapolating data from the NHS in England. 3.3 Carbon emissions baseline ABHB s carbon footprint in 2009/10 was 39,500tCO 2 /yr. This is equivalent to annual emission of approximately 7,000 houses and equates to 3.3tCO 2 /yr for each member of staff. Achievement of the UK Climate change Act will require UK per capita emissions (i.e. for an individual s entire lifestyle) to fall from the current 10tCO 2 /yr/person to approximately 6tCO 2 /yr by 2020 and 2tCO 2 /yr by Figure 6 below shows the resulting breakdown of carbon emissions associated with the utility and transport fuel consumption. Stationary sources (gas, electricity and oil use) make up over 97% of the carbon footprint. This means that, within the scope of ABHB s direct emissions (i.e. scope 1 and 2), carbon management is virtually synonymous with energy management. Note that water consumption makes up 15% of the costs, but less than 1% of ABHBs carbon footprint. 5 The World Business Council for Sustainable Development, who along with the World Resources Institute maintain an standard protocol for greenhouse gas emissions reporting see: Page 18

19 Fleet transport, 959, 2% Oil, 1,394, 4% Water cu.m, 110, 0% Laundry - electricity, 288, 1% Laundry - gas, 1,991, 5% Electricity (excl. laundry), 15,602, 39% Gas (excl. laundry), 19,220, 49% Figure 6: Breakdown of 2009/10 carbon emissions by source (tco 2 /yr) Supply chain emissions are likely to add a further 60,000tCO 2 /yr to bringing ABHB s total (scopes 1, 2 and 3) footprint to approximately 100,000tCO 2 /yr. This is based on a NHS Sustainable Development Unit calculation that 59% of the NHS in England s emission results from its supply chain. This revision of the strategy is focused on scopes 1 and 2 emissions only. 3.4 Business as usual projection A business as usual (BAU) scenario has been created in order to estimate the future costs and emissions up to 2014/15 based on current trends and plans. The scenario extrapolates current consumption using the following assumptions and factors: Energy prices increase 1.7% a year in real terms, as per a June 2010 Department of Energy and Climate Change projection 6. ABHB energy demand increases 1.1% a year, which is a continuation of ABHB s energy consumption growth over recent years. The scheduled opening of the Ysbyty Aneurin Bevan (YAB) and Ysbyty Ystrad Fawr (YYF) hospitals plus the related closures of other sites. This leads to a 5% increase in energy costs in the short-term (2011/12), followed by a decrease of about 4% once the closures have taken effect. The introduction of the Carbon Reduction Commitment - Energy Efficiency scheme from April 2014 which is effectively a new energy tax. At a cost 12/tCO 2 this would cost approximately 460k/yr in the first year (2014/15). The BAU scenario does not include the impact of any new energy efficiency measures over the scenario period. 6 Department of Energy & Climate Change, Projections Advisory Group, June 2010 information, low scenario Page 19

20 The business as usual scenario is shown as the red line in Figure 87. Without intervention the annual utility and transport fuel cost is forecast to increase to 8.8m/yr by 2014/15. This is an increase of 1.3m/yr (17%) in real terms over the five year period. 10,000,000 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000, / / / / / /15 Year Actual cost BAU cost Figure 7: Current utility and transport costs and the business as usual projection Page 20

21 4. TARGETS & BUSINESS CASE 4.1 ABHB vision for carbon management A clear, well-communicated vision statement concerning energy and carbon would be a helpful hook for awareness raising and for providing clarity of the purpose of the strategy. A vision statement was suggested in the original 2003 strategy; to our knowledge such as statement was not adopted by Gwent Healthcare Trust and similarly there is not yet one for ABHB. A vision statement for the Carbon Management revisited strategy could be: To be a leader in energy efficiency and carbon reduction within the NHS in Wales and within the community that we serve 4.2 ABHB Energy Policy Gwent Healthcare Trust adopted a formal energy policy for the period 2007 to This previous policy document goes beyond a pure statement of policy and includes information on responsibilities, strategic objectives, energy consumption data and other background data. We recommend that the scope of the revised ABHB energy policy document is confined to a statement of policy. This aligns with the general principle of the policy statement to primarily provide substance to the vision statement and set out ABHB s position as regards energy and climate change. It should be formally endorsed by the executive board and communicated to all staff. The policy document needs to be brief and written in plain language for a non-technical audience. A test of this for this would be for the energy policy to be presentable on a single poster or leaflet, alongside the target and vision statement. It should avoid including information that needs regular updating, such as consumption data which should be communicated by other means, or specialised information aimed at a technical audience. The additional elements of the previous policy should sit within other documents and processes, such as staff role descriptions, strategy and implementation plans, programme reporting and other communications. The integration of these elements into the day-to-day functions and procedures of ABHB are, in their own right, an important part of embedding carbon management within ABHB. Many of the policy statements in the Energy Policy and those suggested in the 2003 GHT Energy Efficiency Strategy are still relevant. A suggest update is shown in Box 1. Page 21

