ENERGY
CARBON REDUCTION SCHEME
CAN BOOST BOTTOM-LINE
he government’s Carbon embraced properly, in addition to reducing and controls upgrades
T
Reduction Commitment (CRC) costs, the CRC can also enhance both and improvements to
should not be seen as an environmental and CSR programmes.” building fabric can
overhead, but an opportunity to The CRC rules underpin the Climate still have attractive
sharpen competitive edge in the face of Change Act 2008 which sets legally returns on investment
the current recession. binding targets to reduce greenhouse gas with typical payback
Consultants at sustainable power emissions by 80 per cent by 2050, based periods of under five
company ENER-G – www.energ.co.uk – on 1990 levels, with at least 26 per cent years. In addition,
believe the CRC can be used as a CO
2
emission reductions by 2020 these types of
Liam McDonagh
springboard to boost bottom-line measured against the same baseline. initiatives usually improve the internal
performance by reducing energy costs, Under the CRC, organisations will environment.”
while enhancing corporate social have to report on ‘core’ emissions (derived The CRC means organisations must
responsibility programmes. from gas and electricity consumption) but purchase ‘allowances’ to cover CO
2
This view is underscored by some may also have to report on ‘residual’ emissions in April each year for the
government figures suggesting the CRC emissions including diesel, coal, and LPG. following 12 Month period. In the first
could help businesses save a total of Performance in the first year of the scheme three years of the scheme (April 2010 –
£1billion by 2020. (April 2010 – March 2011) will be March 2013), allowances will be traded at
Some 20,000 organisations must evaluated by two ‘early action’ £12 per tonne of CO
2
. The first sale takes
register for the CRC programme. Of these, measurements. place in April 2011, covering actual
an estimated 5,000 will become ‘full’ “The first ‘metric’ evaluates the extent emissions for 2010/11, and projected
participants and have to pay for their of voluntary automatic metering in place emissions for 2011/12 – a double
carbon emissions when the CRC gets which means organisations should be accounting year. Subsequent sales will be
under way with its first trading year from reviewing how energy use in their just for the projected following year. So for
April 2010 to March 2011. Although the properties is measured; deciding if this is an organisation using 6,000,000kWh of
CRC is still in its draft format, acting now suitable for achieving a high rating and electricity a year, the first sale will cost
can quickly create major cost savings and obtaining costs for upgrade as £77,328.
prevent the reputational damage of being appropriate,” explained Liam McDonagh. With this example, the ‘at risk’ penalty
named and shamed in a published league “The second early action metric is or ‘bonus’ amount in October 2011 will
table of energy performance. involvement in an energy efficiency be 10% of traded value of the 2010/11
The business and public sectors accreditation scheme, such as the Carbon allowances, or £3,866 (at best the
generate over one third of UK CO
2
Trust Standard, and organisations should recycling payment will be £42,530, at
emissions and the CRC scheme aims to cut obtain details of schemes, along with costs worst £34,798). 2011/12 allowances will
emissions among those consuming more and timescales for accreditation.” be recycled in October 2012. In the third
than 6,000,000 kWh of half hourly “The two early action metrics will year of the scheme, the penalty or bonus
metered electricity (an approximate annual provide a foundation for energy will rise to 30%, but because the
energy spend of £500,000). The most management, but to convert this into calculation includes baseline emissions of
energy intensive organisations are already carbon reduction requires focused reviews the footprint year (energy consumption in
subject to the EU Emissions Trading of policies, procedures and behaviour, as 2010/11), organisations at the top and
Scheme or Climate Change Agreements. well as detailed technical surveys of bottom of the table could stand to gain or
Performance will be measured and property,” said Liam McDonagh. lose far more than 30% of that year’s
published in a league table, with positions The findings of reviews and surveys will allocation value.
determining how much of the carbon ‘tax’ constitute recommendations for From April 2013, the cost of carbon
is ‘recycled’ back to each organisation. improvement, which can be prioritised and allowances will be determined by sealed
“Because the scheme is revenue implemented to complement CRC strategic bid auction and the total number of
neutral to the government, there will requirements and develop capital and allowances will be capped. It is expected
always be winners and losers, which revenue cost schedules for annual business that by the fifth year of the scheme, the
means corporate reputation as well as planning. recycling penalty/bonus will increase to
finance will be at stake,” said Liam Liam McDonagh added: “Reviews and +/- 50%.
McDonagh, Head of Consultancy Services surveys will also produce a number of no ENER-G is holding a series of path
at ENER-G. cost or low cost quick wins, in particular finder seminars across the UK to assist
“Many organisations affected by the behavioural changes like switching off businesses in understanding their CRC
scheme have not yet started to plan for the equipment and lighting when not obligations and support available from the
various phases, because they have gone required, and introducing temperature ENER-G group. For seminar details
into survival mode and are battening down policies to prevent over heating or cooling. contact: jackie.banner@energ.co.uk.
the hatches against the recession. But the In our experience, no-cost or low-cost ENER-G has carried out more than
CRC is an important catalyst for cost measures can typically achieve energy 1,000 Action Energy/Carbon Trust surveys
reduction and must rise up the boardroom savings of 5 to10%. and delivered strategic energy
agenda. It also takes time to prepare and “Older buildings are generally less management solutions to many blue chip
businesses mustn’t get caught short. If efficient, but lighting, plant, equipment organisations.
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SUSTAINABLE FM | MAY 2009
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