The ‘people first’ approach: Talking energy with Ibstock plc’s Michael McGowan
The UK’s energy intensive industries face a wide range of efficiency challenges, but the most progressive companies are embedding sustainability into their agenda.
One such frontrunner is Ibstock plc, a UK leading manufacturer of clay bricks and concrete building products. We spoke to Michael McGowan, Quality, Environmental & Energy Manager, about the company’s energy strategies, compliance obligations and ambitious programme for carbon reduction.
What environmental reporting obligations does Ibstock need to comply with?
There are over 60 pieces of government legislation that we have to comply with and report against each year, including the European Union Emissions Trading Scheme (EU ETS) and the Energy Savings Opportunity Scheme (ESOS). We also have set targets to reduce our emissions under the voluntary Climate Change Agreement scheme.
Ibstock has an ambitious carbon reduction agenda – what would you say is the key to its success?
Without a doubt the most important thing is taking a ‘people first’ approach. It’s people who identify the potential for improvement and have the desire to make a difference. It’s one thing to invest in an energy efficient kiln. But investing in the staff who manage our kilns and production processes creates more powerful results.
Have you started work on ESOS phase 2?
Ibstock Brick [a company within Ibstock plc] is completely covered by ISO 50001 [the energy management standard], so it’s already compliant with ESOS.
The rest of our business is well into the first half of ESOS phase 2 and we’re expecting to complete in May 2019 – that’s seven months ahead of the deadline.
ESOS doesn’t require you to actually act on your energy saving recommendations, but with ISO 50001 we’ve embedded a culture of efficiency into the organisation – again, it’s a ‘people first’ way of thinking.
Did ESOS phase 1 highlight any potential areas of saving (further to what you’re doing)?
We’re already proactive in identifying energy saving opportunities, so ESOS phase 1 didn’t reveal anything new to us.
How are you preparing for the government’s new Streamlined Energy and Carbon Reporting scheme (SECR)?
SECR doesn’t impact us as Ibstock is already going further than the requirements of the scheme.
The general industry view is that SECR is not as streamlined as originally planned, and that there is still duplication across mandatory reporting schemes.
What is your biggest energy compliance challenge?
This is definitely the EU ETS (EU Emissions Trading Scheme) – the carbon price has risen 280% in recent years. We also pay the carbon price floor on top of this, so it’s a significant cost for the company. There’s also uncertainty over what phase 4 of the scheme will look like, which makes it a challenge in terms of forecasting and planning.
How much is Ibstock affected by the Climate Change Levy (CCL) increase on gas usage?
Energy used in mineralogical processes are exempt from the main rates of the CCL, so the majority of Ibstock plc is not affected by the CCL. Some companies within the group are affected but it’s a minimal part of our overall costs.
How does Ibstock manage energy price rises/volatility?
We tend to take a long term view on energy prices and look to a 4 or 5 year strategy.
Our biggest issue is the cost of electricity. Non-commodity costs have gone up, so that’s something we have to manage. In 2007 non-commodity costs made up 25% of our electricity bill; in 2018 they make up 55% of the bill. Green taxes make up one third of our bills.
There are a few factors which make budgeting a challenge. The UK energy market is volatile – for example, gas prices quadrupled with the ‘Beast from the East’ last year as demand for gas surged. There’s a lack of gas storage in the UK which adds to the volatility. Some non-commodity costs are also adjusted and invoiced later in the year and are often different to those forecasted, such as DUoS, RO and FiTs charges.
Are any companies within Ibstock plc eligible for the Energy Intensive Industries (EII) exemption scheme?
None of our businesses are eligible for EII exemption. We have been campaigning for a number of years on this issue and believe exemption would benefit the business greatly if we did receive it. It would also give us more flexibility to invest in further energy efficiencies.
Is Ibstock adopting renewable energy technologies?
Yes, we have an Alternative Energy Group which investigates the most viable alternative energy solutions for our business. We made a commitment on the edie Pledge Wall to install a solar farm at our Leicester headquarters, which will be in place early next year (2019). We’re predicting that this will reduce demand on the grid by 30%.
We’re also looking into CHP (combined heat and power) and battery storage – a technology which is growing rapidly at the moment.
What have been Ibstock’s major energy efficiency successes in recent years?
We’re continually investing in energy efficiency improvements across our sites. This year we opened our new brick making factory in Leicester. It’s the most energy efficient brickworks in the UK and provides a further 100 million bricks each year to help satisfy the UK’s demand for much needed housing.
We also invested nearly £8 million on a new kiln at our Lodge Lane factory in Staffordshire – it’s boosting brick production and is much more energy efficient.
Lighting is another focus for us and we have a programme of upgrades planned across our sites, as well as replacing motors and drives with more efficient technology.
Michael McGowan is Quality, Environmental & Energy Manager at Ibstock plc.