22 Energy Policy - Aneurin Bevan Health Board: Recognises the need to take action on the causes and effects of climate change. Is committed to matching or exceeding the Welsh Assembly Governments 3% per annum reduction in greenhouse gas emissions from Will prepare and maintain an energy and carbon emissions reduction plan. Will promote a culture of energy awareness and individual responsibility throughout the organisation. Will ensure that all staff receive an appropriate level of training and information in order to support its energy policy aims. Maintain a reporting system that ensures that all staff receive or can access relevant information about the energy use in their area. Maintain energy monitoring & targeting system in order to identify energy wastage, verify energy reduction projects, verify utility bills and provide consumption forecasts for budgeting. When working with EPC contractors, ABHB will physically verify that expected energy savings are being realised, ensure that contactors are incentivised to minimise ABHB s cost and carbon emissions and regularly review contractual arrangements. Will take a strategic approach to energy by integrating its energy efficiency objectives within the estate strategy. Will include energy efficiency considerations and adopt best practice when procuring buildings, equipment or services which have a direct or indirect impact on energy use. Will adopt best practice design, construction and commissioning standards in all new build and refurbishment construction projects to maximise energy, health and comfort benefits. Will adopt a life-cycle costing approach to the assessment of capital purchase and building design options, so that the benefits of those options with lower energy running costs can be fully realised in the analysis Will consistently maintain a comfortable environment for users of all premises in accordance with Department of Health Guidance for Healthcare Buildings. This shall be done without use of supplementary portable heaters or air conditioning, unless authorised by the Estates Department. Requests shall be evaluated using a standardised, formal and transparent process. Box 1: Suggested ABHB Energy Policy statement 4.3 Target for ABHB As noted in Section 2, the Gwent Healthcare Trust targets expired in March 2010 and further targets have not been set by WHE. The WAG 3% annual Greenhouse Gas emission reduction target is currently the main external target to which ABHB should respond. A reasonable expectation would be for ABHB s target to at least match the WAG target over the next five years, which would equate to a 14.1% reduction. Page 22

23 Our analysis of the ABHB projected business as usual emissions and emissions reduction opportunities listed in Section 4 indicated that a reduction of 20% against a 2009/10 base year is achievable. Based on the above, we recommend that an internal target is adopted as follows: A 20% reduction in carbon emissions by 2014/15 against at 2009/10 baseline. The scope of target is scopes 1 and 2 emissions plus the emissions from water i.e. the direct use of fossil fuels, electricity and water for buildings, fleet transport and business travel, but excluding commuting and supply chain emissions. As an option, ABHB could consider adopting a lower e.g. 15% target for external communication whilst maintaining the 20% internal target. This would reduce the risk of failing to meeting a publicallystated target whilst maintaining an ambitious target to drive progress. 4.4 Financial value at stake The value at stake is the difference between the energy costs of the business as usual scenario and those of a target scenario. The target scenario assumes a 20% reduction in energy consumption against a 2009/10 baseline as per the proposed five year target for ABHB, if achieved solely through energy efficiency. All other assumptions remain the same. As at least some of the carbon target shall be met by switching from gas to biomass fuel, this estimate represents the upper level of savings to be expected. This scenario is denoted by the blue line in Figure 8 below. The slight rise in 2014/15 is due to the introduction of Carbon Reduction Commitment related costs. 10,000,000 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000, / / / / / /15 Year Actual cost BAU cost Target cost Figure 8: Comparison of Business As Usual and Target Scenarios (financial) Page 23

