Getting ahead of the CRC Energy Efficiency Scheme 

Posted November 2009

The CRC Energy Efficiency Scheme(this is an external link and will open in a new window) is the UK's mandatory carbon emissions cap and trade scheme starting in April 2010.

The scheme has been developed to support the Climate Change Act 2008(this is an external link and will open in a new window) target for 80% carbon reduction by 2050.

The CRC could affect up to 20,000 organisations:

  • Owners of large portfolios
  • Retail
  • Leisure
  • Some manufacturing
  • Professional services
  • Public sector including local authorities, universities and NHS Trusts.
  • Landlords with tenants themselves captured by the scheme
  • (Indirectly) tenants of buildings owned by an organisation captured by CRC.

Has your organisation considered the implications?

  • Financial
  • Compliance
  • Trading
  • Reputational
  • Penalties

Energy consumption measurement, monitoring and reporting are new to many participants. There are significant cash flow implications.

All organisations will be audited. Criminal and civil penalties apply to non-compliance.

New and emerging risks and opportunities

CRC performance will be in the public domain, subject to scrutiny and peer comparison. Financial directors and other stakeholders should consider:

  • Cash flow. Allowances must be purchased in advance, affecting cashflow. These are recycled back to participants with a six-month delay. Recycled payments (starting at +/- 10%) are based on league table performance and participants' baseline emissions.
  • Risk to reputation and brand. Companies are rated in a league table, and non-compliance will be published.
  • Increased investor pressure to perform in CRC league table whilst taking account of business growth and company investments.
  • Definition of organisation. Especially challenging for internationally owned organisations who have part of their portfolio in the UK.
  • Accuracy of energy data and carbon footprint. The system used to meet scheme requirements must be robust and auditable.
  • Polluter pays? Organisations who are landlords or tenants will need to identify who is responsible for energy consumed on site.
  • Impact on lease agreements. Tenants and landlords need to review their contracts to reflect the financial burden, and gains in energy reduction, that CRC brings.
  • Trading. Participants will need to take part in government sales from 2011 and closed bid auctions from April 2013. Emissions must be accurately forecast to minimise the financial impact.

CRC review preparation

An opportunity to:

  • make savings in energy spend, through better monitoring systems
  • improve carbon performance
  • invest in energy saving measures
  • review estate strategy
  • identify areas for improvement in metering
  • refine energy management practice
  • review leasing agreements

How we can help

We can help you chart an economically viable path between low carbon and reasonable cost.

 

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