Conquering the CRC challenge

The Carbon Reduction Commitment Energy Efficiency Scheme (CRC) has rarely been out of the media spotlight recently. Many articles have focused on the detail of the scheme and its implications, but for everyone involved, including those in the public sector facing inclusion, the time for discussion is over. It’s now crucial that plans and processes are put in place to manage inclusion in the scheme to avoid the potential financial and reputational pitfalls.
Many government organisations still have questions and even those who are fully up to speed on registration may still be unclear about some of the scheme’s early actions. In fact, recent research, the npower Business Energy Index, revealed that nearly half of those questioned from the private and public sector said they did not fully understand what was involved in buying allowances for CO2 emissions and 44 per cent were also unclear about forecasting their CO2 emissions. Both processes are key elements of the CRC and it’s no wonder they’re unsure as 44 per cent also believe the level of guidance about the CRC has not been adequate.
The findings paint a dim picture of the potential priority placed on carbon reduction in organisations and their understanding of the CRC.

Taking control
Although it may be of some comfort that other organisations are feeling the same confusion, ultimately, this does not help the cause. Organisations should take control of their participation in the CRC to ensure they do not face the potential financial and reputational implications.
Missing the September 30th deadline and failing to manage the purchase of emissions allowances adequately will result in financial penalties. For example, late registrants will face an immediate fine of £5,000, plus an additional £500 per working day for every working day past the deadline, up to a maximum of 80 days. Non-compliance will also be published.
This does not even take into account the impact on reputation of a low position in the CRC’s league table, which will rank participants in part on how successful they’ve been in reducing their CO2 emissions.

Call in the experts
With many still unclear about their obligations, and lacking a strategy and in-house expertise, we believe it is likely that organisations will call on specialists such as npower for advice. At npower we’re increasingly working with a number of our customers in this way under our new ‘CRC Assist’ service, which supports organisations in managing their CRC obligations.
Using services like ‘CRC Assist’ should prove to be time and cost effective, by helping to clarify the role in-house specialists like energy managers will play, whilst also helping to avoid the need to recruit and train extra staff, and to establish a suite of processes and procedures for compliance with CRC.
This arrangement could also prove to be more productive in the long term as the CRC strategy would be based not only on compliance, but on long term goals to deliver energy savings and CO2 reductions focused on performing well under the scheme, from a financial and reputational perspective, that are linked to an organisation’s broader business objectives.
The importance of this ongoing strategy cannot be underestimated – while all eyes might be on registration at the moment, we cannot escape the fact that the real focus of the CRC is delivering emissions reduction through energy efficiency.

Change required
For many establishments this will require a step change in how they manage current and future energy consumption and the implementation of new tools. For example, organisations will need to have detailed plans in place to record and report on their emissions, and then reduce them. The ability to forecast allowance requirements, understand risk exposure and control cash flow related to allowance purchases will also be crucial.
Smart meters should feature as a priority in these plans. These will capture data on energy use, which can then be analysed to make informed decisions on energy efficiency.
Armed with this data, participants can take a longer term view on where energy efficiency measures could be implemented; the capital investment required to deliver these actions; and the expected outcome in terms of energy, and therefore CO2 and allowance savings.
Scheme participants that can do this are more likely to perform well under the CRC, to enjoy also significant cost savings from reduced energy consumption and potentially unlock financial rewards through purchasing fewer emissions allowances.
Government organisations wanting to share in the rewards the CRC offers should start work now and for those lacking in-house resource or expertise, perhaps working with a specialist partner could be the best solution for long-term success.

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