Carbon Reduction Commitment
Rewards or Penalties?…
The CRC Energy Efficiency Scheme (previously known as the Carbon Reduction Commitment) the new and mandatory, energy saving and carbon emissions reduction scheme for the UK is now up-and running. The 5,000 plus organisations in the UK that consumed more than 6,000 MWh (around £500K spend) of electricity between January 2008 and December 2008 have from now until 30th September 2010 to register as a Participant.
Organisations that used less than 6,000 MWh of electricity during 2008 are not exempt from the Scheme and will have to make an Information Disclosure.
The CRC Energy Efficiency Scheme has been designed to target the next tier down from the UK’s Industrial large scale energy users. Organisations that fall under the scheme include government departments, local authorities, universities, hotel chains, supermarkets, banks and other major retailers.
The CRC is not a “One Size Fits All” Scheme. There are specific rules for certain types of organisations, including; groups, or part of a group (for example, subsidiary organisations), franchisees or franchisors, schools, universities, parts of/agencies of central government departments, joint ventures/Private Finance Initiatives (PFI) and property management companies.
The Scheme, which is based on buying carbon allowances, offers financial incentives to improve energy efficiency and will help large private and public sector organisations generate cost savings through reduced energy bills. These savings should exceed the cost of participating. However, for organisations that fail to register or submit incorrect /incomplete information, there will be financial penalties. Participating organisations will need to monitor their emissions and purchase allowances to emit Carbon Dioxide (CO2). The more CO2 an organisation emits, the more allowances it will need to purchase, so there is a direct incentive to reduce emissions.
The September 2010 Deadline is Fast Approaching
The Scheme applies to entire organisations rather than just individual sites and Registration must be done on-line via the Environment Agency Website before 30th September 2010.
Each organisation has to pay a Registration Fee of £950 on entering the Scheme with an ongoing Annual Subsistence Fee of £1,290 for administration of their account.
What happens after we Register?
The period from April 2010 to April 2011 will be the first ‘Compliance Year’ and the start of the ‘Footprint Year’ where calculations will be made to establish each participating organisation’s ‘share’ of the total amount of carbon covered by the scheme. This percentage share will then be used to calculate share of the ‘Recycling Pot’ which will result in financial rewards for the high performing organisations and financial penalties for poor performance.
Then, in April 2011, the first sale of Allowances will take place to cover the following year’s forecasted carbon emissions. These emissions are based on all energy used and resulting CO2 (excluding transport emissions).
The fixed price for Carbon Allowances during the first three years of the Scheme has been fixed at £12 per tonne of CO2. Organisations have to submit their first Footprint Report in July 2011 and Allowances have to be surrendered by this time.
Then in October 2011, the first ‘Recycling Payments’ will be made depending on performance and an organisation’s ranking within the first publish League Table.
The Carbon Reduction Energy Efficiency Scheme will operate a Bonus and Penalty Scheme based on League Positions. In the first year the bonus/penalty will be +/- 10%. In Year 2 this rises to +/- 20% and +/-30% in Year 3 up to +/- 50% in Year 5. It is anticipated that in subsequent years that the bonus/penalties may continue to rise/fall in 10% increments with the Government reviewing the situation after the first five years.
Effectively, the higher an organisation is in the League Table, the more allowance payments it receives back with poor performing organisations receiving much fewer allowance payments.
Penalties for Non-Compliance?
Under the CRC Energy Efficiency Scheme Order 2010, organisations that fail to either register or comply will face civil or even criminal penalties. For example, any qualifying organisation that fails to register for the Scheme by the end of September 2010 faces a fine of £5,000 plus an additional £500 per day until application for registration is made, subject to a maximum of 80 days. (potentially over £40,000). Failure to supply or late supply of Annual Reports to the Environment Agency (the Scheme Administrator) also will result in fines of £5,000 plus. Areas including, Failure to comply with Enforcement Notices or Falsification of Submitted Information will lead to possible Criminal Prosecutions with fines up to £50,000 and potential jail terms.
Ask Inteb for Guidance
The main thrust of the Scheme remains a positive one, with organisations being encouraged to look at the Money Saving and Carbon Reduction benefits of the Scheme which will, not only enhance an organisation’s energy performance and bottom line, but will also improve its corporate culture and reputation.
The Environment Agency has produced guidance explaining how to register for CRC and what information your organisation will need to do. Additional information is also available on the Department of Energy & Climate Change (DECC) website.
Inteb is able to help organisations both register and successfully manage their participation in the CRC Energy Efficiency Scheme. We already have a large amount of experience in the CRC and we can help you to fully understand the Scheme and its implications; compiling data, producing all relevant reports/evidence packs/annual statements, installing advanced metering and energy saving solutions, advising on the financial implications of carbon allowances and ensuring scheme compliance.
Main Contact Point
You can find out if your organisation qualifies for the CRC Energy Efficiency Scheme by clicking on www.environment-agency.gov.uk or if you would like to discuss any CRC issues with Inteb, please phone us on +44 (0)151 346 2141 or email Angela Hobbs.