Is it Time for a Fresh Look at the Carbon Reduction Scheme?
17/03/2014« Back

Why does the scheme receive bad press?

The Carbon Reduction Commitment has received quite a lot of bad press over the course of the first phase of operation, much of it due to continual change and creation of confusion over requirements – ironically in many cases through actions aimed at simplifying the scheme for participants.

I have never held back in my praise for the intent of the scheme, it arguably should have been hailed as one of the best legislative measures implemented in the last decade, instead mention of its name alone is often greeted with cutting eyes and sneers. With the phase one measurement period about to end (signaling the official start of phase two) isn’t it high time we took a step backwards and gave the scheme a second chance? 

OK, so it’s a tax – that is something we can all agree on! But then we are taxed on almost everything so it’s no surprise that we are taxed on Carbon Emissions. I guess the annoying thing for CRC participants is that due to your size and profile you are in a select group of around 2,500 that get ‘special’ treatment! Maybe if you start to feel special it would help?

Lets Focus on Some Benefits

If you are a participant then you will have a nominated Senior Officer with a legal responsibility to provide some attention to carbon – and as a result energy management – you may be that Senior Officer, possibly wondering why no one highlighted to you the cost savings that could be achieved through energy reductions before!

The demanding legal requirement of a specific structure of responsibility is one of the real benefits to have come out of the scheme; only dramatic increases in energy costs have made it to the board table with equal impact.

Is Your List of Responsible People up to Date?

The management of an evidence pack and the requirement to carry out an internal audit each year has been as clear as it could be within the scheme guidance. It is clear however that there have been various approaches undertaken, from the comprehensive to the non-existent across participants.

Adopt a Monthly Management Process

The annual cycle for CRC is quite simple, measure, report, buy and submit. Break that cycle into a monthly process, as you would for any financial accounting requirement and you have nothing more than a continual audit process.

Adoption of a monthly management process of recording, validation and accrual, with integration to financial process (and internal audit quarterly or half yearly, with integration to internal audit process) can be a powerful engagement tool. It can also lead to real reductions in energy cost.

Energy Asset Management is critical for every participant. An accurate register of metering points (cross referenced with property/managed assets – with integration to existing processes and integration to other business management systems) is required to maintain accuracy.

With a robust asset record, accurate tracking of consumption through billing and direct metering can lead to a 5-10% reduction on overall cost not only of participation (i.e. cost of carbon allowances) but cost of energy through simple validation. Internal recharge and allocation of all costs to individual departments (directly responsible for energy use) is also recommended to foster ownership at source of emission.

Make a Simple Check

If you are not ready to submit your annual report on the 2nd April and you don’t accrue for CRC costs with at least 5% accuracythroughout the year there is much improvement that can be made. Improvements, with well considered investment in time and systems this could yield significant financial savings over the next five-year phase of the scheme.

Richard Hipkiss - Commercial Director - digitalenergy Ltd

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