Last week, the government unveiled the final details of its scheme to persuade organisations that saving energy not only makes sound economic sense, but also significantly reduces carbon dioxide emissions. The Carbon Reduction Commitment (CRC) energy efficiency scheme is a new regulatory incentive to improve the energy efficiency measures taken by large public and private sector organisations. It forms part of the government’s well publicised target to achieve UK carbon emissions reductions of at least 34 per cent on 1990 levels by 2020. Organisations that consume over 6GWh per year (and who operate half-hourly metering) will have to participate from April 1 2010, and currently some 5,000 are caught up in this net.
Not surprisingly, there has been a lot of toing and froing on the issue between these organisations, their trade bodies and the Department of Energy and Climate Change (DECC) to ease the transition. For many, it will involve considerable cultural and operational change and, at a time of economic uncertainty, a lot of necessary investment in energy reduction technologies and practices.
Steve Ruddell, ABB’s spokesman for energy and energy efficiency issues, says that while the CRC will effectively be revenue neutral to the Exchequer, it will have cash flow implications for qualifying organisations. He estimates that an energy saving of 5% will be needed to cover just the average cost of administration of CRC implementation within an organisation.
Mr Ruddell’s view is that many organisations are ‘stuck’ at the monitoring and targeting phase of the CRC – the measurements have been taken and the energy consuming ‘culprits’ have been identified. He now urges all organisations – not solely those identified by DECC for the April 2010 deadline – to move immediately to the next stage: energy reduction.
DECC has modified the scheme to make the transition more orderly and to help ease the up-front costs. Essentially, organisations will only have to report emissions in the first year (2010/2011). In subsequent years organisations will have to buy allowances corresponding to their emissions from energy use, and then surrender them by the end of the year.
In the second year (2011/2012) extra weighting will be given to organisations that take early action to improve energy efficiency, and recognition will be given to those deploying onsite renewable energy sources by publishing the increased carbon savings achieved as a result. From 2013, the government intends to cap the number of allowances available each year and all allowances will be auctioned.
“While organisations may sit back believing they have sufficient time before action is needed, the government has rather cunningly introduced a few incentives of its own to motivate action now,” says Mr Ruddell. He refers to the proposed ‘league table’ that will publicly expose, on an annual basis, the best and worst performers in terms of carbon emissions reduction.
In a move to reduce the financial burden, auction revenues generated through the initial sale of allowances will be recycled back to participants in the scheme, with companies receiving payments back from government in relation to their first year emissions, plus or minus a bonus or penalty dependent on their position in the league table.
Guidance for scheme participants is due to be published towards the end of this month. For more information contact crchelp@environment-agency.gov.uk. Meanwhile, ABB has created a Six-Step CRC plan (based on its established Six-Step plan), which includes guidance on conducting energy appraisals and how variable speed drives may be used to reduce the energy consumption of pump and fan installations.
Les Hunt
Editor