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March 30, 2007

Universities keen to cut their carbon footprint can join a consortium that will help them to minimise their energy costs. Andrew Fields explains

The Government’s 2006 climate change programme put the spotlight on universities in the battle to combat greenhouse emissions and reduce consumption. Each year the sector uses 5.2 billion kWh of energy at a cost of more than £200 million, and the programme identified universities as critical in the process of achieving the national goal of reducing carbon dioxide emissions by 20 per cent below 1990 levels by 2010 and by 60 per cent by 2050.

University managers are increasingly aware that they need to take account of energy issues: the 2005 instability in crude oil and gas markets saw to that. They are also quick to take up renewable energy sources. Many universities and colleges purchase a proportion of their electricity requirements from renewables.

The Energy Consortium (TEC) is a-not-for-profit organisation with 160 universities and colleges in membership. It was founded at the end of 1989 in response to the privatisation of the energy markets with the aim of helping members cope with the increasing challenges of the energy market, assisting with low-cost energy procurement and ensuring that activities are compliant with public sector and European Union procurement needs. It was initially supported by member subscriptions, but in 1999 an additional income stream from commissions paid by suppliers who won tenders from universities was adopted. The consortium converted to not-for-profit company status in 2002.

The process is based on managing tenders for individual member universities. Kevin Doyle, TEC chief executive, says: "We go through EU tendering processes and operate within a supplier framework agreement." TEC has commissioned energy market analysts Utylix to assist it to put each member’s requirements out to tender.

Doyle says: "Most contracts in the sector are currently fixed price and fixed term. However, TEC is developing new forms of contract that will offer alternative methods of dealing in the energy markets." The consortium is in the process of rolling out the idea to the sector. TEC will advise on day-to-day purchases or when to take steps to head off the effects of a rising market.

Renewable energy sources and sustainable development are no longer at the opposite end of the spectrum from energy efficiency and careful cost control: the magnitude of climate change has converged with soaring energy costs and doubts over continuity of supply.

The consensus among senior managers in the sector seems to be that green alternatives are more costly than conventional methods of supply. Carbon trading has until now been required for only a small number of the largest universities. But that is set to change. The first phase of the EU Emission Trading Scheme runs from 2005 to 2007. It set a threshold of sites with boilers of 20MWth input capacity and requires monitoring of all gas and oil use — and the trading of emissions allowances.

Some 40 universities fell into the scope of the scheme: 32, with 34 sites, joined a group brought together by TEC. In 2005-06, the group exceeded the emissions limit by 2.3 per cent, 16 per cent less than the average. But consultations have just ended on a more rigorous regime for carbon trading. Two options were included in the process: voluntary reporting and benchmarking of energy performance, and an energy performance commitment.

Informed opinion suggests that as the voluntary scheme would be difficult to administer, the energy performance commitment is more likely to proceed from 2009. Its 3,000MW a year electricity consumption threshold would, if proposals are implemented, capture most universities and many colleges. Once the threshold is reached, all electricity, gas and oil will have to be monitored.

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