The Carbon Reduction Commitment (CRC), a mandatory emissions trading scheme, starts in April 2010. The legislation covers organisations – including public sector bodies – with an energy bill of £500,000 or more. Allowances need to be purchased to cover the average total energy consumption. The money will be recycled to participants, but the amount will vary according to their success in cutting emissions. Each year a table of the best and worst performers will be published, with the best performers rewarded and the worst penalised.
In addition, National Indicator 185, part of a framework of performance measures set by central government, requires councils to measure their CO2 emissions. Both the CRC and NI 185 have the potential to damage Councils reputation by getting a poor rating. This public reporting and the financial impacts are the greatest drivers for many public sector bodies. Conversely, a clear strategy can yield some positive PR and cost benefits.
Whilst many local authorities, fire and police authorities, hospitals and schools will fall within the remit of the CRC, little has been done to effectively incorporate the requirements at a strategic level.
The revised Carbon Reduction Commitment was released by the Department of Energy and Climate Change in early October providing clarification for public sector bodies on how this far reaching legislation will affect them. The response sets out the Government’s final policy decisions on how the scheme will operate. The Environment Agency will publish guidance for participants later this month. The order implementing the scheme will go before parliament in December.
One of the key changes is a name change to the Carbon Reduction Commitment Energy Efficiency Scheme to better reflect the ambitions and intentions of the legislation. Recent studies by both the European and UK Environment Agencies have shown that up to 25% of energy can be saved from the average building through good practice measures of which 15% can be met through quick payback initiatives.
Greater focus has been placed upon the ability to achieve the early action metric, used to compile the league table at the start of the CRC. The Carbon Trust Standard or equivalent will now be accepted in respect of the Early Action metric. A set of strict criteria must be met to demonstrate energy emissions reduction has been achieved over a three year period. Key is the evidence and accuracy of the data set to gain these additional credits. The weighting of the metric has also been amended to provide a greater weight in years 2 and 3 of the scheme – it will count for 40 per cent in second year of the introductory phase and 20 per cent in third year.
Certainly to be well placed in the ranking tables for the first three years, robust energy efficiency measures will be required. Cost effectiveness will be swayed by the £12 per tonne trade price enabling some initiatives to become viable.
Prior to April 2010 public sector bodies will need to have understood the risks and developed a forward strategy based upon a management system approach. There are a series of steps which need to be taken to achieve this:
Stage 1 mobilisation
High level organisational review to understand the liabilities and how ready the business is.
Engage with the key stakeholders
Perform an initial review and gap analysis using a roadmap approach
Stage 2 – Strategy
Identify the organisational requirements
Develop the CRC strategy key needs, business case, costs and early action measures that can be taken, 2008 inventory of half-hour meters, board approval, date systems and comms approach
Stage 3 Implement early actions
Implement necessary systems
Collate registration details and data
Stage 4 forecast, monitor and projects
Complete registration
Forecast and monitor carbon emissions under the CRC over the next 12 months to assess accuracy of the model developed
Project identification and implementation to test the system use robust system to understand and capture savings.
Our own experiences suggest that whilst the private sector is reasonably well advanced in its preparations for the CRC regime, public sector bodies are not. With both financial and reputational issues at stake public sector organisations would do well to act and prepare now.
Sunil Shah is head of sustainability at independent planning consultancy DPP. He can be reached by email: Sunil.Shah@dppllp.com
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