Carbon commitment

1 March, 2010

Do we know enough about the impact of the CRC Energy Efficiency Scheme (formerly known as the Carbon Reduction Commitment) to our industry? That was a question I found myself asking following the FMA Young Managers Forum networking event in January.

The discussion was sparked following a presentation on sustainability from Lynda Simmons, corporate sustainability manager at MITIE. At the end of her presentation, a straw poll was taken to gauge the general awareness of the impact of the CRC scheme on our businesses. It is fair to say that, from the show of hands, less than one-third of the attendees were actually aware of the impact.

While I recognise that the attendees may not be a fair reflection of the industry, and voting hands may have been laden down with the complimentary beer or wine, this does highlight a genuine concern for facilities management.

The CRC Energy Efficiency Scheme is described as a mandatory scheme aiming to cut carbon emissions using a ‘cap and trade’ principle. You may be asking yourself how this will affect your business. Is it just another red tape exercise? The scheme will apply to organisations that consumed more than 6000 MWh of total half-hourly metered electricity in 2008, and are not already registered in the European Union Emissions Trading Scheme (EUETS) or party to a climate change agreement (CCA). That means an electricity spend in excess of around £420,000, depending on your tariff.

Implementation is set to start soon with the first phase commencing this April, when all organisations will have to register. The first year of the scheme, from April 2010 to March 2011, will be a reporting only year. Thereafter, each participating company will be required to purchase emissions allowances equal to 100 per cent of its predicted annual emissions, with the cost of allowances during the introductory phase fixed at £12 per tonne of CO2.

Don’t ignore it
Doing nothing is not an option. Failure to comply with the payments and reporting requirements of the scheme will result in heavy financial penalties, even prosecution. The whole point of the scheme is to incentivise organisations to be responsible and efficient with their energy. For some, compliance may be enough, but for others, the driver will be to avoid penalties, which, given the current economic climate, is now more important than ever.

So, the CRC scheme is a compliance issue and we must face up to it. Developing the knowledge in your business or finding an expert partner to manage this on your behalf is paramount. Due to the financial implications and potential risk to company reputations, this will be an area of concern for many senior executives and board members. However, it is likely to be the FMs who will be responsible for providing the solutions.