CRC Energy Efficiency Scheme
CRC Overview
The Carbon Reduction Commitment (CRC) is a government scheme aimed at reducing the amount of carbon dioxide (CO2) emitted in the UK.
Only large energy users (over 6,000 MWh of electricity usage) are obliged to participate fully in the scheme. For your information, 6,000 MegaWatt hours is equal to 6,000,000 KiloWatt hours (kWh). To put this into context, at 10p per kWh, this would mean you are spending around £600,000 on your electricity.
However, most organisations with half-hourly metered electricity have mandatory obligations. These include registering electricity supplies with the CRC scheme and annual information disclosure. These obligations have been applicable since 1 April 2010.
There are steep financial penalties for any organisation failing to meet the obligations by the set deadlines.
Business Cost Consultants would be pleased to help you manage your obligations by:
- providing independent advice on what the scheme entails for your organisation;
- assisting with registration for the CRC scheme;
- collating and analysing consumption data;
- assisting with the annual information disclosure requirements;
- general energy consumption and cost management.
Carbon Reduction Commitment explained
The CRC Energy Efficiency Scheme is effectively the UK’s first compulsory carbon trading scheme. It became effective on 1 April 2010 and initially involves organisations using over 6,000,000 kWh of electricity per annum. The period over which this will initially be measured is January 2008 to December 2008.
The CRC scheme is ambitious and had committed to reducing carbon emissions of larger organisations by way of achieving targets. Initially the aim is to reduce carbon emissions by 1.2 million tonnes by 2020. The issue at the heart of this incentive is climate change, and by 2050 it aims to have reduced CO2 emissions by a massive 60%. The scheme itself will administrated by The Environmental Protection Agency (EPA) in England & Wales, the Scottish Environmental Protection Agency (SEPA) in Scotland and The Northern Ireland Environment Agency (NIEA) in Northern Ireland.
How does it work?
Effectively the scheme encourages improvements in energy efficiency by way of financial incentives, or penalties for poor efficiency performance. Large private and public sector organisations will have to off-set their carbon emissions by purchasing ‘tokens’ or credits. The fees paid for these ‘tokens’ will then be distributed among other participants in the scheme in accordance with their CO2 reductions. Participants in the scheme will be ranked in a league table. There will be bonuses for the best performers with regards to carbon emissions reduction.
The Carbon Reduction Commitment scheme is backed up by an amendment to the Climate Change Act 2008. This means that penalties can be enforced by law should any participants fail to comply with the scheme. It is important to bear in mind that financial penalties will be imposed on those organisation who fail to fulfil their obligations.
Organisations will be given the time period between 1 April 2010 and September 2010 in which to register. However, if an organisation has not received a letter from the scheme, they will still be obliged to fulfil their reduction commitment.
The scheme is directed at the most senior levels of organisations, parent and holding companies at director level. It is therefore prudent for subsidiary companies to be proactive in establishing lines of contact with their parent company. They can then be clear on their individual obligation with regards to CO2 reduction.
In essence the Carbon Reduction Commitment is aimed at initiating a cultural change within the workplace. It requires senior management and employees of large organisations to be active in conserving energy, an area where there has often been no incentive to do so. With the introduction of actual financial incentives and penalties, it is hoped that organisations will take steps to reduce energy consumption through various avenues.
Possible penalties
- Failure to register for the scheme on time (by 30 September 2010) will result in a penalty of £5,000.
- Each day thereafter a further £500 penalty will be applied until the registration is complete.
- Every participating organisation will be asked to produce a ‘footprint report’ detailing their carbon emissions annually. Failure to provide this report by 31 July each year will result in a penalty of £5000.
- Thereafter, the price at which an organisation trades carbon tonnes will be increased daily by 5p per tonne for the first 40 days.
- After this 40 day period, if the ‘footprint report’ is not produced, the price at which an organisation trades carbon tonnes will increase daily by 10p per tonne until the report is completed.
Where Business Cost Consultants can help with the CRC scheme
Business Cost Consultants is a reliable and trusted utility consultancy with more than 15 years of experience in the energy markets. We can help you to manage the registration, data collection and reporting processes and provide independent advice.
Business Cost Consultants can assist with the mandatory registration and annual information disclosure processes. We can also help you collate the necessary consumption data required by the scheme. This may include detailed consumption data regarding your electricity and gas or other energy related information.
In a more pro-active sense, Business Cost Consultants can assist an organisation in reducing energy consumption. We have been successful in doing so for a great number of clients. By pulling together and analysing the detailed data we can produce reports on your energy consumption then target areas of potential reduction. We can then investigate whether any capital investment is needed in order to achieve these savings, what grants or soft loans may be available and calculate the return on investment for your organisation.
The main advantages to having us involved in meeting your CRC obligation is that we provide you with more information and tighter control over your energy consumption and expenditure. This in turn leads to having the clarity needed to identify savings and implement what is needed to make these a reality. We can help you use the CRC to your company’s advantage, turning the scheme into an opportunity to reduce your carbon emissions and your costs.
If your organisation has not already begun the implementing your obligations for the CRC we recommend taking immediate action or seeking advice by contacting us now.