360 Environmental Limited - Carbon Reduction Commitment

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Carbon Reduction Commitment

Introduction

The Carbon Reduction Commitment (CRC) is a mandatory system that will affect all organisations that receive electricity anywhere in their organisation through Half Hourly Meters (HHMs).

It is designed to reduce carbon emmisions in the UK by rewarding companies that perform well and penalising those that don't.

An organisation is counted as being at parent level. Therefore, a group of companies, a county council in relation to schools, franchisors on behalf of their franchisees or a government department are all considered to be the parent organisation responsible. It is an offence to split out companies to fall below the threshold.

Any organisation that consumes more that 6,000 MWh per annum (a bill of around £500k) will be required to participate fully. Any organisation that falls below that but still has electricity through HHM will be a partial participant and required to disclose information.

Qualifying organisations will be receiving packs from the environment Agency (Environment Agency in England and Wales, SEPA in Scotland and NIEA in Northern Ireland) in September 2009 telling them what they will be required to do.

Full participants will be required to buy allowances from the government at the beginning of each compliance year after 2010 The first such year is April 2011 to March 2012. The allowances will cost a fixed £12/tonne of CO2. Organisations may then trade allowances later in the year if they have a surplusor shortfall.

It is estimated there will 20,000 organisations in the UK required to register under CRC of which 5,000 will be full participants with the rest just required to submit a disclosure.

Qualifying organisations that fail to register or disclose will be subject to fines of up to £5k and £500/day for full participants and a one off £1k for partial participants.

360 Environmental has prepared a summary checklist from the comprehensive Defra publication on CRC.

What should you be doing?

1. Decide if you qualify.

If any part of your organisation receives electricity through HHM, the organisation qualifies.
All organisations on HHM should have received a letter last year from the Environment Agency outlining the CRC scheme and showing their 2008 electricity consumption. However, this might not have picked up all the electricity consumed by an organisation.
The Agency will also not necessarily have sent it to the qualifying parent organisation.
All qualifying organisations should receive a pack from the environment Agency in September advising on how to register. If you think you qualify and not yet had any information from your Agency, you should contact the relevant Agency using the contact details below.

2. If you qualify.

You must start to prepare your organisation to be able to submit the necessary information in April.
If you are part of an organisation, one part of that organisation must take responsibility for compiling the necessary electricity consumption data for the whole organisation. You must therefore think about your organisational structure and who will register between April and September 2010.
If you handle the energy on behalf of someone else, you must make sure that this information is passed on to the organisation to enable them to register.

3. What data will you need to register between April and September 2010?

For full participants:

information on the organisation and its principal subsidiaries
identification information for the person(s) responsible for the organisation’s participation in CRC
a list of all your organisation’s HHM settled on the half hourly market and total half hourly electricity used.

For participants that consume between less than 6000MWh:

If you consume more than 3,000 MWh in the qualification year, you must disclose your total annual consumption of half hourly electricity during the period.
If you consume less than 3,000 MWh in the qualification year, then you will need to tick the appropriate box on the online form.
Your energy supplier should be able to tell you if you have any HHM settled on the half hourly market and your electricity consumption through these meters.

4. What else will need to be done?

Between April 2010 and March 2011, participating organisations will need to measure all energy use including electricity, gas and oil (although there are some exemptions, mainly for energy used for transport and energy use that is captured under other regulation).

In April 2011, participating organisations will be required to purchase allowances based on the amount of CO2 they have emitted in the previous year and expect to emit in the following year.

In July 2011, participating organisations will be required to submit a footprint report, an Annual Report and be required to surrender allowances equivalent to their CO" emissions and will then receive a recycling payment from the government based on a league table of improved emissions performance.

Summary

This scheme is the work if a fiendish brain. It is intended to penalise those that make no effort to reduce carbon emmisions and reward those that do, but initially, it will only have a real impact on those organisations that consume the most electricity. It appears, at first sight, to be extremely complicated and will rely heavily on the environment Agencies data management systems to ensure the correct penalties and rewards are applied. Data management has not been an Agency strong point in the past.