Wise-up to energy efficiency

The UK government has made a commitment to reduce carbon dioxide (CO2) emissions by at least 80 per cent from 1990 levels by 2050. This is a tough target – which will require significant changes in the way businesses and the government operate.
    
The CRC Energy Efficiency Scheme is a new mandatory emissions trading scheme designed by the government to help reach this target. It could reduce CO2 emissions (from around 5,000 participant organisations) by approximately 11.6million tonnes per year by 2020 – the equivalent to taking roughly four million cars off the road.  
    
These reductions in emissions will be achieved by requiring large organisations to monitor energy consumption and purchase allowances for resulting carbon emissions. Participants successful in reducing energy consumption will not only save money on energy bills, they will also receive financial and repuational incentives. These savings should be well in excess of the costs of participating in the scheme.

A legal requirement
Registration for the scheme is a legal obligation affecting both private and public sector organisations. Alongside engineering companies, banks, hotels and utility companies, the public sector is one of the top ten sectors affected by the CRC scheme. Qualifying organisations, which include all UK government departments, must register for CRC with the Environment Agency before 30 September 2010.  
    
As the lead administrator for the scheme, the Environment Agency wants to ensure that everyone registers correctly and is in position to provide an accurate annual report on energy use by July 2011.
    
We are working with organisations to help them understand their obligations and will provide as much guidance and information as is possible. To support this, since April 2009, we have had a CRC helpdesk in place to answer questions. However, failure to comply with appropriate deadlines or providing inaccurate information may result in civil sanctions and fines.  
    
Compliance with the CRC Energy Efficiency Scheme will require financial, audit and carbon management adjustments to be made by participating organisations. By planning and preparing for these now, participating organisations can not only make sure they fulfil their legal duty, but that they can make the most of the opportunities offered by the scheme in cutting energy bills, reducing upfront CRC payments, increasing payouts from the scheme and enhancing their reputation.

How does it work?
The CRC Energy Efficiency Scheme will be phased in over three years. Once fully operational, CRC Participants (not Information Declarers) will be required to monitor their emissions and purchase allowances for each tonne of CO2 they emit at the beginning of each reporting year.  
    
The scheme is revenue neutral overall, meaning all revenue raised from selling allowances is re-distributed back to participants according to their position in the annual Performance League Table.
    
As a consequence, reducing carbon emissions means participants will save money on their energy bill, will purchase fewer allowances and receive greater financial reward through revenue recycling.
    
Participants that perform well will also be placed higher in the Performance League Table, which will be published annually by the Environment Agency. In an age of eco-conscious public, being higher up the league table will have the added benefit of enhancing the organisation’s reputation.

Requirements for the public sector
All government departments are participants in the CRC Energy Efficiency Scheme, regardless of their energy consumption, and must register for the scheme by 30 September 2010.  
    
Other public sector bodies, such as non-departmental public bodies and public corporations, must also register for the scheme by 30 September 2010 if they have a settled half-hourly electricity meter. These organisations may also be participants in the scheme if they meet the qualification threshold.
    
This threshold is determined by 2008 electricity consumption: If the organisation has a half-hourly electricity meter and consumed at least 6,000 Mega-Watt-hours of electricity through all of its meters during 2008 (equivalent to an electricity bill of around £500,000), then it will need to participate in the scheme by monitoring energy consumption and purchasing allowances.
    
However, if the organisation has a half-hourly electricity meter but consumed less than this amount of electricity, it will be an Information Declarer. This means that all it will need to do is identify its half-hourly meters. It will not have to purchase allowances.
    
There are serious penalties for eligible organisations if they do not register with CRC by the end of the registration period – they will be handed a fixed fine of £5,000, then for each subsequent working day they fail to register they will be fined an additional £500 per day, for a maximum of 80 working days, together with a publication of non-compliance. It is therefore essential that eligible organisations register before 30 September 2010.

Take action now
If you believe your organisation is likely to fall under the CRC Energy Efficiency Scheme, the first step you need to take is to identify your highest parent organisation, as that’s the body responsible for registering for CRC on behalf of the entire organisation. If this organisation has at least one half-hourly electricity meter, it will need to register for the scheme via the Environment Agency’s website.  
    
