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CRC ‘to prompt office refurbishment for firms’
By Paul Kelly
The introduction of the new CRC Energy Efficiency Scheme - formerly known as the Carbon Reduction Commitment - could see many businesses implementing office refurbishment plans to bring their premises in line with new guidelines in regards to the amount of energy they use and the carbon they produce.
What is it?
CRC is the UK’s first mandatory carbon trading scheme. It has been designed to raise awareness in large organisations of their responsibilities in terms of the environment and cutting back on the amount of energy and finite resources which they consume.
It is central to the government’s aim to reduce total CO2 emissions in the UK by 60 per cent by 2050, as set out in the Climate Change Act 2008.
The scheme will work as a “cap and trade” system, whereby firms will be given a financial incentive to reduce their energy use and carbon output. At the start of each year, the Environment Agency will sell allowances for each tonne of carbon that a company believes it will emit over the coming 12 months.
Performances will then be logged and published in a league table that will be open for public scrutiny.
This sale of allowances will provide revenue for the scheme that will be paid back to businesses in a type of “recycling payment”, with good performers receiving more of the relative cash pot than those who are not so good.
Who is affected?
Firms which generate more than six million kWh of metered electricity per annum will be eligible for CRC and this is applicable to both public and private sector organisations, therefore any office refurbishment projects that could help to reduce energy usage might now want to be implemented sooner rather than later.
In total, it is believed the scheme will impact on approximately 25 per cent of overall business sector emissions and is expected to impact on around 20,000 businesses across the UK.
However, of this figure, approximately 5,000 will be full participants - companies or enterprises that will have a legal requirement to comply with the scheme - while the remainder will have reporting duties only.
Organisations that do qualify will have to fulfil their carbon reduction commitments or face severe sanctions and financial penalties.
When does it start?
CRC is to come into force in April next year, although it is set to work in tandem with the existing European Union Emissions Trading Scheme and Climate Change Agreements.
An introductory phase is to be carried out between 2010 and 2012, where the government will not set a cap on the number of allowances to be auctioned.
From 2013 onwards, all allowances will be capped, therefore, businesses will have to purchase their annual allocation at an initial auction in January, although they will be able to trade with other organisations in a secondary market in July.
What does it mean to my office/property portfolio?
According to a recent report by the Carbon Trust, the UK’s 1.8 million non-domestic buildings account for 18 per cent of the country’s total emissions.
Therefore, offices and other institutions - such as schools, hospitals, banks, etc - will form a major part of the carbon reduction aims of the government.
Organisations which qualify for CRC but do not comply are to be fined £25 per tonne of excess CO2 produced during the initial two-year start-up period, rising to £70 per tonne for future phases.
Therefore, it is in the best interests of companies to carry out office refurbishment projects and other measures to ensure they meet these new guidelines in the years ahead.
What should you do to prepare?
In preparation for the scheme, businesses will have to create an “evidence pack” outlining their current level of carbon output. This will include structural records of all premises, data relating to energy use - such as utility bills - and also evidence of any special events that could affect carbon production.
This pack then needs to be signed by a director and forwarded to the relevant authorities.
Stuart Farmer, head of buildings strategy at the Carbon Trust, commented: “Commercial and public buildings offer the UK a big bang for its carbon reduction buck. But it won’t just happen on its own; energy efficiency needs to be the first and second priority.”
Therefore, companies looking to get ahead in terms of improving their energy efficiency - especially those whose premises hold Energy Performance Certificate ratings of G or F - might like to invest in an office refurbishment programme to boost their compliance.
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