The CRC Energy Efficiency Scheme is designed by government to require businesses to participate in lowering UK carbon emissions by engaging in energy saving projects to become more energy efficient. Formerly known as the Carbon Reduction Commitment scheme, it’s administered by the Environment Agency and forms an essential part of the UK’s commitment to reducing its overall carbon emissions in line with targets, so has green as well as money-saving credentials.
Who has to participate in the Scheme?
Participation in the Scheme is mandatory from April 2010 for UK businesses whose annual usage through half-hourly meters is more than 6,000MWh. This equates roughly to all businesses with annual energy bills around £500,000 or higher. While there is some uncertainty surrounding its future with the recent change of government, it’s currently unaffected and its mandatory nature is currently in force as originally planned.
Our revolutionary auditing solution, EPIC, is the perfect way to ensure your business’s compliance with the Scheme – or, alternatively, to assist your business in keeping its annual energy consumption below levels that would require it to participate in the Scheme.
Businesses who use less than 6,000MWh annually through half-hourly meters are not required to join the Scheme. However, those whose usage is more than 3,000MWh per year are required to provide information to the Scheme administrator about their annual energy usage as well as their use of half-hourly meters – and some others are encouraged to do so.
So, if your business is not yet required to participate in the Scheme but you predict increased energy usage that might require your involvement in the future, now is a great time to contact ACEA about ways to reduce your energy consumption: you might well be able to become sufficiently energy efficient now to avoid having to be included in the Scheme in the future, as we can help you keep your energy usage below the 6,000MWh threshold.
Costs and benefits
Commitment to the Scheme – or, alternatively, keeping your usage down to avoid having to participate in it – comes at some initial cost because implementing energy saving projects almost always involves some capital expense. However, the longer term benefits far outweigh any initial costs, as one of the crucial and most attractive side effects of being more energy efficient is the resulting lower energy bills. In addition, commitment to increased energy efficiency under the Scheme means companies will have to spend less on carbon credits, and, more positively, will gain recognition and exposure for their energy saving projects by their position on the CRC league tables.
The Scheme promotes the implementation of energy saving strategies such as insulation, upgraded equipment and low-energy lighting. These not only help combat climate change by reducing energy consumption and carbon emissions, but also result in considerable energy bill savings; as such, following these strategies makes good business sense – whether or not your business is required to participate in the Scheme.
How the Scheme will operate
The plan is for the Scheme to run across seven-year cycles; however, the initial cycle will be just three years, starting in 2010. The qualification period – which ran from 2008 – has now ended, and we’re entering the Registration phase of the Scheme’s first cycle, which runs now until September this year. April 2010-April 2011 will be the Scheme “footprint year”, while its initial “compliance years” will run for three years from April 2010 up until April 2013.
You can register for the Scheme here, via the Environment Agency’s website: http://www.environment-agency.gov.uk/business/topics/pollution/117652.aspx
It is during the registration period – so, by September 2010 – that all those businesses required to participate must provide the government with information about their annual energy usage (not just that through half-hourly meters, but all energy usage); and, during the footprint year, carbon emissions will be monitored.
In all “compliance years”, businesses will be required to purchase carbon credits where necessary to cover their emissions. These carbon credits will be purchased at the start of each year, based on projected emissions; any unused credits can then be traded back on the secondary market for businesses whose emissions end up lower than those projected.
The Scheme’s basis is to provide financial incentives for businesses to reduce their energy use by both (a) putting a price on energy consumption, and (b) providing and promoting opportunities to reduce energy bill expenditure by increased energy efficiency. In particular, the more carbon your business emits, the more carbon credits it will be required to purchase. This provides a direct incentive to reduce carbon emissions.
The government has said that all the money it raises through the selling of carbon credits will be recycled back to the businesses participating in the Scheme according to how well they perform in terms of energy efficiency. The league tables referred to above will be annual performance indicators that rank businesses on their energy efficiency performance. The better a business’s performance on those league tables, the better its PR as well as its financial situation under the Scheme. Since the Scheme also encourages the development of energy management strategies that promote a better understanding of energy usage, a tool such as EPIC will be invaluable to businesses required to participate in the Scheme – as well as to those not yet required to do so.
Potential impact of the Scheme
Businesses targeted by the Scheme – both public and private sector – account together for approximately 10% of the UK’s overall carbon emissions. Clearly, then, if all those businesses work to cut their emissions, this will have a significant impact on the UK’s overall emissions, with consequently positive results for the environment.
Combined with this is the potentially revolutionary impact on lowering energy costs for the businesses involved in the Scheme – and those that follow their lead. In particular, while potential rewards from the Scheme’s fund recycling are available, those that your business can enjoy from committing fully to saving energy consumption and costs through recommendations from tools such as EPIC are vast. This, then, is the time to take the lead in making changes to improve your business’s energy efficiency – and to capitalise on the government’s support for cutting your energy costs as well as emissions, to improve your overall efficiency and competitiveness, as well as your green prestige with consumers.
