CRC Energy Efficiency Scheme
In April 2010 a new requirement to participate in a mandatory carbon trading scheme began for an estimated 5,000 UK private and public sector organisations.
The CRC Energy Efficiency Scheme (formerly known as the Carbon Reduction Commitment) is a climate change and energy saving scheme designed to encourage improvements in energy efficiency which can save organisations money. The scheme has been designed to generate a shift in awareness in large organisations especially at senior level, and to drive changes in behavior and infrastructure.
Who is affected?
The scheme affects any organisation that, at a top-company level as defined by the Companies Act, used more than 6,000 MWh of electricity through Half Hourly Meters (HHMs) in 2008 – that is approximately £0.5m of annual electricity spend.
What does it require participants to do?
For any organisation that meets the threshold, they are required to:
- Pay for every tonne of carbon emitted from energy use in buildings and factor this into accounts, budgets and investment decisions from April 2010
- Participate at a top-co level, or non-UK organisations must nominate a responsible UK subsidiary and include all companies that are less than fifty per cent owned by the top-co or PE fund
- Report total 2008 electricity usage through HHMs
- Trade any excess / deficit in these allowances on a commodity market
- Have a director sign off on reported carbon numbers
- Participate in a publicly listed, annual league table and determines how much an organisation ultimately pays for carbon
- Keep records for five years to allow government inspectors to audit compliance when required, with significant fines misstatement
For further information on the CRC and to find out whether your firm qualifies, visit the Department for Food Environment and Rural Affairs website
Ben Wielgus, Lead CRC Advisor, KPMG Carbon Advisory Group has written an exclusive comment piece for the LSA, outlining key issues for the legal sector.
The Carbon Trust have further advice
Following a public consultation, in December 2012 DECC published proposals to simplify the CRC Scheme. These proposals are intended to offer participants:
- A 55% reduction in administrative costs
- Reduced overlap with other schemes
- Clearer rules around incentives for adopting cost-cutting energy efficiency measures
For the 2010/2011 and 2011/2012 compliance years, the results of the scheme were set out in a CRC Performance League Table. From the 2012/2013 compliance year onwards, this table will no longer be published. Instead the Environment Agency will publish participants’ aggregated energy use and emissions data.
The majority of the proposals will be introduced at the start of the second phase in 2014.
In October 2010 the government previously announced a significant amendment to the CRC. The government had intended to “recycle” the revenue raised from the sale of allowances to those organisations participating in the scheme. The level of recycled payments would be determined by performance in an energy efficiency league table, with the best performers receiving a full rebate on the money they spent on allowances plus a bonus and the worst performers receiving only a partial rebate.
Revenue raised from the CRC will now be used to support the public finances (including spending on the environment), rather than recycled to participants. All participants will purchase carbon allowances based on how much energy they use. The first sale of allowances will now be in 2012, rather than 2011.