The CRC Energy Efficiency Scheme is a mandatory regulatory incentive to improve energy efficiency in large public and private organisations. The scheme will affect around 20,000 organisations in order to achieve overall targets of reducing greenhouse gas emissions by 2050 by at least 80% compared to the 1990 baseline.

 

Who does the CRC apply to?

If you had at least one Half Hourly Meter (HHM) settled on the half hourly market in 2008 and your annual electricity supply was at least 6,000MWh (equivalent of spending around £500,000 a year) then you will have to participate in the scheme. If your annual electricity supply is below 6,000MWh but above 3,000MWh then you will be required to make an information disclosure.

The scheme will affect a broad range of Public and Private companies including:

- Education (Public Schools and Universities)
- Manufacturing
- Local Authorities
- Private Accommodation
- Joint Ventures & PFI schemes
- All Government Departments
- Food and Drink
- Hotels
- Hospitals
- Nursing Homes

Notable Exclusions include:

- Domestic Accommodation
- Transport Emissions
- Emissions covered by the Climate Change Agreement and the European Emissions Trading System

 

What should you have done by now?

You should have determined the total amount of electricity used through all of your organisations HHM’s in 2008 and assessed whether it exceeds the qualification threshold.

If you have a HHM settled on the half hourly market then you should have received an information pack in autumn 2009 from your scheme administrator. Your scheme administrator could be the Environment Agency (England & Wales), the Scottish Environment Protection Agency (Scotland) or the Northern Ireland Environment Agency (Northern Ireland).

You should have nominated someone within your organisation that will be able to familiarise and then manage the scheme on behalf of the organisation.

 

What will happen next?

If you qualify for the scheme then you must register between April and September 2010. However, if you don’t meet the qualification criteria but have a HHM on the half hourly market then you will be required to make an information disclosure during the registration period.

From 2010 you will have to produce a report on the CO2 emissions you have emitted for that year. The reporting year is from 1st April to 31st March and the report will be submitted in July every year.

In April 2011 you will have one month to purchase allowances for every tonne of CO2 you emit from your energy supplies. You will have to pay £12 per allowance and they must cover your projected emissions for the forth coming year (April 2011 – March 2012).

All organisations will then be positioned in a league table based on their performance in reducing their CO2 emissions. The revenue generated from the allowances sale will then be issued as a bonus to the organisations at the top of the table and a penalty will be issued to organisations at the bottom of the table.

 

In the Future

From April 2013 the Government will cap the total number of allowances that will be issued to all participants. This will mean that all organisations will have to bid for allowances in a closed auction. Auctioning and capping allowances will increase the price of each allowance and the total cost of the scheme to the participant.

 

What if I don’t do what the scheme requires?

The following are fines/penalties that you will incur if you do not comply with the scheme:

If you meet the qualification criteria but do not register by the deadline (30th September 2010) you will have to pay £5,000 immediately and a further £500 per working day for each subsequent working day of delay up to a maximum of 80 days.

Failure to make an information disclosure will result in a £500 fine which will be issued for each HHM that your organisation is responsible for.

Failure to register all parts of the organisation will result in a £500 fine for each HHM that was not included in the registration.

Failure or a late submission of a footprint /annual report (submitted in July every year) will result in an immediate £5,000 fine and a further £500 per working day for each subsequent day of delay up to a maximum of 40 days. The total accumulated daily rate fine will then be doubled after 40 days.

20% of organisations in the CRC will be audited each year and if any information has been reported incorrectly to the administrator then there will be a £40 penalty for each tonne of CO2 incorrectly reported.

Failure to keep adequate records in your evidence pack (contains information on energy used and other documents supporting your reports) will result in a penalty of £40 for each tonne of CO2 of the total emissions reported on your most recent CRC annual report.

Falsification of evidence and an attempt to mislead the administrator could result in a £50,000 fine and imprisonment for up to three months.

Failure to comply with an enforcement notice and to intentionally obstruct the administrator will result in imprisonment for up to two years and an unlimited fine.

If you do not buy enough allowances for the year then you can buy extra allowances through the Safety Valve. The administrator will require a deposit in order to purchase the allowances from the EU Emissions Trading System. You will then be required to pay the difference between the price the administrator bought the allowances for and the deposit you paid. You will also have to pay a £300 transaction fee.

 

What can I do to reduce my organisations liability to pay for the CRC scheme?

If an organisation only just meets the qualification threshold then they will have to spend just over £38,000 on allowances to cover their CO2 emissions generated from their electricity supply.

Vital Energi can provide turnkey solutions incorporating technologies to suit your organisation which will significantly reduce your CO2 emissions, your energy bills and your CRC costs.

Smart Metering Systems (also know as Automatic Meter Reading Systems) will allow you to remotely monitor your energy consumption and gather accurate gas and electricity readings every half hour. Vital Energi are innovators in providing bespoke metering solutions that are tailored to your requirements that will make gathering and analysing data a more efficient process. Accurate data on your CO2 emissions will allow you to purchase the correct amount of allowances for the year ahead therefore you will not be penalised for buying extra allowances during the year. Our tailored metering solutions will also help you to compile accurate reports on your energy usage which will ensure you do not receive costly fines. Installing a Smart Metering System before the 31st March 2011 will earn you more performance points and will increase your position in the league table therefore giving you a better chance of earning a bonus.