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UK Businesses Risk Falling Foul of Carbon Control Regulations

The Carbon Reduction Commitment (CRC) is a new carbon emissions trading scheme that will affect large organisations in the UK. It is coming into force soon and businesses who flout the regulations risk a heavy fine.

The CRC forms part of the Climate Change Bill that was introduced into Parliament on 14 November 2007 and became law on 26 November 2008. If your electricity bills exceed £500,000 you will have to comply. Even if your bill is lower than this, you may still be required to register.

The scheme is central to the UK's strategy for controlling carbon dioxide (CO2) emissions. It will tackle C02 emissions not already covered by Climate Change Agreements and the EU Emissions Trading System and will help to deliver the ambitious emissions reduction targets set in the Government's Climate Change Act. The scheme will start in April 2010, although it is based on 2008 energy consumption.

Around 20,000 organisations may be affected by the scheme and yours could be one of them. Failure to comply with your obligations will result in penalties including fines.

Although suppliers will be sending letters to all their qualifying customers this month (you may have already received one), it will be your responsibility to respond and manage your carbon emissions, not your supplier.

As with any trading scheme there will be winners and losers;

  • The real losers will be the companies who ignore the rules or get the documentation lost in their internal systems. This could result in heavy fines. Making somebody within the organisation responsible for registration and reporting is the first step. Some companies offer a service to do this for you. Asking your supplier to do this is a bad idea, it restricts your options for competitive supply in the future if you are too reliant on your incumbent supplier.
  • Registration and reporting will mitigate some risk but the ability to forecast and manage energy will be imperative. Companies who are not already doing this could find themselves having to purchase credits after 2011 if they are using more energy than they did in 2008. Business growth will be no excuse, if you use more energy you will have to pay.
  • The Carbon Trust has an accreditation scheme for good energy management practice. Registration on this scheme provides some advantage.
  • The real winners will be those who can manage their energy well and source or generate genuine renewable energy.
The scheme is controversial, the argument being that it penalises companies who have already done a lot to reduce their consumption before 2008 and rewards those who have done nothing. Detractors also say it will make UK businesses uncompetitive in global markets compared to countries who are doing far less. There is much evidence to support this argument but there is not much to be gained by grumbling about it. The era of paying for the right to use energy is coming and it is unlikely to go away in the foreseeable future.

(Pic: Larsz cc2.0)