Targets

New applicants are required to commit to biennial targets over 2006 to 2010. The chemical sector agreement is an "option 2" energy efficiency agreement whereby each company or site participant signs an individual (or "underlying") agreement with the secretary of state and CIABATA signs an overarching (or "umbrella") agreement for the sector as a whole. The underlying agreement carries the participant’s targets.

The target base year has generally been 1998, although a later year is possible - whatever the base year, consumption data must be sourced from meter readings. For sites with no base data eg. where there is new plant, it is possible to enter an interim agreement prior to specifying targets. Companies can opt for absolute energy, relative energy, absolute carbon, or relative carbon targets. Most targets are relative energy to allow for growth. The targets are determined "bottom-up" based on an assessment of the energy efficiency improvements that can be made in a cost effective way.

Relative targets are measured using the "NOVEM" methodology as defined for the UK chemical sector. NOVEM in the Netherlands developed an aggregate energy efficiency measure which incorporates a simple means of correcting for distortions introduced by changes in product mix. In a simple site measure, distortions can arise where energy intensities vary between product groups. The NOVEM methodology is also capable of handling target adjustment for unanticipated changes in product mix and output levels - a flexibility provided for in the agreements.

A paper which sets out the NOVEM methodology used and a spreadsheet to help with the calculation of base year data and targets are provided in the participation pack.

In the January following a target year participants' performance against targets will be assessed to determine if they should qualify for the 80% CCL reduction for a further 2 years. An interface between the CCAs and the UK Emissions Trading scheme provides participants who overachieve targets with the opportunity to generate emissions allowances for sale or own use later. Those who fall short of their targets can purchase emissions allowances for surrender to secure target compliance.