All set for the Carbon Reduction Commitment, due to kick in next year? If so, you're in a minority – some big firms barely know what it is, let alone have a strategy in place to deal with it. The scheme will require companies that spend more than about £500,000 per year on their electricity bills to purchase allowances for every tonne of CO2 they emit. They'll then be ranked in a public league table according to their energy use, and rewarded or penalised based on their position. So compliance will be the first big challenge - and becoming more energy efficient the second...
With as many as 10,000 UK firms expected to receive fines next year, MT asked Alex Matthias, Energy Management Leader at insurer RSA, for his top ten tips on how to stay ahead of the game.
1. Identify stakeholders
Understand your company structure, identifying key stakeholders to ensure full reporting compliance. Omission of any information may lead to remedial action (ranging from criminal prosecution to fines) by the enforcing authority, The Environments Agency. Key stakeholders could include corporate and social responsibility managers, facilities managers, managing directors of subsidiary companies and franchisees.
2. Delegate responsibility
Advise key stakeholders of their responsibilities under CRC and set key milestones for the delivery of relevant information. It is vital that the information submitted under CRC is accurate and complete, therefore clear communication and accountability is important.
3. Appoint someone to manage CRC
Appoint a designated signatory to report on CRC and a board member to sign off submissions. This is a requirement of the legislation. It is valuable to do this early in order that there is clear management and accountability from the outset.
4. Gather information
Make sure access to energy data is available. Understand your Group energy procurement processes and responsibilities and start gathering energy data now. Unnecessary delays could lead to missed deadlines and/or increased cost of compliance.
5. Understand MPAN
Collect and record all MPANs (Meter Point Administration Number) to make collection and recording of energy data quick, simple and accurate. Early capture of all metering sources ensures no errors or omissions at the time of submission. This is a mandatory element of the submission.
6. Explore early action metrics
There are two ways a company can qualify for bonus payments under the early action metrics: Obtaining the Carbon Trust Standard, and setting up Automatic Meter Readings. This could place your company higher up in the league and potentially provide you with a bigger return in the early years of the scheme.
7. Set aside a budget
There are substantial initial costs associated with CRC. For example, if a business just falls into scope and spends £500,000 a year on energy, it will involve a spend of £30,000 on allowances and £25,000 on compliance-related administration costs. This is the minimum cost and procurement could reach hundreds of thousands of pounds, if not millions. There will be fines for non-compliance so it is important that businesses have money put aside. Be mindful of the double payment and recycling element of first year trading meaning that you will have to invest two years in one payment.
8. Climb the league table
It makes good business sense to reduce energy and costs in the current climate. To enable you to do this, create a strategy for league table positioning to maximise economic benefits of CRC participation.
9. Get help
Third party validation of your submission will provide the Finance Director or Managing Director with the peace of mind that the submission is correct and there will be no financial ramifications. It is possible to self-certify under the scheme but this would leave you wholly accountable for errors or omissions. Engaging with a competent company to validate your submission would create an additional benefit as most of the work will probably need to be done in the early stages of the scheme and engaging in-house resource could be seen as cost ineffective in long run.
10.Get on with it
Don't delay - start action now. The scheme starts in April 2010.
Anything more to add? As ever, please do so below...