Legal Financial commitment
With changes announced in the carbon reduction scheme, building services providers have an opportunity to help their clients save money, writes Hywel Davies
finally started in April 2010 in the dying days of the Labour government that created it. CRC was intended to be central to the UK’s strategy
T
to improve energy efficiency and reduce carbon dioxide emissions under the Climate Change Act 2008. It was designed to raise awareness among senior managers in large organisations, and to encourage changes in both the behaviour and the physical assets of those organisations by taking money from poor performers to reward those reducing emissions, as defined by the scheme’s rules. Under the previous plans, all organisations using more
than 6,000MWh of electricity per year, and not already in an emissions trading scheme, would purchase allowances to cover their anticipated emissions and report their actual emissions annually. The reports would be used to create a league table, with top performers getting their allowances back, plus a premium, while those at the bottom would get back only a portion of their allowances. The scheme was originally designed, and all the consultations undertaken, on the understanding that the scheme was to be ‘revenue neutral’: money from the sale of allowances would be recycled to the participants. What was not so widely discussed was that the scheme provided a significant interest-free loan to government by large energy-using bodies, who were required to buy allowances a year or more in advance of the league table and allocation of repayments. In October’s Spending Review, the UK Chancellor announced that revenue from CRC will be used to support the public finances, including spending on the environment, rather than recycled to participants. This revenue is expected to amount to £1bn a year by 2014- 15. The Spending Review states that retaining the money raised from selling allowances will ‘clarify the price signal [the cost of using the carbon] to participants’. At the same time the government announced a
12-month delay in the initial sale of allowances; it said that the scheme ‘will be simplified to reduce the burden on businesses, with the first allowance sales for 2011-12 emissions now taking place in 2012 rather than 2011’, although this may not be the simplification that the British Property Federation and others had been seeking, which
22 CIBSE Journal February 2011
he Carbon Reduction Commitment Energy Efficiency Scheme (CRC) is the UK’s mandatory climate change and energy saving scheme. After much consultation and development, the scheme
was administrative simplification and greater recognition of the role of tenants in energy consumption. A formal consultation on changes to the CRC Energy
Efficiency Order 2010 was undertaken before Christmas 2010. It proposed an initial amendment to come into force by 1 April 2011, to extend the introductory phase and delay the initial sale of allowances to 2012 and postpone the start of Phase 2 until 2013. Following this ‘a broader simplification review’ will identify further amendments. The performance league table is retained as the main reputational driver, starting in October 2011, with metric weightings and publication dates as envisaged in the original legislation. The Department of Energy and Climate Change (DECC) website reminds us that the ‘CRC remains in place as a mandatory scheme, and the Environment Agency continue to provide support to participants with their CRC compliance. Organisations who fail to comply will be subject to enforcement action. Participants should continue to fully comply with the scheme and use the introductory phase to gain experience on reporting, complying and surrendering allowances in CRC.’ The introductory phase also enables participants to gain
experience in handing over a lot of money to government. Everyone involved should now think urgently about how they can ensure they measure their energy use and emissions accurately, to ensure that they pay the right amount, but also find ways to cut energy use and reduce not just bills and emissions, but payments to Treasury. The ‘clear price signal’ to industry is that energy will
cost more, in utility bills and through CRC. It should also be a signal to CIBSE members to work with clients or employers who are in the CRC to find ways to reduce the commitment and save themselves money. DECC are inviting suggestions about simplifying CRC.
CIBSE will be submitting suggestions shortly: you can send comments to us at
cbreslin@cibse.org. l
Hywel Davies is technical director of CIBSE
Everyone involved in the CRC should
now think urgently about how they ensure they measure their energy use and emissions accurately
WEBLINKS l
www.decc.gov.uk
l CRC is administered by the Environment Agency http://www.environment-
agency.gov.uk/business/ topics/pollution/
98263.aspx, the Scottish Environment Protection Agency http://
www.sepa.org.uk/ and the Chief Inspector (Northern Ireland Environment Agency)
http://www.ni-environment.
gov.uk/
www.cibsejournal.com
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