The CRC Energy Efficiency Scheme, formerly the Carbon Reduction Commitment, is a mandatory UK carbon emissions trading scheme covering organisations that use more than 6,000MWh per year of electricity (equivalent to an annual electricity bill of about £500,000). Operated by the UK Government’s Department of Environment and Climate Change (DECC) and aligned to the Energy Act 2008 and the Climate Change Act 2008, the more carbon dioxide a company emits the more allowances it will have to purchase.
All energy sources such as electricity, gas, fuel and oil are included over the qualifying period. The regulations will cover around 5,000 businesses, including most high street chains as well as public-sector bodies such as the NHS. With effect from April 2011, companies will have to pay £12 for each tonne of carbon dioxide they emit. This figure will rise to £14 per tonne from 2013. This equates to a tax of £76,000 for a company with a £1 million electricity bill rising to £114,000 from 2014. Revenue from the sale of CRC allowances, totalling £1 billion a year by 2014/15, will be used to support the public finances, including spending on the environment, rather than recycled to participants.
As a cap and trade scheme, the programme restricts the amount of carbon dioxide that organisations release to the atmosphere, by allocating them with an allowance based on annual consumption. The Government will allow the company to emit carbon dioxide by effectively selling it a license to do so. At the end of each year, companies and institutions must surrender sufficient allowances to cover their emissions and can buy additional allowances if needed or sell any surplus. Revenues from the sale of allowances will be recycled back to organisations within the scheme. Each organisation will be repaid in proportion to their historic emissions with a bonus or penalty depending on the extent to which they have reduced their emissions compared with other organisations within the scheme.
From 2013 it is calculated that up to 20,000 additional organisations will be included in the scheme as emissions other than carbon dioxide are included. After April 2013, allowances will be auctioned with a diminishing number of allowances available over time. Participants will also be able to buy allowances on the secondary market, or purchase EU Emissions Trading Scheme (EU ETS) allowances. The EU ETS allowances will be a 'buy-only' mechanism that acts to cap the price of CRC allowances.
Participants successful in reducing energy consumption will not only save money on energy bills but will need to purchase fewer allowances and will receive greater financial rewards through revenue recycling. These savings should be well in excess of the costs of participation. In addition, participants that perform well will also be placed higher in the performance league table, which will be published annually by the Environment Agency, boosting their reputation as an energy-conscious organisation.
The good news is that in total there is a pot worth £5 billion per annum available to UK companies to increase their energy efficiency. Most companies can apply for a number of different schemes. The bad news is that the onus is on businesses to find out what’s on offer, to keep up to date with what’s new, and to apply for them themselves.
Companies, such as Thermal Energy International, not only have a wide range of products to reduce energy consumption and carbon emissions but can also support companies with finance, paperwork and product selection. They have the experience and expertise to advise about every aspect of reducing energy costs and carbon emissions from boilers, condensate return systems, dryers and heat exchangers.
Companies such as Thermal Energy International offer a complete package of expert engineering services, analysing different options required to meet customer’s needs, fully developing a comprehensive project plan to meet the corporate, financial and business objectives for our clients. They provide the up front business and project development and business case analyses, engineering, construction management, installation services and project financing needs on a comprehensive basis for a complete customer solution.
The CRC Energy Efficiency Scheme is an opportunity for organisations to do their bit for the planet and save money. The strongest way to make improvements to energy efficiency is to make an investment, which will not only reduce energy bills and provide a short-term payback but will also significantly reduce the carbon emissions and the amount payable to the CRC Energy Efficiency Scheme.
The potential costs and opportunities of the CRC will help ensure that climate change mitigation and adaptation are increasingly viewed as a strategic priority and become a permanent feature on board agencies. Acting early will not only enable an organisation to gain financially if it achieves a good position in the league table, but will also avoid penalties resulting from being at the bottom. Ends