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23 October 2019
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STREAMLINED ENERGY

The Streamlined Energy and Carbon Reporting (SECR) regulations come into force in April 2019 and FMs need to be prepared, says Jamie Tabord.

Carbon Emission © iStock
© iStock

09 January 2019 | Jamie Tabord


From 1 April, SECR will be the new instrument for organisations to collect, measure and report on their carbon emissions. It will replace the current CRC scheme and expand to include all large companies (around 12,000 in total).

The Department of Business, Energy and Industrial Strategy (BEIS) recognised that the range of energy-efficiency policies can create complexity and add administrative burdens to those that qualify. SECR is the proposed solution.


What is involved?

The objective is to incentivise organisations to save energy through improved energy efficiency, and reduce energy bills and carbon emissions.

This is expected to drive behavioural changes by raising awareness of energy efficiency with organisational decision-makers and boost the importance energy efficiency has on an organisation's reputation. In addition, it will increase transparency for investors and others so that companies can be held to account.

Meanwhile, the tax element of the CRC is being transferred to the Climate Change Levy tax, which is a chargeable element on business electricity use, with rates for electricity and gas being hiked from 1 April 2019.

Organisations budgeting for their 2019/20 energy spend will need to factor in this rise.


SECR framework objectives

  • To reduce the overall administrative burden on participants;
  • To incentivise energy saving by improving energy efficiency;
  • To drive behavioural changes by raising awareness with decision-makers; 
  • To link energy efficiency to organisational reputation; and 
  • To increase transparency for investors so companies can be held to account.

 

Companies that will be affected

Qualifying criteria are changing so SECR will encapsulate an additional 7,900 companies, which will be required to report their carbon emissions for the first time.

While public sector organisations will not be required to comply at this time, they are encouraged to do so on a voluntary basis.


SECR qualifying criteria

All quoted companies and all large UK incorporated unquoted companies and LLPs fulfilling at least two of the following conditions in the financial year:

  • at least 250 employees
  • an annual turnover of
  • over £36 million
  • an annual balance sheet of over £18 million 
  • qualifying UK-registered subsidiaries of parent companies not registered in the UK
  • public bodies including limited company or LLP elements.

 


Five steps FMs should take to prepare

The implications are varied, but there are five key requirements.


1) Report all UK energy use including total underlying energy use such as transport;

2) Report energy-efficiency action taken in the past 12 months – if you don’t have these in place you will need to implement new structures and systems to do this;

3) Be prepared for increased Climate Change Levy (CCL) charges – revenue generated from the sale of allowances in the CRC scheme (set to be abolished in March 2019) will continue via an increase in the CCL rate, a non-commodity charge found in utility bills;

4) 2019/20 budgeting will need to factor in this rise; and

5) Companies will be required to include this data and information within their directors’ report.


We anticipate a transitional period which will require organisations that qualify to review and make changes to how they collect data, report and demonstrate energy-efficiency changes.

Guidance on the practical implementation for SECR was published in November. You should consult all relevant information to guarantee SECR compliance.

Even large companies with their own energy teams are seeking our support, as there is a lot of ground to cover –  especially for those starting from scratch to make sure they are compliant.


Jamie Tabord is head of optimisation services at Inspired Energy