24 Water, 302,715 CRC cost, 84,640 Transport, 128,014 Stationary sources, 1,396,056 Figure 9: Breakdown of the 1.9m financial value at stake in year 5 (2014/15) Compared to the BAU scenario, achievement of a 20% reduction in utility and transport consumption would result in: A 600k reduction on the 2009/10 utilities and transport bill, including the impact of the CRC 1.9m/yr savings in year 5 relative to the BAU scenario 6m cumulative savings over the 5 years 4.5 How can the 20% target be met? Figure 10 below shows the BAU and target scenario compared to the aggregate reduction achieved by all quantified project opportunities listed in Section 5.1 (invest-tosave projects opportunities) and Section 5.2 (third party-funded projects). The aggregate emissions are labelled emissions in the chosen plan. It assumes that all projects are implemented in and that the savings are obtained from the following year onwards. The identified invest-to-save projects total almost 3,000tCO 2 /yr carbon reduction, equivalent to 8% reduction of ABHB s current baseline. The two third-party funded projects 3MWe of solar electricity generation and trigeneration at Royal Gwent Hospital - are estimated to yield a further 3,400tCO 2 /yr, 9% reduction of ABHB s current baseline. The total carbon savings of the quantified projects is 6,400tCO 2 /yr, which is approximately 900tCO 2 /yr short of the reduction required by This shortfall should be easily made up by the extensive list of further unquantified projects listed in Section 5.3. Page 24

25 Tonnes CO2 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5, Figure 10: Carbon progress against target Year Predicted Business as Usual Emissions Target Emissions Emissions in chosen plan 4.6 Indicative cost of achieving the target Figure 11 and Table 4 show the aggregate capital cost and resulting savings of the invest-to-save project opportunities listed in Section 5.1 to achieve 8% saving on the 2009/10 baseline. The total investment cost is approximately 900k yielding ongoing cost savings of 500k a year. This represents a practical first package of reduction projects. The list of unquantified projects in Section 5.3 are likely to have similar investment cases. By simple extrapolation, this suggests that meeting the 20% target will require about 2.25m of investment. However, we would expect that beyond a certain point, perhaps between 10% and 20% carbon reduction, the cost of carbon reduction per tonne will tend to increase as the best and most obvious projects are already implemented. The 2.25m estimate may therefore be an underestimate and there is likely to be a role for the more capital intensive Third party finance projects listed in Section 5.3. These projects yield carbon savings, but it is assumed that a share of the financial savings would be used to pay off capital borrowed from the private sector. Page 25

26 Financial progress 800, , , , , , , , Total Capex for year Total Opex for Year Total Gross savings for Year Total Cash Flow for Year Figure 11: Indicative cash flows of implemented projects (excluding solar PV electricity generation and trigeneration projects) Discounted Costs Total annual capital cost Total annual revenue cost , , ,200 51,200 51,200 51,200 Total costs 0 208, ,200 51,200 51,200 51,200 Annual gross cost saving Net cost saving Annual CO 2 saving , , , , , , , , , ,635 2,996 2,996 2,996 Table 4: Summary costs and savings of identified invest to-save projects to achieve 8% reduction (excluding estate-wide solar PV and trigeneration and Royal Gwent Hospital) 4.7 Carbon value at stake Figure 12 shows the carbon emissions associated with the business and usual and target scenarios. Emissions remain approximately level under the BAU scenario, decreasing due to the closure of various sites and the use of biomass heating in the new hospitals Page 26

27 Carbon emissions (kgco2) up to 2012/13, but rising again thereafter due to the assumption of a continuation of historical energy consumption trends across the ABHB estate. The 20% reduction scenario would result in carbon emissions declining by 8,700tCO 2 /yr to 32,000tCO 2 /yr by year 5 and yield a cumulative carbon saving of 26,000tCO 2 over the five years. WAG s target of a 3% reduction in Wales emissions year on year from 2011 is shown in comparison. Over five years, WAGs annual 3% target would equate to a 14% reduction. 45,000,000 40,000,000 35,000,000 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,000, / / / / / /15 Year Actual emissions BAU emissions Target WAG 3% target Figure 12: Comparison of BAU and target scenarios (carbon emissions) Page 27