CRC Energy Efficiency Scheme — the Final Draft?

Posted under environment by Nigel Evans

As part of the process of soliciting feedback, the UK government has recently completed final preparations for the launch of the CRC Energy Efficiency Scheme, now ready to emerge in April of 2010. The scheme has been under discussion for some time now, but it is sobering to hear that a significant number of the affected organizations are still floundering in the dark.

The CRC Energy Efficiency Scheme is mandatory for those organizations that use more than 6000 MWh of electricity, which roughly equates to about 0.5m in annual energy bills. 5000 or so businesses must comply and should clearly note that the terms for qualification determine an analysis of 2008 consumption figures. 2009 was the year for preparation and those companies that are still behind are taking significant risks.

When the CRC Energy Efficiency Scheme rolls out in April of 2010, this will be the start of three key phases, but still just a harbinger of what is to come. Eventually, the scheme will operate on a capped, auction driven markets basis and active trading of carbon emission allowances will be required for all contenders.

Originally known as the Carbon Reduction Commitment, the CRC Energy Efficiency Scheme was adjudged to be a better name and more indicative of the intention. This change was made during final consultations, together with a more significant alteration affecting a company’s cash floor requirements. Rather than expect an organization to pay for its 2010 and 2011 emission allowances at the same time, in April of 2011, only the latter year allowances will now be required.

The CRC Energy Efficiency Scheme is not intended to be a revenue raiser for the government and as such, no money will flow to the taxpayer. Indeed, in an ideal world an organization will receive rebates for the emission allowances it purchased, but the government intends to promote the scheme by running a league table. This league table will show relative performances and those companies that do well will receive a bonus on top of a rebate, while those that do not will be penalized.

Up to 60% of those companies affected by the CRC Energy Efficiency Scheme seem to be unclear and have no plans to begin actions to reduce their carbon emissions, at least until the scheme “cranks up” in 2011. They seem to be missing the “early action” metric, initiated by the government. Those companies that register with the Carbon Trust Standard and install automatic smart meters will score more highly on the league table and be better off.

There are major financial implications for companies who fail to take sufficient action and move toward the concept of sustainability. It seems clear that any effort to initiate energy efficiency can only help a company’s balance sheet anyway.

It is unlikely that any further changes will be made to the CRC Energy Efficiency Scheme by the British government and in April 2010 companies must officially register their participation as part of the first phase. The year commencing April 2010 is known as the “footprint year” and energy use during this period will form the basis for calculations in subsequent periods.

Daniel Stouffer has a lot of information about the CRC Energy Efficiency Scheme and how a visit to www.verisae.com can be of use to you.