From April 2010, over 5,000 organisations in the UK will be hit by new “green” laws that will require them to buy allowances to cover their carbon emissions. The new legislation, called the Carbon Reduction Commitment (CRC) will require companies to spend upwards of 40,000 each year on carbon allowances.
The Carbon Reduction Commitment will have a phased introduction starting in 2010 with organisations expected to monitor their energy use and carbon emissions and after 2011 buy carbon allowances to cover their emissions.
Companies are being encouraged to act early in preparation for the CRC. A whole range of organisations will be affected including banks, schools and hotels.
The new regulations are currently being finalised but companies affected will be expected to submit details of their annual energy use from next year.
The new rules are being introduced as part of the Government’s aim to deliver reductions in carbon dioxide emissions. Organisations, in both the public and private sector that use over 6,000MW hours of electricity, roughly equivalent to energy bills over 500,000, will be affected by the CRC and expected to buy carbon allowances to cover their annual emissions.
In April 2011, these companies will then be expected to buy 2 years worth of allowances to cover the carbon dioxide emissions they anticipate producing in the following year and to cover the emissions generated in 2010. The payment will be recycled back to the company with either a bonus or a penalty depending on their position in an all important “carbon” league table.
The Environment Agency will manage the league table which will be crucial in determining whether companies get bonuses or penalties for their carbon performance. Various factors will be applied to determine league table position, but one crucial aspect will be early action to cut carbon emissions.
Few companies are aware of the new law and how it will impact on their business, not least their cash flow with carbon allowances purchased 6 months in advance. Energy Consultancy TNEI Services is working hard to inform its clients of the new regulations and help organisations prepare for the new legislation to avoid penalties and by taking early action secure a higher ranking in the league table published each year.
TNEI works with companies on energy management programmes to help reduce energy costs and carbon emissions, so is well placed to assist companies in preparing for the CRC.
Dan Smith, Principal Consultant of Energy Management explained:
“Our energy management team has been studying the proposed legislation to determine how our Clients will be affected and how they can improve their energy efficiency in line with the CRC and generally to enhance their energy efficiency and reduce costs.”
TNEI is planning to host free CRC information seminars in March to advise companies on the new legislation and how they could be affected by the laws.
To find out more or to register an interest in attending the seminar please contact TNEI on 0191 211 1400.