01.11.2010

The Carbon Reduction Commitment Energy Efficiency Scheme, the UK’s mandatory climate change scheme commenced this year  - how will this  impact on  your organisation?

The Government Spending Review introduced changes to “simplify” the Scheme by delaying the need to purchase allowances until 2012 but instead of being recycled to participating organisations the approximately £1bn “will be used to support the public finances”. 

Carbon Reduction Commitment (CRC) Energy Efficiency Scheme (EES)
Organisations (and their subsidiaries) meeting the criteria should have registered by the end of September 2010.  Have you registered?  Are you clear about the implications of CRC EES on your organisation?

What is it?
The CRC Energy Efficiency Scheme (formerly known as the Carbon Reduction Commitment) is the UK's mandatory climate change and energy saving scheme. 

The scheme is central to the UK's strategy for improving energy efficiency and reducing carbon dioxide (CO²) emissions, as set out in the Climate Change Act 2008, and has been designed to raise awareness in large organisations, especially at senior level and to encourage changes in behaviour and infrastructure.

Who does it cover?
Designed to tackle CO² emissions not already covered by Climate Change Agreements and the EU Emissions Trading Scheme, the scheme will cover large public and private sector organisations who are responsible for about 10 percent of the UK’s emissions. It is expected to affect around 20,000 organisations.

Organisations qualify for CRC if they (and their subsidiaries) have at least one half-hourly electricity meter (HHM) settled on the half-hourly market.  The requirements under the Scheme vary depending on the level of energy consumption as summarised in the table below:

Electricity Consumption (Mega Watt Hours – MWh) provided by half hourly meters settled on the half hourly market

< 3,000 MWh	> 3,000 MWh < 6,000 MWh	> 6,000 MWh
Not required to comply in full with CRC Are required to provide contact details via the online registry	Not required to comply in full with the CRC Are required to submit information disclosures via the online registry for administration purposes	Required to comply in full with CRC

Initially, it is estimated that around 5,000 organisations will qualify in full (ie consumption > 6,000 MWh), including supermarkets, water companies, banks, local authorities and all Central Government Departments.

All qualifying organisations had to register by September 2010 and comply with the scheme or face financial and other penalties.

Organisations which qualify in full will need to submit their first footprint report in April 2011.  The original plans were for carbon allowances to be purchased from the Government from April 2011 based on the submitted data and a league table created of all qualifying organisations. A recycling payment would then be paid back to the participants in October of each year, calculated using their position in the league table.

However, the recent Government Spending Review contained changes to these arrangements with initial purchase of allowances being delayed by a year but with no recycling of the sums paid.  This will increase the financial implications of the scheme significantly for those covered.  It is now unclear on how the Scheme will be developed in future years.

The Penalties

	Late Registration	Late Reporting	Inaccurate Reporting
Compliant	£5,000.00	£5,000.00 + £500 per working day to 40 days then a further £20,000.00	Exceed the 5% margin of error and £40.00 per tonne of CO² emissions is charged
Disclosure only	£500.00

In most cases non compliance will be published, and in some cases organisations may be moved to the bottom of league table.

How can Scott-Moncrieff help?
We are dedicated to the ‘Green Agenda’ and been researching and training on CRC EES.  We are able to provide guidance and support on the requirements and types of challenges eligible organisations will face in the run up to April 2011 and the first sale of allowances.

o Assurance and Support - provide clients with assurance that their treatment of the financial transactions is correct and support with accurate data collection and the interpretation of guidance on what’s included.

o Monitoring and System Change support - an increasing number of solutions are being introduced to the market place for recording and measuring the carbon equivalent of an  organisations activities.  We can help clients identify and implement the right system and support them through system and process changes. 

o Energy Management – we have access to energy specialists to support you and can demonstrate our own commitment to energy management from a recent energy management project we carried out in both our office locations.

Contact:
Campbell McLundie, Partner, Business Technology & Consulting
Tel: 0141 567 4500

Robert Mackenzie, Partner, Business Technology & Consulting
Tel: 0131 473 3500

Gary Niven, Senior Manager, Business Technology & Consulting
Tel: 0141 567 4500

Wendy Clydesdale, Business Technology Consultant
Tel: 0131 473 3500