CRC Update

More than 4,000 organisations still to register - less than 12 weeks to the 30th September cut-off - more time for disaggregation - PFI: who’s responsible? - landlord and tenant - Early Action Metric - monitoring carbon footprint - buying allowances - evidence pack and audit - super-smart metering to save energy and save cost.

The total number of CRC full participants was estimated at 5,000 and according to the Environment Agency only 651 have so far registered. That leaves less than 12 weeks for the remaining 4,349 to complete the process by 30th September. Of course you may already have started, but if you’re waiting to clear up some minor query or you have some doubts about your particular case the Environment Agency urges you to register now and sort out queries and errors later. No doubt there will be increasing pressure on the system as we get closer to the cut-off.

Good news if you were planning for disaggregation. The Environment Agency has extended the initial deadline until 31st July, although all your SGUs still have to be registered on their own account by 30th September.

Some organisations operate facilities provided under PFI and the PFI company has claimed that the organisation which uses the facilities is responsible. The Environment Agency has now made it clear that the “counterparty to the supply contract” principle applies, so if the PFI company is paying the bill then the PFI company is the participant.

CRC remains an issue for landlords. Remember, if you bought more than 6,000MWh of half-hourly electricity in 2008 you are a full participant even if you sold that electricity on to your tenants. When we get to the reporting phase, the landlord is responsible for reporting the total carbon footprint from all energy sources, including energy used by tenants. Can you negotiate an amendment to the lease? The CRC legislation gives you obligations, but no additional rights vis-à-vis the tenant.

If you are a tenant and taking steps to improve your energy efficiency, will the landlord pass on the benefit of lower CRC costs to you? Again, can you re-negotiate the lease?

Your Performance League Table position and your total CRC cost are both affected by the Early Action Metric and it’s not too late to get the benefit. The earlier you put in voluntary AMRs (automatic meter reading) the better, because the benefit is calculated on the proportion of your total energy that flows through them in 2010/11. Don’t forget gas meters. You have until 31st March 2011 to achieve the Carbon Trust Standard. As long as you have it in place by that date you qualify in full. The Environment Agency has just approved CEMARS as an alternative to the Carbon Trust Standard. Other standards are under review.

Quite apart from the Early Action Metric and your league table position, the surest way to reduce your CRC costs is to improve your energy efficiency and cut your energy bills. Have I told you about the super-smart metering that gives you instant feedback and detailed analysis for close cost control? Give me a call on 07803 616877 and I’ll tell you more!

Once registration is complete the next task is to prepare for the annual report and for the purchase of carbon allowances in April 2011. You need to have an evidence pack, and 20% of all participants will be audited. Have you been monitoring your carbon footprint since April? Have you got detailed records and an audit trail?

If you would like to discuss any of these points in more detail please give me a call on my direct line: 07803 616877. Together with strategic partners, Cyber Associates can help and advise on CRC registration, obtaining benefit from the Early Action Metric, monitoring your carbon footprint and establishing an employee engagement programme to maximise your energy efficiency.

I look forward to talking to you!

Best wishes,

Anthony Day

PS NoWatt, our super-smart metering partners, have a window in August due to customer holidays. If you want a rapid assessment and installation we can help you to start saving money on energy in a matter of weeks. Call me on 07803 616877!

CRC - do you need to buy allowances next April?

The CRC Energy Efficiency Scheme which came into effect on 1st April 2010 is a sort of carbon-trading system for larger organisations. I say “sort of” because the government sells carbon allowances in April and gives all the money back in October. Those organisations which do really well in controlling their emissions, and hence find themselves at the top of the league table (more of that later!), will get their money back with a bonus of up to 10%. In order to pay these bonuses those who do less well will be penalised to the same extent. Over 5 years this bonus/penalty will rise to 50%.

Let’s look at the first year. In April 2011 you have to buy allowances to cover your EXPECTED emissions in 2011/12. In October 2011 the cost of those allowances will be returned to you with a bonus or penalty depending on your ACTUAL performance in 2010/11. Your cost is therefore the cost of having your money tied up from April to October, offset or increased by the bonus/penalty. This bonus/penalty, by the way, at 10% of your allowances will be less than 0.7% of your energy bill.

What if you don’t buy any allowances next April? You don’t have to surrender them until July 2012 and there will be another sale of allowances in April 2012. By then you will know exactly how much you need and allowances can be transferred from year to year within each phase. If you adopt this procedure you will defer the cash flow effect (not increase it, because you will not buy anything for the following year either. When you get to the end of Phase 1 you can buy exactly the allowances you need, which is important because if you have any extras they cannot be carried into Phase 2 and so will be worthless.

Of course, if you do this you’ll miss out on a possible bonus in Year 1, but is 0.7% of your bill such a big deal?

CRC - is the league table a red herring?

For most people, the Performance League Table is a red herring.

Depending on how scheme participants manage their carbon footprints, they will be assigned a ranking on the Performance League Table. This will be publicly available, so the theory is that organisations will not wish to be named and shamed for appearing low down in the league. Secondly, there are financial penalties associated with your league table position.

Since the Environment Agency took over much of the information on CRC seems to have become both more complicated and more vague. For example, the fixed price for carbon allowances was originally announced at £12/tonne. This does not appear to be confirmed on the current CRC website. When participants get their money back through recycling payments, the original plan was that they would get a bonus or a penalty depending on their position on the league table. This could be between 5% and 50%. Again, these figures do not appear on the new CRC website.

Cyber Associates has requested clarification of these points from the CRC helpdesk, but in the meantime let’s use the original figures. On that basis a 5% bonus or penalty on your recycling payment is about 0.3% of your bill. That’s why we believe that the League Table is a red herring.

You will gain far more by reducing your energy usage than by trying to improve your league table position.

After all - as will be revealed at the 10th June conference - many participants will be prevented from taking advantage of the early Action Metrics and will have no way to improve their position at all.

This is all part of the obligation under the Climate Change Act to cut CO2 by 34% by 2020 and 80% by 2050. With UK emissions still growing, even standing still will be difficult. The oil price has been on the rise for most of this year, so energy is going to be expensive to buy and if you use it inefficiently the government is making it even more expensive to use!