Anita Brook is founder of Accounts Assist a growing firm of Chartered Accountants. She’s been advising small business, sole traders and consultants for 12 years.
Due to little-known rules, companies that fail to register their energy usage under the CRC Energy Efficiency Scheme by 30 September could be hit with fines reaching £45,000. Anita Brook takes a look at the CRC and whether it will affect your business.
Have you heard of the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme? With only 1/3 of qualifying businesses registered to date, it seems that many organisations that should know about it don’t.
Intended to forcibly encourage businesses to cut their emissions, the CRC will fine organisations that exceed their quota and reward those that make significant environmental moves – bonuses will be funded by the penalties imposed on others. Participants will also make savings on energy bills through improved energy efficiency.
The scheme started in April 2010 and is administered by the Environment Agency http://www.environment-agency.gov.uk/. It has been designed to raise awareness in large organisations and encourage changes in behaviour and infrastructure. The CRC is mandatory, aimed at improving energy efficiency and cutting emissions in large public and private sector organisations – these organisations are responsible for around 10% of the UK’s emissions.
How does it work?
Under CRC, organisations buy allowances equal to their annual emissions. There is an overall limit to the amount of allowances businesses can by and individual companies can determine the most cost-effective way to reduce carbon production. All the money raised through the allowances will be recycled back to participants, according to how well they perform.
The scheme features an annual performance league table that ranks participants on energy efficiency performance.
Is my business affected?
Organisations are eligible for CRC if they (and their subsidiaries) have consumed more than 6,000 megawatt-hours (MWh) per year – meaning a power bill of about £500,000. If your business doesn’t meet the 6,000 MWh threshold, but has a half hourly electricity metre, an information disclosure is required, submitted once per phase.
Half hourly meters are used by larger businesses that have a peak load time of 100kWh at any point during the day (or paying more than about £30,000 a year for electricity). Data is captured every half hour and then sent back to the energy provider.
It is estimated that initially around 3,000 – 4,000 organisations will qualify for full participation – including supermarkets, water companies, banks, local authorities and all central Government Departments. A further 15,000 businesses will have to make an information disclosure.
Qualifying organisations will have to comply legally with the scheme or face financial and other penalties. Missing the deadline will mean an immediate £5,000 fine and £500 for each day after that, up to a maximum of £45,000.
Figures published by the Environment Agency on the 11th August show that only 1,200 businesses have registered, leaving thousands potentially facing fines. Tony Grayling, head of climate change and sustainable development at the Environment Agency, said: “We would urge the remaining businesses to sign up now, and not leave registration to the last minute. Our dedicated CRC helpdesk is available to help businesses through the registrations process.”
Businesses that qualify can register by visiting the Environment Agency website: http://www.environment-agency.gov.uk/business/topics/pollution/98263.aspx
Tags: enterprise, Green Business, small business, SMEs
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