Life could soon become very uncomfortable for businesses that are not acting to curb high carbon dioxide (CO2) emissions.
The
Carbon Reduction Commitment (CRC) comes into effect in 2010, and it looks like this
carbon emissions trading scheme will be vigorously enforced.
The
Environment Agency (EA) has confirmed that around 50 auditors and inspectors are to be given wide-ranging powers, including warrants to search company premises, view power meters and seize records.
The
CRC will apply to more than 5,000 non-energy intensive organisations operating within the UK in the public and private sectors. Under the terms of the scheme, which puts a price on every tonne of carbon emitted by a business, UK companies with energy expenditures of more than £500,000 are required to use their energy bills to calculate the CO2 generated by their activities. For each tonne of CO2 emitted, companies will have to buy a carbon allowance, with the money being paid into a central pool. At the end of each reckoning period, they will receive a payment from the fund.
The least energy-efficient companies will get back less than they paid in, with the surplus going to the businesses that have most successfully
reduced emissions. The gains and losses will be small at first but the
CRC scheme has been designed to ratchet upwards, so businesses will find it increasingly expensive to ignore
energy efficiency.
But should business managers be worried about the prospect of green-jacketed members of the EA’s team all over their business premises like a cheap suit? A spokesperson at the EA was keen to allay fears that SWAT teams of green police will be swooping down on unsuspecting businesses. Companies that comply with the terms of the scheme have nothing to worry about. The
EA expects to audit some 1,200 businesses per year from 2010, and those that are adhering to the terms of the CRC should be given a clean bill of health following a desk study of their energy bills and activities. However, companies that are failing to comply with the scheme are likely to receive a visit from one of the EA’s inspectors, and these individuals potentially have access to warrant cards allowing them to search company premises, inspect company property, view power meters, call up electricity and gas bills and examine carbon-trading records.
The enforcement team’s task is simple – exposing the companies that refuse to act responsibly. The AE will have the power to commence civil proceedings against companies that fail to comply with the
CRC scheme that could result in financial penalties. Their findings will also form the basis of an annual league table publicly ranking companies by performance in cutting emissions. An organisation’s position in the league table will reflect their emission performance for the year; their carbon emissions in relations to growth in turnover; and for the first three years, their attempts to take ‘early action’ towards commitment to the CRC scheme.
The scheme has been designed to force medium-size and large companies to pay attention to
energy efficiency. The Government hopes that the threat of financial penalties and the potential shame of a lowly placing in the CRC league table will drive organisations to greater energy efficiency measures. Ed Mitchell, head of business performance and regulation at the EA, believes the enforcement squad will strengthen efforts to bring commercial
CO2 emissions under control.
Business managers will not want to wait and see how sharp the teeth of the EA enforcers are before they begin to make the necessary changes to comply with the CRC. Indeed, the scheme could represent a business opportunity for forward-thinking managers.
All organisations that currently have half-hourly metered electrical supply must consider whether the CRC applies to them either directly or through their parent companies and groups, as it is the energy consumption of the highest legal business entity that is responsible for the emissions of its UK operations. They will then need to begin considering both the budgetary implications of the
CRC scheme and the action that can be taken to make significant cost savings through carbon management.
Organisations that are willing to engage in strategic carbon management could potentially generate revenue and significant cost savings as a consequence of energy efficiency. They could also turn a high CRC league position into a positive marketing opportunity. Those that ignore the implications of the CRC may risk having their collar felt by the boys in green.
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