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Carbon commitments

Designed to help cut greenhouse gas emissions by an estimated four million tonnes annually by 2020, the Carbon Reduction Commitment Energy Efficiency Scheme (CRCEES), previously known as the Carbon Reduction Commitment, or CRC, is the UK’s first mandatory carbon trading scheme. It has been implemented to assist the government in meeting the legally binding targets set out in the Climate Change Act 2008.

Introduced in April this year, the initial phase is compulsory for larger, low energy intensive organisations exceeding a set electricity usage limit.  Around 5,000 organisations will be required to fully participate in the scheme, affecting 25% of total business sector emissions within the UK.  A further 15,000 will be required to make an online information disclosure under the scheme.  

The cut off date to register is 30 September and it is estimated that as many as 40% of qualifying organisations are unaware of their obligations and set to miss this deadline.

How can organisations tell if they qualify for the CRCEES?  In September, qualification packs will be issued to all organisations with half-hourly meter supplies, which will then be required to submit information to assess whether they qualify as full participants in the scheme’s introductory phase. 

For those which must take part, carbon allowances will be sold to them based their energy usage in a CRCEES year and excess allowance can be bought and sold from the Government or other participants.  In addition, the scheme is intended to be revenue-neutral, a welcome piece of information in the current economic climate. 

But will the scheme really make a significant difference to the country’s energy efficiency?  The Government certainly thinks so; implementing stiff penalties to deal with non-compliance, alongside bonuses with the potential to run into millions of pounds, to incentivise organisations to embrace the CRCEES.  But critics question whether the additional bureaucracy it adds to the running of a company is worth it, when the savings could represent as little as 2% of the total carbon reductions required by 2020.

Aside from the impact on the environment, the CRCEES is touted to have a wider reaching effect on business.  A league table charting the best and worst performing organisations will be published annually which, depending on the ranking, could position a company as a sustainability leader or damage its reputation.

The waste sector is one area which is expected to be overlooked when organisations, both public and private, step up activity to reduce carbon.  Much of the focus will be on reducing the running costs of buildings but the opportunity to reduce carbon via waste sector activities is yet to be fully exploited. 

For example, advances in intelligent transport systems have made measuring and maximising fuel efficiency much simpler, reducing costs and emissions.  Huge improvements in low carbon vehicles, such as hybrid technologies and battery powered refuse collection, have made them a viable option for local authorities and waste management companies – many of which will be included in the initial 5,000.

So how can organisations assess which activities will have the most cost effective impact on emissions in the long term? As well as comparing initial investments and running costs, potential CRCEES bonuses or penalties must also be added into the equation.  This can make a significant difference to the viability of investing in new vehicle technologies, so life-cycle costing will be a key consideration going forward.  Waste companies must be able to prove that any investment will offer satisfactory returns. 

With emissions reduction set to be centre stage for the foreseeable future, the waste sector needs communicate the current sustainable benefits of the products and services it offers in order to maximise investment from organisations.  Innovation must be at the forefront of operations, as companies demand greater payback from the new technologies purchased. 

The CRCEES is likely to be the first of many similar schemes, giving us a glimpse at how we will all be running our businesses in the future.

Norman Thoday is managing director of Dennis Eagle

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