'Dazed and confused' by CRC scheme

London – The Carbon Reduction Commitment (CRC) energy efficiency scheme, which came into force this April, continues to confuse UK businesses despite the deadline for registration having ended.

This is according leaders of a group of major businesses who met in London recently for the latest in a series of Sustainable Business round table debates.

The executives were there to discuss how they are preparing to comply with the CRC, and the general feeling from the likes of BAA, Transport for London, Asda and Cemex, was that the mechanism is still not perfect.

Among the complaints and confusion heard around the table were that the league table is unfair to those companies that have already carried out a lot of energy efficiency work. Such companies are likely to come lower down the league table than those that are just about to embark on the energy reduction programmes.

Concern was also raised about the complexity of the regulation, which has drained resources and made it difficult to communicate the impact of the scheme in boardrooms.

The discussion also highlighted fears that the CRC hasn’t focused minds of cutting energy, more on complying with a new piece of regulation. Moreover, the scheme was expected to penalise growth in industry as there is no way of normalising the emissions data.

The detail of how the CRC will work has still not been finalised, particularly for the later phases of the scheme, and the Government has not made it clear what changes, if any, will be made.

The round table, moderated by Andrew Warren from the Association for the Conservation of Energy, came in the wake of the Committee on Climate Change’s independent report that offered the Government a series of recommendations on how it could change the post-2012, phase of the scheme.

The Committee advised the UK government to redesign its ’complex’ CRC scheme to make it easier for businesses and organisations to cut carbon – recommendations also largely welcomed by the companies around the table, particularly the idea of having separate league tables for the private and public sectors.

Indeed, the Committee report also received support even from environmental lobby groups, Friends of the Earth’s economy campaigner Dave Powell agreeing with report’s findings that the current CRC system is “too complicated, distracting, and unfair to do the job needed.”

“At the moment, councils, schools and hospitals have to compete with banks and supermarkets for carbon credits,” said Powell. “We agree with the recommendation that the trading element of the scheme should be dropped - instead we need local carbon budgets that allow the public and private sectors to work together to cut emissions.

“As the Committee recommends, it is vital that the Comprehensive Spending Review supports investment in energy efficiency - this will save councils cash, create green jobs, and move us a step closer to our long-promised low-carbon economy.”

Last-minute registrations

Meanwhile, the number of organisations now registered to the CRC Carbon Reduction Scheme had reached 2779 as of 9am, 1 Oct, according to an Environment Agency (EA) spokeswoman.

The Agency was still processing around 400 registrations that arrived in just before the 30 Sept deadline and expected to issue a final figure for sign-ups early next week.

The number of companies facing fines for late registration or non-registration will not be known until a full audit of the details provided by organisations. This work is expected to be completed by the end of the month.

The EA was said to be “very positive” about meeting its target of 3,000-4,000 registrations by full participants to the scheme.

Nearly 2800 participants have registered. Between them these organisations have reported over 90% of the electricity consumption expected to be included within the scheme,” said the EA representative.

“Another 400 organisations who we are working with are in the process of completing their registrations. As a result we expect that participant registrations will be complete - subject to final checks on meters and coverage,” she added.

Another 12,112 organisations had met their requirements to provide information on their energy usage, out of an EA target of 15,000.

Companies that fail to register for the scheme will be liable for fines of £5,000, plus £500 for every subsequent day of non-registration, as well as having to fund the CRC carbon-trading mechanism.

When performance league tables are published in October 2011, companies in the bottom rankings will only get 90% of their credits back while those at the top will receive a 10% bonus.

This incentive will ramp up in subsequent years from +/-25% in Year Two, rising annually to reach +/-50% by Year Five.

Non-registrants also risk reputational damage even before the CRC performance league table - now expected to list around 3,500 organisations - is published in October 2011.

Details of all registered participants are listed on the EA website. The agency also seems to be considering the option of identifying companies that fail to register by the end of September.

“We will not be publishing before the deadline a list of those organisations that have not yet registered,” said an EA spokesperson. The hope, she added, is that “there will be no need to fine or name-and-shame anyone because we are working with businesses to help them get it right”.

The low response rates have been linked to general confusion surrounding the scheme, which lumps process plants and water treatment facilities in the same group as hotels, swimming pools and local authority buildings.

Government ministers and the EA have also been accused of a lack of appreciation of the difficulties created by the scheme.

However, an Environment Agency spokeswoman countered: “We have heard what organisations have been saying about complexity. We are working hard to support everyone who needs to register and have run a high-profile campaign to ensure that organisations affected by CRC are fully aware and prepared.  

“As part of this campaign we have hosted workshops, issued regular media briefings, posted online updates and guidance, taken part in over 140 speaking events and issued over 80,000 letters directly to businesses required to register.

“We have also operated a CRC helpdesk so organisations could contact us with queries about CRC. “