Dave Covell, Principal at carbon management specialists ENVIRON

As of the 1st April, The Carbon Reduction Commitment Energy Efficiency Scheme (CRC) arrived, affecting around 20,000 organisations including many in the leisure and hospitality business.  A UK-led scheme encouraging improvements in energy efficiency, it is part of achieving the government’s target of an 80% cut in carbon emissions by 2050.  By 2020, it is envisaged that the CRC will cut annual emissions by 4.4 million tonnes.

The CRC puts a price on carbon and major energy users will need to buy allowances equivalent to their anticipated CO2 emissions for the year ahead.  Participants will be ranked in a league table, with financial incentives for organisations that reduce emissions and deductions from recycling payments for organisations in the bottom half of the league table. 

20% of organisations will be audited annually.  Inaccurate submissions carry a penalty of £40 for each tonne of CO2 incorrectly reported, mistakes in the evidence pack mean a £5,000 fine and, ultimately, imprisonment for submitting false information.

What you need to know
The CRC came into force on 1st April 2010.  An Introductory Phase runs to 2013 (i.e. 3 years April to March), while subsequent phases each last for seven years.  Organisations now have to register and start compiling emissions data for the first reporting year – 2010/2011 – named the ‘footprint year’. These results have to be reported by the end of July 2011 – failure to do so means a fine of £5,000 plus £500 for every day you’re overdue.  The first league table will be published in October 2011.

At the start of each compliance year, capped allowances will be sold by the government.  During the introductory phase, the price is fixed at £12 per tonne of CO2. After the initial sale period, participants can buy or sell allowances among themselves as necessary.  After 2013, the cap on the cost of carbon will be removed and is expected to rise significantly. 

Planning and preparation
Now
Determine whether your organisation must participate.  Eligibility depends upon the total half-hourly metered (HHM) electricity use between 1st January and 31st December 2008. If this was greater than 6,000 MWh (mega-watt hours) per year, roughly £500,000 a year on electricity, organisations are full participants in the CRC. 

Organisations with consumptions between 3,000 and 6,000MWh also have to register but will have reduced obligations, and those whose emissions are for transport purposes or generating electricity are exempt, as are organisations that already fall under the European Union’s Emissions Trading Scheme (EU ETS) or have more than 25% of emissions covered by a Climate Change Agreement (CCA), although they still have to register and gather data.

Also organisations now need to start compiling material for an evidence pack that covers data and information for this the footprint year.

This year
While qualifying for the CRC is based on historical electricity consumption, all energy use falls into the scheme - gas, oil, coal, liquefied petroleum gas (LPG), etc.  The complexity of some energy use means that auditable data can take many months to collate.  Also, many organisations don’t know what meters they have, some are read incorrectly, and in other cases metering units are incorrect e.g. hundreds of cubic feet versus cubic meters. In fact, in ENVIRON’s experience of undertaking metering audits, we have found that on average, only 1 in 10 bills are accurate.  Organisations must review their metering, and we recommend doing this as part of the development of a wider metering strategy, which includes improving sub-metering as well as fiscal metering.
In meeting the ongoing requirements of the CRC, organisations can establish a process for the ongoing monitoring, collection and reporting of data in-house, outsource it to an organisation like ENVIRON, which can also help with planning for future improvements, or opt for a combination of the two.

Early Action Metrics
An organisation’s position in the league table during the Introductory Phase is partly based on three metrics:
Absolute metric: percentage change in absolute emissions compared with previous years
Early action metric: having Automatic Monitoring Reading (AMR) and the Carbon Trust Standard, by 1st April 2011. 

Growth metric: the growth or decline of an organisation during its participation
In year 1, the early action metric accounts for 100% of the ranking.  Achieving the Carbon Trust Standard can take three months and there’s a stringent process to follow.  You need to have secured the standard by April 2011 for it to count so best to start thinking about it now. Rolling out an AMR strategy isn’t a swift process either.

In Year 2 (2012), it accounts for 40% with the absolute metric at 45% and the growth metric 15%.  In Year 3 (2013), the split becomes 20%, 60% and 20% respectively.

Improving future performance
You need to plan for reducing emissions over the longer term.  A specialist consultant like ENVIRON can help develop a five or ten-year plan of improvements.  Opportunities to secure quick wins and longer-term options should be considered, and mapped against capital expenditure requirements, cash flow and potential energy cost reductions that can be reinvested in energy saving measures. 

The final word
By taking a proactive approach to reducing carbon emissions, you’re not just reducing your exposure to carbon costs and avoiding fines, you’re also lowering your costs, positively affecting reputation, potentially opening up a new income stream and reducing the depletion of the world’s resources.

www.environcorp.com