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What is the CRC?

In the 2007 Energy White Paper, the Government announced its plans to tackle climate change by introducing new laws to cut carbon dioxide emissions and reduce energy use in large businesses and public sector organisations.

The result, will be a new legally binding energy saving scheme called the Carbon Reduction Commitment Energy Efficiency Scheme (CRC). 

The CRC will work as a “cap and trade” scheme – with a ceiling placed on the amount of carbon allowances issued into the market. Companies will have to buy these allowances to cover the carbon emissions they produce.

The aim of the scheme is to significantly reduce carbon dioxide emissions from organisations covered by the scheme including hotel chains, supermarkets, banks, schools and large local authorities which together account for around 10% of the UK’s carbon emissions.

By 2020, the Government hopes to deliver a 1.2 million tonne reduction in carbon dioxide emissions from these large, non-energy intensive organisations.

What it means for your business?

If, during the 2008 calendar year, you used over 6,000 megawatt hours (MWh) of electricity (roughly equivalent to bills over £500,000), and had at least one half-hourly electricity meter (HHM) settled on the half-hourly market you will be included in the CRC scheme.

However, even if you use less than 6,000MWh but still have at least one HHM you will be required to undertake an ‘information disclosure’.

From April 2010, you will have to measure and record your energy use and calculate its CO2 emissions.

Long term, to cut your CRC costs, you will have to work to reduce your energy use and drive efficiencies.

To ensure that your company or organisation does well in the CRC participants should:

• Implement Automatic Meter Readers before March 2011
• Sign up to the Carbon Trust Standard or equivalent
• Establish comprehensive monitoring and targeting mechanisms
• Collect and record energy data
• Assign responsibilities and ownership for energy reduction tasks
• Carry out regular reviews of data collection
• Reduce emissions within the scheme
• Proactively develop a strategy to identify and implement future energy savings

How much will the scheme cost?

The new legislation will require a company spend upwards of £40,000 each year on carbon allowances.

If your organisation qualifies you will have to buy allowance to cover your CO2 emissions.  During the initial introductory phase (expected to last three years from April 2010) you will need to buy allowances from the Government in a fixed-price sale.

From April 2013, allowances will be allocated through auctions with a diminishing number of credits available over time.

Allowances are expected to cost £12 per tonne of carbon. To comply with the CRC, organisations will submit their allowances to cover their emissions.

The CRC is to be “revenue neutral” – so, the Government will gain no revenue from the scheme.  Instead, the money raised by the auctions will be divided amongst qualifying organisations.

At the end of each year, company performance, mainly based on absolute carbon reductions since the start of the scheme, will be reported in league tables outlining the best and worse performers in terms of carbon emissions and reduction.

Companies will receive payments back from the Government in relation to their first year emissions, plus or minus a bonus or penalty depending on their position in the league table.

What should you do now?

The time to act is now. Although the scheme does not start officially until 2010, the Government has made it clear that organisations that have already acted to cut their energy use and their carbon dioxide emissions will benefit under the new CRC scheme. The Government has attempted to design the scheme to be as simple as possible, including self certification of monitoring, reporting and verification of emissions. The aim is to encourage organisations to improve energy and carbon management skills, particularly in relation to metering, reporting and reduction and to focus senior management attention on the issues.

All these efforts can start now with the introduction of Monitoring and Targeting systems and awareness raising training for staff and senior management.

The league table produced during the first year of the CRC will be compiled based on 100% assessment criteria from Early Action Metrics. Organisations can qualify for a bonus payment within the first year of the scheme by proving the implementation of two principal early action metrics. The first of these can be obtained by achieving the Carbon Trust Standard.

Carbon Trust Standard

The Carbon Trust is a private company set up by the government and provides many useful sources of information for those wishing to manage their energy use effectively.  They also provide site survery and carbon management products for companies with energy bills over a certain size.

Visit www.carbontrust.co.uk or call 0800 085 2005 for more details.

The Carbon Trust Standard requires organisations to calculate their carbon footprint (including site based transport – not commuting), demonstrate absolute or relative reduction in carbon emissions by more than 2.5% per year and demonstrate good carbon management. In order to qualify as an early action metric, an organisation must have received the Carbon Trust Standard by March 2011.

The Carbon Trust Standard is an independently assessed accreditation offered by the Carbon Trust for organisations who measure, monitor and reduce emissions year on year. Achieving the Carbon Trust Standard is one of the factors which counts towards performance in the CRC league table, as part of an organisation's early action metric score.

Visit www.carbontruststandard.com for further information.

Kitemark Scheme for Energy Reduction Verification

BSI has developed a Kitemark Scheme which builds on the BS EN 16001 Energy Management Standard which will independently verify energy reductions. BSI believes that the scheme is acceptable as an Early Action Metric under the Carbon Reduction Commitment Energy Efficiency Scheme and are waiting for approval from the Environment Agency which is expected in January 2010.

The basis of the Kitemark Scheme is the operation of an Energy Management System according to BS EN 16001. This standard specifies the requirements for an energy management system, which entails the development of an energy policy, identification of an organisation's past, present and future energy consumption and focuses on the measurement, management and reduction in energy consumption. The Kitemark Scheme will verify the relative reduction in energy consumption as a result of the management system being in place and expressed as tonnes of CO2 emissions.

Key scheme requirements

The Kitemark Scheme for Energy Reduction verification (KERV) will independently verify a company's energy reduction based on the following:

• The applicant will be required to produce 2 years historical data plus the data for the compliant year
• The applicant has a BS EN 16001 Energy Management System in place
• The applicant has identified and assessed their significant Energy Aspects
• The applicant has reduced their energy use when measured in tCO2e by a minimum of 2.5% year on year and compared to the compliance year when the energy factirs have been calculated and factored in

The year of compliance is identified by the applicant and the assessment must be completed within 6 months of the end of the compliance year.

All of the above will be independently assessed and verified by BSI.

The Kitemark Certificate will be valid for 2 years from the end of the compliance year. Visit the BSI website for further information

Automatic Meter Reading

Automatic Meter Reading (AMR) is the second part of the early action metric that companies can achieve. In order to qualify, the AMR must cover both electricity and gas. The equipment must also meet a minimum standard in its ability to capture, store and retrieve data at half-hour intervals, and provide software to manipulate the data into usable data.

Where do organisations go for help?

You may already have received a Government leaflet issued via your electricity provider advising you that the scheme is to be introduced. 
The Government intends to follow this with a major publicity campaign to raise awareness about the scheme and to ensure that people are well prepared for its introduction.

For more information visit the Department of Energy and Climate Change website
http://www.decc.gov.uk/en/content/cms/what_we_do/lc_uk/crc/crc.aspx

Or visit the Environment Agency’s website
http://www.environment-agency.gov.uk/business/topics/pollution/98263.aspx

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