The CRC Energy Efficiency Scheme (CRC)
What is the CRC Energy Efficiency Scheme?
The CRC Energy Efficiency Scheme (CRC), formerly known as the Carbon Reduction Commitment, starts on 1st April 2010. It is a mandatory UK emissions trading scheme which has been introduced to assist in reducing carbon dioxide (CO2) emissions.
This scheme, administered by the Environment Agency (EA) will affect any private and public sector organisations that had more than 6,000 mega watt hours (MWh) half-hourly metered[1] electricity usage in 2008 - i.e. an annual electricity bill of around £500,000. However, every organisation with a half hourly meter, regardless of electricity use, must make an “information disclosure[2]“. Failure to comply with this scheme will result in fines from the EA.
Emissions Trading
For those organisations that qualify, allowances to cover expected CO2 emissions (from direct fossil fuel use) for the year will need to be purchased (mostly from the Government). The allowances are then surrendered by the following year and these must be sufficient to cover the actual emissions. One allowance covers one tonne of CO2 and will initially cost £12 - these will, after April 2013, be auctioned. Unlimited allowances will be available at the start of the scheme.
The Government will return revenue from the April sale of allowances to CRC participants. However, it will add a bonus, or deduct a penalty, depending on the energy saving performance of an organisation relative to the performance of other CRC participants. It has been estimated that by 2015 the bonus or penalty could be as much as 50% of a participant’s payment. This will also allow a league table of CO2 emission saving performance to be calculated.
Qualification for the CRC
Qualification for the CRC is based on the extent of an organisation at 31st December 2008 and relies on data from energy consumption during 2008 to determine the degree of an organisation’s participation.
Step 1 - The Extent of an Organisation
Qualification for the CRC is based on supply of electricity to organisations rather than to individual sites. Organisations will also need to check if they are part of a group as the qualification for CRC is assessed on a group basis. Organisations that are part of a group structure will be grouped under the highest parent undertaking.
Step 2 - Identify all half hourly meters
An organisation will qualify for participation if, at any point in 2008, it had one or more HHM settled on the half hourly market.
Step 3 - Assess half hourly metered electricity consumption in 2008
Not all energy consumption needs to be accounted for in the CRC, there are some exemptions. Once the total HHM supply has been quantified the following actions need to be taken:
- 6,000 MWh or more - register as a CRC participant
- 3,000 MWh - 6,000MWh - make an information disclosure
- Less than 3,000 MWH - an information disclosure must be made, however no consumption data will have to be reported.
What next for an Organisation?
The scheme starts 1st April 2010. Environmental Compliance have already assisted some of our clients in determining if they have to participate. We are now working with them to ensure compliance with the CRC and also looking at ways to improve energy efficiency. This will enable our clients to maximise the potential income from this scheme and also improve their position in the forthcoming league tables.
For more information please contact Sarah Burley (s.burley@envirocompli.com).
[1] Half hourly meters (”HHM”) are meters for heavy electricity consumers. They measure electricity consumption on a half hourly basis and can be settled on the half hourly market.
[2] Information Disclosure - organisations with HHM, but that use less than 6,000MWh/year must submit an information disclosure. This would include a list of HHMs and for those organisations with an electricity usage of over 3,000MWh/year, their electricity usage through these meters.