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Thursday 2nd September 2010
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updated 1.53pm, Tuesday 5th May 2020
The mandatory CRC energy efficiency scheme commenced on 1 April 2010 but the deadline is fast approaching and FMs must register immediately as it could result in a hefty fine
by Glenn Massey
2 September 2010
The scheme is designed to increase awareness of the impact of energy use and associated CO2 emissions in large organisations, especially at senior level, and to drive changes in behaviour and infrastructure. If your organisation uses over 6,000MWh/yr it will be captured by the CRC Energy Efficiency Scheme. Typically this amount of electricity would be used in a single storey 25,000m2 office building. Under the scheme it is a mandatory requirement for an organisation to calculate its total carbon emission and purchase an equivalent amount of carbon allowances.
For the first three years the cost of each allowance is set at £12 per tonne of CO2 emitted. Carbon allowances must be purchased from the government in advance at the beginning of each financial year. The sale of allowances will commence during April 2011. There is no need to purchase allowances during 2010.
The government undertook an assessment of UK energy users based on 2008 energy use. Organisations that used more than 6,000MWh/yr in 2008 should have received a letter from the government advising of the organisation’s obligations, duties and the implications of the CRC Energy Efficiency Scheme.
The performance of the participants will be compared and a league table published annually. The first league table will be published in October 2011.
What the scheme means
Existing buildings make up the majority of UK commercial building stock, with new buildings comprising just 1-2 per cent. If the government is to achieve CO2 reduction targets, then significant reductions need to come from existing buildings. Existing buildings will be most affected by the scheme, but they also have the biggest opportunity to improve. Owners of commercial property will look to facilities managers to reduce energy use in buildings in order to minimise the financial and reputational risks resulting from poorly performing buildings leading to a lowly league table position.Registration will close on 30 September 2010. This is the deadline for completing registration.
What FMs must do now
Clients, from both public and private sectors, can appoint a CRC agent or third party (this could be an outsourced facilities manager) to act on their organisation’s behalf and take them through the registration process. However, they cannot delegate responsibility for complying with the requirements of the scheme to the agent. The client organisation remains responsible for compliance and will be liable for any penalties if the agent does not comply.
How long will it take to register?
Some parts of the registration process will be beyond the organisation’s control. There is, for example, a period when the scheme administrators, the Environment Agency, check the details provided by each organisation – a process that could take up to two weeks. In reality it may take a lot longer. The time taken to register is influenced by the number of buildings that need to be registered and the quantity of information submitted, for example, information relating to meter supply numbers and energy use.
What if organisations do not register?
• An immediate fine of £5,000. If an organisation has received a letter from the government advising of the organisation’s CRC Energy Efficiency Scheme responsibilities, it seems likely that the “immediate fine” will be as quick as it takes to generate another letter. Plus:
• the fine will increase by £500 per working day.
• information about non-compliance will be placed in the public domain.
• knowingly or recklessly making a false statement is a criminal offence and may result in a penalty of:
• imprisonment up to three years.
• a fine up to £50,000.
Additional documentation
The CRC Energy Efficiency Scheme does not end after the registration process – a raft of new documents must be submitted annually. Failure to submit these reports will result in fines. Landlords will look to FMs to provide the supporting data needed, if not to compile the reports, which will put pressure on facilities managers.
Footprint Report – due July 29 2011
Annual Emissions Report – due July 29 2011
Evidence Pack – ongoing
Quick guide to CRC
1. Registration, via the Environment Agency website, closes on 30 September 2010
2. Fees payable to the Environment Agency are: £950 registration fee and then £1,290 each year
3. If your organisation uses over 6,000MWh/yr the CRC Energy Efficiency Scheme will cost money
4. If your organisation uses less than 6,000MWh/yr it may still be captured by the legislation, but the financial implications are reduced
5. You cannot buy carbon allowances until April 2011 – but you may wish to budget sooner
6. League tables will be published annually from October 2011
7. During the three year introductory phase – 1 April 2010 to 31 March 2013 – each carbon credit will be capped at £12/ton of CO2. After this, the cost of carbon may increase
Jargon buster
• CRC – the acronym for ‘Carbon Reduction Commitment’. The scheme’s full name is the ‘CRC Energy Efficiency Scheme’.
• CCA – the Climate Change Agreement
• Disaggregation – the process by which the group participant, after registration, may nominate part of the group to participate separately in the CRC Energy Efficiency Scheme.
• League Table – the CRC Energy Efficiency Scheme’s league table will rank all participants on the basis of their performance.
• Carbon and CO2 – these are different things. Carbon is a chemical element with the symbol C and atomic number 6. It is the 4th most abundant element in the universe by mass after hydrogen, helium, and oxygen. CO2 is Carbon dioxide and is a chemical compound composed of two oxygen atoms covalently bonded to a single carbon atom. Carbon dioxide is generated as a by product of the combustion of fossil fuels or vegetable matter, among other chemical processes.
• Although this scheme is called the Carbon Reduction Commitment, when it comes to purchasing allowances the organisation must convert energy use (kWh) to CO2 – so though organisations purchase ‘carbon credits’ these are actually measured in terms of CO2.
• Allowances – an allowance is purchased from the Government and represents the right to emit one TCO2.
• Participant – an organisation that qualifies, or is otherwise required to participate and register under the CRC Energy Efficiency Scheme.
Glenn Massey is an associate at Hoare Lea Engineering Management
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