Will the CRC Energy Efficiency Scheme affect me?
SOURCE: INSIDER, APRIL / MAY 2010
The CRC Energy Efficiency Scheme is a UK-wide environmental initiative. The idea is to drive energy efficiency by forcing certain organisations to:
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count and report on their greenhouse gas emissions; and
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purchase, and later surrender, enough "emissions allowances" to cover their annual CO2 emissions.
So who is affected?
If your organisation was a party to electricity supply contracts under which it consumed more than 6,000 MWh electricity through half-hourly meters during 2008, it has to take part in the Scheme.
It will impact on commercial leases and sale and purchase contracts, as well as the administration and operation of multi-let buildings. The major issue faced by the property industry, and landlords in particular, relates to who is responsible for energy use in a large multi-let building with common parts – the CRC currently makes the counterparty to the electricity supply contract responsible for the energy used under it.
Organisations which are part of a group must participate as a group, with the highest UK parent company responsible for compliance – though subsidiaries which qualify for participation in their own right can choose to take part on their own.
The CRC is largely revenue-neutral, because money you spend on "emissions allowances" is "recycled" back to you six months later – however, a penalty is deducted or a bonus added based on your performance in an annual "league table". The league table ranks participants based on emissions reductions – and a poor ranking could affect your corporate image.
There are also cashflow issues – because of the 6 month gap between buying your allowances and your payments being "recycled" back to you.
Here are our top three tips on dealing with the CRC:
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Check whether your organisation has to comply.
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If it does, calculate how much you need to spend on “emissions allowances” – and whether there’s scope to reduce that.
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Assess your contractual and corporate arrangements to ascertain whether or not there’s scope to reduce your future exposure under the Scheme.
You can download Semple Fraser LLP's full Briefing on the CRC by clicking here.
AUTHOR: VINCENT BROWN
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