INFORMATION SHEET 3

MASTER BAKERS TARGETS AND MILESTONES

Having committed to join the Master Bakers Climate Levy Discount scheme, you will be required to achieve an overall energy efficiency target by 2010 and achieve steady energy efficiency improvements measured against predefined 2-yearly milestones.

2010 Target

The 2010 target is expressed as a percentage improvement in performance from the primary energy consumption in the Base Year. Different targets have been negotiated by NAMB/SAMB for bakeries and for bakery shops.

The target for all craft bakeries in the Master Bakers CCLA will be 9%.

The target for all retail bakery shops will be 4.5%.

Base Year

Your base year should be the calendar year 1999. You will need to provide auditable energy consumption and product output data for the base year.

If you have inadequate energy or product output data for the calendar year 1999, you can select the most recent 12 month period for which you have suitable data.

Delivered and Primary Energy Targets

Targets can either be expressed in terms of delivered or primary energy. The target above is set in terms of primary energy.

Delivered energy is the actual amount of energy delivered to a site. It is usually the quantity of energy in, say, kWh shown on your energy invoices. Primary energy takes into account the energy used to generate and transmit energy to your site. For gas and oil, delivered energy and primary energy are treated as being equal under the Climate Change Levy. However, for electricity it is necessary to take into account the efficiency of converting fuels into electricity. This efficiency can vary from year to year depending on the mix of available power stations. For the year 2000, the assumed relationship for electricity under the Climate Change Levy will be:

Primary energy (kWh) for electricity = 2.6 * delivered electricity (kWh)

The energy target that is shown in your Underlying Agreement will be expressed in terms of primary energy. The Scheme Administrator will calculate your primary energy target based upon energy data in your application form and certain conversion factors that have been agreed with DEFRA.

Measurement of Product Output

Your target will be expressed in terms of an energy saving per unit of product output. For the craft bakery sector, product output will be defined in terms of "added value". This is defined as follows:

Added value = gross sales value - cost of input materials

The gross sales value is based on sales from all the shops in a "bakery ring" (including both shops that are eligible for a levy discount and shops that are not eligible) plus any sales made directly from the bakery (e.g. if the bakery is a wholesale bakery supplying shops belonging to other companies). See Paragraph 6 of the Guidance Notes for a description of the bakery ring.

The cost of input materials should include ingredients and materials used in the bakery (flour, fats, packaging etc.), raw materials used in the shops and other purchased products sold in the shops (e.g. crisps and drinks).

On your Application Form you will be asked to supply figures for both gross sales value and the cost of input materials. This will be a single pair of figures for the whole of the bakery ring.

Currency of Target

CCLAs allow participating companies flexibility in meeting their targets. Before signing the Agreement you have the option of choosing the units or "currency" against which your performance will be measured. You have four currency options:

• Energy consumption relative to product output
  
  
• Carbon emissions relative to product output

In both cases, production output will be measured in terms of added value as discussed above.

Energy units (e.g. kWh) are no doubt most familiar and may be appropriate in many circumstances. However, there can be significant advantages in selecting a carbon target, particularly if you have the opportunity to convert from "high carbon" fuels such as oil to low carbon fuels such as gas or renewables. Note that carbon emissions from a facility include direct emissions from the site as well as indirect emissions from power stations for the electricity used. Standard methods and coefficients have been developed for calculating these emissions. See Information Sheet 12.

Changing Currency

Subject to approval by DEFRA, you will be allowed to change from one currency and another. This is subject to the following rules:

• You will only be allowed one change between an energy and a carbon target. If you start with an energy target you may change to a carbon target but not back again, and vice-versa changing from a carbon to an energy target.

• If you wish to change your currency once the agreement is signed you will need to contact the Scheme administrator.

Milestones and Certification Periods

The CCLA runs from April 2001 until March 2013. This period is divided into six 2-year "certification periods". At the start of the Agreement you will be certified for an 80% Levy discount until March 2003.

Your Agreement will include an overall target and 4 milestone targets that represent the required rate of progress at 2-yearly intervals. The milestone targets will be calculated by the Scheme Administrator based on a mechanism agreed between DEFRA and NAMB/SAMB (see "Setting Milestone Targets" in this Information Sheet). If you meet the first milestone target you will be re-certified for the second certification period - a further 2 years, to March 2005.

The final certification period is from April 2011 to March 2013. You will be certified for this final period if you have met the overall target in the measurement period prior to April 2011.

Your performance will be measured every 12 months. The measurement period will be known as the "CCL Year" and this will run from October 1^st to September 30^th each year. At each milestone, your performance data from the latest CCL Year will be compared to your performance in your base year. Hence for the first milestone in April 2003 your performance for the CCL Year October 2001 to September 2002 will be compared to your base year performance.

Because of the time taken to collate and validate performance data there is a time lag between the Master Bakers Climate Change Discount Scheme receiving the data and certification for the next two years being confirmed (see Table 3.1).

Setting Milestone Targets

A simple mechanism has been agreed between DEFRA and NAMB/SAMB for setting milestone targets. All Participants will use 1999 as the Base year and the following milestones must be reached at 2-yearly intervals:

	Bakeries	Bakery Shops
Milestone 1	1.5%	0.5%
Milestone 2	3.5%	1.5%
Milestone 3	5.0%	2.5%
Milestone 4	7.0%	3.5%
Milestone 5	9.0%	4.5%

Table 3.1 Key Dates in the Master Bakers CCLA

Varying the Target

Your Underlying Agreement with DEFRA allows both you and DEFRA to review the targets at the end of the 2^nd milestone (Spring 2005) and 4^th milestone (Spring 2009). Whilst it is unlikely to be necessary, you will have the legal right to challenge any variation which DEFRA attempts to impose.

Missing a Milestone Target

If however, the sector fails its target, individual sites (or groups of sites in one company) will become accountable for their performance. In this event, and if the performance of your site is below the milestone level, you risk losing the discount for the subsequent 2 year period.