UK's Carbon Reducation Commitment (CRC) News
This post was written by Tim Foster and Siobhan Hayes.
In earlier postings we have introduced the UK’s Carbon Reduction Commitment (“CRC”) which has been the subject of public consultation. The Government issued their policy decisions recently and a number of things will change when the Regulations come into force next April. To restate, headlines reporting the CRC was deferred were wide of the mark and the CRC will still start to apply in April 2010. To emphasise the impact of the CRC the first thing to note is that it will now be called the CRC Energy Efficiency Scheme. Energy efficient businesses are to be rewarded for their good behaviour.
This is a note on the main changes we expect to see when the next draft of the Regulations is published towards the end of this year.
The main changes to the CRC are as follows-
Qualification –Will still be based on the consumption of electricity in 2008 excluding electricity which tenant occupiers bought from their landlords but catching other indirect supplies. What this means is that if your organisation consumed over 6,000 MWh of electricity through half hourly meters in 2008 and at least one of your half hourly meters is settled on the half hourly market you will have to be fully compliant. Between 3,000 and 6,000 MWh of consumption will lead to you having reporting requirements.
Buying Allowances - There will be no double purchase of allowances in 2011. No allowances will have to be bought to cover the first “footprint” year of the CRC (2010/2011). Reporting only will be required for the first footprint year but in 2011 full compliance starts requiring the purchase of allowances for estimated carbon emissions.
The CRC Organisation - If an organisation is sufficiently large that it has a subsidiary (or sub-group of companies) that would qualify by itself for CRC then it can nominate it as a “significant group undertaking” for separate participation in the CRC. Private equity houses may be pleased to see this because they may be able to disaggregate their groups for compliance purposes (although not if the parent company, taken together with any residual parts of the group, would then fall below the 6,000 MWh threshold).
Franchising - Franchisors are still going to have to take responsibility for the energy consumption of their franchisees although the definition of franchise is changing to exclude premises of the franchisee which are not used exclusively for the franchise. Franchisees will be subject to penalties if they do not provide the data their franchisors need to comply.
Early Action - There was plenty of criticism that organisations that had taken all the steps they could to be energy efficient were going to suffer under the CRC because of their relative position in the performance league tables. The policy decision shows that this has been recognised to a certain extent although we await details of just how much difference this will make.
Penalties - These have been revised. Look for details in a future blog posting.
