December 9, 2009 12:03 pm
With the deadline for CRC fast approaching many organisations are already taking action to mitigate its impact and are looking forward to the benefits of improving their performance. Knowing how to monitor energy use is the key first step in meeting this crucial piece of legislation.
Participating organisations will need to purchase CO2 emission allowances equal to their annual emissions, thus the more CO2 an organisation emits the more allowances have to be purchased, giving a direct incentive to reduce emissions.
Administered by the Environment Agency, the scheme is revenue neutral, with all the money collected through the allowances being recycled back to participating organisations according to their performance.
An annual performance league table ranks participants based on energy efficiency performance, consequently the better an organisation performs in reducing emissions the higher it will appear. The league position affects how much of the revenue each organisation receives.
CRC will be mandatory for any organisation that has at least one electricity meter settled on the half-hourly market. This is likely to affect approximately 20,000 private and public sector organisations. The majority of these will only be required to make an information disclosure providing details of their electricity usage. However, organisations will be required to fully participate if they have at least one half-hourly meter settled on the half-hourly market and an annual consumption through half-hourly meters of more than 6,000 MWh during the Qualification Year January 2008 to December 2008.
Whilst qualification is based on electricity consumption, participating organisations will need to monitor their emissions from all sources (electricity, gas and other fuels) apart from transportation. The first compliance year of the scheme runs from April 2010 to March 2011 and this is also the footprint year. Participants need to maintain a comprehensive and accurate record of all their CO2 emissions, and this will be the basis for submitting a footprint report to the administrator of how much CO2 has been emitted and how many allowances per tonnes of CO2 need to be purchased. The footprint report will need to be submitted by 29 July 2011.
In subsequent Compliance Years participating organisations must purchase allowances for each tonne of CO2 they emit, based on expected energy use, and monitor their usage. After each compliance year’s submissions are received, a league table will be published showing each organisation’s performance. To make this fair, performance is normalised using three different metrics:
· Absolute metric, which reflects the absolute change in an organisation’s CRC emissions
· Early action metric, which reflects any energy saving measures implemented before the start of CRC. (This includes installation of AMR (Automatic Meter Reading) or achieving the Carbon Trust Standard or equivalent scheme, each worth a weighting of 50% of emissions in the first year).
· Growth Metric, which reflects that an organisation might have increased its CO2 emissions due to expansion, but has done so in an energy efficient way
The early action metric for AMR is limited to metering installed voluntarily before 31st March 2011, after which time the percentage of AMR meters is then frozen.
In response to lobbying, a recent change in the legislation means that the relative weighting of the early action metric in the overall performance score will be reduced more gradually to better recognise early action taken, from 100% in the first year, 40% in the second year and 20% in the third year.
The benefits of AMR have long been championed, which as part of an Automatic Monitoring & Targeting system is widely accepted to deliver savings of 5% of energy consumption. So for earlier adopters of AMR, there is a double incentive to invest to see a faster return on investment.
One of the key requirements of CRC is accuracy of data and keeping suitable records for audits which will be carried out on a sample of around 20% of participants each year. The requirement to maintain an accurate database of energy consumption and CO2 emissions is essential.
In order to comply with audit requirements and make use of the AMR data, there is a compelling argument to store this data in a secure database. This not only provides security and maintains the quality of the data but opens up a range of tools available for analysing performance and realising the value of the data to identify savings by understanding where and how energy is used.
Setting targets and benchmarking Key Performance Indicators (KPI’s) should be a key component of every organisation’s energy management strategy. With the advent of CRC, it becomes even more attractive with the added benefit of the early action metric providing even greater value.
The preparations for the CRC Energy Efficiency Scheme and the ongoing administration places the emphasis on every organisation to monitor and manage their energy and carbon emissions in more detail than ever before, and in a manner that is fully auditable to ensure compliance. Some organisations are already advanced in their preparations for the CRC Energy Efficiency Scheme, with AMR and software systems in place to allow full reporting for CRC and Carbon Footprinting, but these are currently in the minority.
For further information and a FREE, NO OBLIGATION consultation, please contact one of our professional, experienced advisors on 0121 222 5622.
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