Managing energy within the CRC

An integrated energy management plan must be used by facilities managers to overcome this challenging economic and legislative climate, explains Dave Lewis.

5 May 2011
While energy managers are aware of the cost, regulatory, environmental, operational and reputational risks related to energy use, changes to the Carbon Reduction Commitment Energy Efficiency Scheme (CRC) at the end of 2010 mean many organisations may well be confused about what is required from them by the scheme. In a survey of businesses to mark one year of the CRC, npower found that opinions about the scheme and its future are strong.
Businesses face a myriad challenges in relation to energy legislation and compliance. However, it is of prime importance that they do not concentrate too much on the minutiae involved. Businesses should ensure that their focus is on the bigger picture of making energy efficiency a key priority so that energy emissions and costs are reduced.

Following the government’s Comprehensive Spending Review in October and subsequent amendments to the scheme, the CRC has caused much confusion and concern for businesses. In response to this, the Department of Energy and Climate Change (DECC) is undertaking another consultation process, seeking views from participants on how to simplify the scheme. Despite the inevitable uncertainty that lies ahead and regardless of the shape the scheme takes in the future, FMs need to focus on the best practice behaviour the CRC was established to encourage, namely reducing energy consumption and emissions.

A hostile reception
However, the changes to the scheme have meant businesses have become disengaged. Research by npower to mark the first anniversary of the CRC on 1 April, found nearly half of UK businesses (45 per cent) already want the scheme scrapped. Also, over a quarter (29 per cent) said they do not think the CRC will help the UK meet its carbon reduction targets – one of its key aims.

Reacting to the changes that the government implemented following October’s Comprehensive Spending Review, many organisations now view the CRC as a tax. More than 40 per cent of them think there is no incentive to reduce their carbon emissions – another reason why the scheme was first introduced.

These results reflect much of the feedback we regularly receive from our customers. It is concerning that the changes to the CRC have resulted in businesses putting fewer efforts into reducing emissions. Regardless of sentiment about the scheme and its recent changes, businesses need to understand that compliance with the scheme is mandatory for full participants, so it is crucial that organisations keep it on the 
board agenda.

It is important that organisations focus on the best practice behaviour the CRC sets out to encourage, as energy efficiency and effective management make sound commercial sense, with or without the scheme.

What can facilities managers do?
In their ‘shop-floor’ role, facilities managers have a hugely important part to play in introducing energy and cost efficiencies.

They need to work across the business and not approach changes to energy legislation, such as the CRC, in isolation. Only by fully understanding the organisation’s energy consumption can FMs identify areas for improvement, therefore enabling the board to ensure it invests in the right areas to achieve energy savings.

For any energy management strategy to be successful, facilities managers need to work collaboratively with the management board and all staff to ensure that everyone is active in its implementation. By raising energy management to board level, organisations can ensure they have the time and resources devoted to it to achieve both cost and carbon savings.

Meeting the challenge
The next milestone in the CRC calendar is submission of the first footprint report by 29 July, which details an organisation’s carbon emissions from April 2010. Our research reveals that not only are one in ten businesses concerned their company will miss the deadline, but also that the same amount are not confident that the data their company will submit is correct. This is a real concern as accurate data is the first point of any effective energy management strategy. Only by knowing for certain how and where energy is being consumed can efficiency measures be put in place.

In short, organisations should be treating the CRC as just one element of an overall energy management strategy that will provide better energy efficiency and management for the future. The challenge for businesses is to embrace this strategy and create innovative solutions to meet these demands from which they will benefit in the long run.

Npower research

45% want CRC scrapped
29% do not think it will help the UK meet its carbon reduction targets
43% want financial incentives reintroduced
54% feel the CRC places unnecessary financial burden on businesses
41% feel the CRC should be postponed until the UK economy’s financial recovery is more secure
48% said they felt the scheme’s first league table will not carry any real meaning
40% of organisations said that now the CRC is effectively a tax, there is no incentive for businesses to reduce their carbon emissions
61% would like more clarity on what is required of their business
57% would like a simpler process for carbon footprint reporting
16% would like no more changes to the scheme

Dave Lewis is head of business energy services at energy provider npower