The HSQE Department Ltd

Fact Sheet on
The CRC Energy Efficiency Scheme
Overview
Am I in or out?
What do I count if I'm in?
Who's responsible for my organisation?
What's the timetable?
What will I pay?
Can I offset some of my commitment by buying from nuclear or sustainable sources?
What happens if I don't comply?
Where can I go for more information?

Overview
This scheme, formally known as the Carbon Reduction Commitment, or CRC, is aimed at
large energy users in the private and public sectors that are not already covered by a
Climate Change Agreement (CCA) or the European Union Energy Trading Scheme
(EUETS). The objective of the scheme is to encourage energy conservation and a
reduction in carbon dioxide emissions within the UK.

Am I in or out?
The threshold is based on electricity consumption, in 2008, of 6 GWhr/year, which is
equivalent to having 220 three-kilowatt kettles running continuously. At current prices, this
is likely to include anyone with an electricity bill of around £500,000/year or above.
Consumption needs to be recorded by at least one half-hourly meter (HHM) and be bought
on the half-hourly market. You should ask your energy supplier whether this applies to
you.
There is a lower threshold of 3 GWhr/year at which an organisation isn't included in CRC,
but will need to register so that Government can track all major users. Regulators call this
“information disclosure”.
The thresholds are for the total consumption of an organisation, or group of organisations
under common ownership, aggregated together. For example, if company A owns more
than 50% of company B, it needs to include company B's electricity consumption in its own
total for the purpose of deciding whether it is in CRC. In this case, company A will be
known as the Parent Organisation.
Organisations covered by a CCA or EUETS can claim exemption from CRC but are
expected to need to register first.

© The HSQE Department Ltd 2009

www.thehsqedepartment.com
01934 610168
What do I count if I'm in?
You need to include all energy used on the site. This might include: -
• electricity & gas to run equipment
• heating, lighting & air conditioning
• gas, oil or electricity for forklift trucks
• power for portable maintenance equipment e.g. welding
There are a few exemptions, for example you do not need to include vehicles that are
licensed for use on the road.

Who's responsible for my organisation?

By April 2010 the Parent Organisation or, in the case of a group of sites under common
ownership, a site designated the “primary member”, needs to have appointed a named
director and 2 administrators, all of whom will responsible for registration. These must all
be officers of the organisation because the responsibility cannot be delegated to a third
party such as an energy consultancy.
After registration the organisation can appoint a third party to be a scheme administrator,
effectively outsourcing the management of the scheme. Similarly, after registration, an
organisation can delegate data collection and reporting to any site under its control.

What's the timetable?

During 2009 it would be good practice for organisations to set up their management
systems for gathering and reporting energy use.
Operation of the scheme will be split into Phase I & Phase II. Reporting years follow the
traditional accounting year of April to March.
Phase I The “uncapped” period
2010: Organisations that are in CRC can expect to receive registration packs from the
Environment Agency by the end of quarter 1 (Q1) and must also have named their director
and administrators. The first 12-month energy monitoring period starts at the beginning of
Q2, but is for the purpose of reporting only. Registration must have been applied for by
the end of Q3.
2011: At the beginning of Q1 there will be a sale of carbon units at a fixed price. An
organisation will be able to buy as many units as it wants, based on how much energy it
expects to use in the following 12 months. Energy consumption for 2010/11 will be
reported in Q2. The first league table of energy consumers will be published at the end of
Q3.
2012: This will be a repeat of 2011, with the no limit on the number of carbon units
purchased. At the same time that the league table is published, government will pay back
to registered organisations, some of the revenue raised from sale of carbon units.
Payment will be prioritised on the basis of carbon savings and will be known as “recycling”.

© The HSQE Department Ltd 2009

www.thehsqedepartment.com
01934 610168
Phase II The “capped” period
2013 and beyond: The pattern of buying carbon units and reporting will continue. The two
main differences will be that an organisation will only be allowed to buy carbon units based
on actual consumption from previous years and that these units will be auctioned to the
highest bidders. If an organisation decides not to participate in the auction, or needs more
carbon units that it has been allocated, it must buy on the open market.

What will I pay?

Initial costs of the CRC are expected to be around 8% of an organisation's total energy
spend, but this is expected to fall to around 1% after “recycling” of carbon units.
The cost of carbon units during the capped period Phase I is expected to be around
£12/tonne of CO2. The cost during Phase II at auction and on the open market, will vary
depending on demand.

Can I offset some of my commitment by buying from nuclear

or sustainable sources?
This is controversial and appears to be contrary to the objectives of CRC, but no. All
electricity purchased from the grid will be assumed to have the same impact on CO2
emissions.

What happens if we don't comply?

The regulators have come up with 11 ways that they can levy a fine, from forgetting to
include an electricity meter (£500 for each one) to late registration (£5,000 plus £500 for
each additional day).
It's therefore very much in an organisation's interests to get to grips with this scheme.

Where can I go for more information?

The standard of data collection and reporting needed will be very similar to that of financial
accounts and there are significant penalties for false or inaccurate reporting. We would
therefore encourage organisations to read around the subject and start putting
management systems and data collection in place in good time.
Guidance is evolving all the time and the links below are current only at the time of writing.
Environment Agency guidance
DECC guidance

The HSQE Department can help you to understand the CRC Energy Efficiency Scheme,
assist you to put systems in place and help to find energy savings. To discuss your needs
or to arrange a free CRC audit, please contact: -
info@TheHSQEDepartment.com

© The HSQE Department Ltd 2009

www.thehsqedepartment.com
01934 610168