Before registering, determine if your organisation qualifies for CRC as a Participant or Information Declarer. This will require taking account of all half hourly meters in your organisation and their total electricity consumption for the calendar year 2008. You should also find out what emissions are excluded from CRC and determine if your organisation, or part of it, qualifies for an exemption due to a Climate Change Agreement. If you have an exemption, you must still register with the Environment Agency. Contact the Environment Agency for more information on how to do this.
    
Once you know if you are a Participant or Information Declarer, you will need the following information to register for the scheme: your registration address, the names of senior officers and contact details along with the half-hourly meters your organisation has and those meters’ electricity consumption. Making sure this information is easily available and getting all the data in order beforehand will make registration simpler and quicker.
    
If you are a Participant, you will also need to consider the financial commitment your organisation will have to make in order to purchase allowances to emit carbon. During the CRC’s introductory phase (2011/2012), one allowance, which equals one tonne of CO2, will cost £12. However, after the three-year introductory phase, the total number of allowances will be capped, and these allowances will be auctioned, rather than sold at a fixed price. As a result, the cost of purchasing allowances will become higher making it financially more attractive for participating organisations to reduce their CO2 emissions by introducing energy saving measures.
    
As a result, you should start looking for ways to reduce energy consumption now. For public sector organisations, the most effective ways to reduce CO2 emissions are through simple steps, which improve energy efficiency in office buildings. These are often inexpensive and will show instant results.

Practicing what we preach
As a large public sector organisation operating over 200 buildings throughout England and Wales, the Environment Agency will be a Participant in the CRC Energy Efficiency Scheme.
    
With the double responsibility of a CRC participant and lead administrator for the scheme, we are leading by example in cutting our own carbon emissions. So far, we have cut our CO2 emissions by 14 per cent against a 33 per cent target for 2015 by implementing a wide range of initiatives to make its offices and buildings as energy efficient as possible.
    
Not all of these initiatives have been at a high cost. Some of the most effective ways of reducing energy consumption have included simple steps such as installing roof insulation, intelligent lighting systems (controlled by movement and ambient light sensors), raising staff awareness and controlling temperature.  
    
We closely monitor heating controls to make sure they are set for the right time and to a comfortable temperature. For winter 2009-2010, the office building temperature policy was 19 degrees Celsius and no higher. This was taken one step further in our Anglian regional office where the heating was put on two weeks later than in the previous year. This combined effort cut energy use by 34 per cent and reduced the region’s heating bill significantly.
    
More ambitious, but equally cost effective steps to reduce energy consumption have been the installation of wind turbines on Environment Agency land and the introduction of voltage power optimisation technology in our buildings. This technology prevents excess use of electricity and will be installed in 33 of our offices before the end of 2010, cutting the Environment Agency’s carbon emissions by between 700 to 900 tonnes annually and reducing energy bills by between £160,000 and £200,000. These cost savings mean that the new scheme will pay for itself in just three to four years.

New office
In 2010, the Environment Agency’s corporate office in Bristol will move to a new more efficient building. This office utilises technologies such as a ground source heat pump and solar panels to reduce energy consumption and has been recognised for its environmental performance. Moving to this office will save the organisation as estimated £180,000 per year in operational costs.
    
These steps and our continued effort to reduce our carbon emissions will help to place us in a favourable position in the CRC league table. They also deliver value for money and demonstrate the commercial viability of investing in technologies that reduce energy consumption. What we’ve done isn’t rocket science – a lot of it is common sense. We look forward to other large organisations following this lead and helping to meet the UK’s CO2 emissions target.
    
Andrew Hitchings is the project executive working to run the emissions trading registry at the Environment Agency.

For more information
For more information about the CRC Energy Efficiency Scheme and to download the CRC Registration Guidance, visit www.environment-agency.gov.uk/crc
    
For assistance or queries about the scheme, contact the CRC dedicated helpdesk at crchelp@environment-agency.gov.uk
    
You can make an action plan for reducing your organisation’s energy use on the Carbon Trust website: www.carbontrust.co.uk