The CRC Energy Efficiency Scheme will change the ways in which large organisations manage energy consumption. Richard Evans sets out the key considerations for hvac contractors and consultants.
The CRC officially came into force on April 1, 2010. However, its introduction has not been straightforward. In October, the Comprehensive Spending Review ushered in changes to revenue recycling within the scheme; and at the end of last year, the Government also announced its intention to simplify the CRC, which could mean further changes are on the horizon. As the framework continues to evolve, it is crucial that those involved in the industry stay informed of the latest developments.

Around 5,000 organisations will be required to make regular information disclosures regarding their emissions as part of the CRC scheme. They will then also be required to purchase allowances from the Government for each tonne of CO2 they emit. The higher their carbon emissions the more allowances they will have to buy, thus creating a direct incentive for these organisations to reduce their emissions.

Around 20,000 additional organisations will also need to participate in the scheme in some way, with the majority simply required to make an 'information disclosure' once every few years that tells the administrator about their electricity usage.

Within the spending review, the Government announced that the funds generated by the CRC, estimated at £1 bn a year by 2014-15, will be kept by the Government and subsequently directed into public funding. While the CRC may be viewed by organisations as another unwelcome tax, this latest move actually simplifies the incentive which ultimately is good news for contractors and consultants.


Organisations can now plan full initiatives without having to leave allowances for cost benefits, which would only have come into play some time in the future.

While the distribution of funds raised by the CRC may have changed, qualification remains the same. An organisation qualifies as a full participant in the scheme if at any point during the qualification period it had at least one HHM settled on the half hourly market and its 2008 annual electricity supply through all HHMs was at least 6,000 MWh.

The CRC is divided into phases with the introductory phase running for three years. Each phase includes a number of consecutive compliance years, which run from April to March, like financial years. There are no gaps or breaks between phases or compliance years.

It is important that contractors and consultants are aware of the requirements for qualifying organisations outlined within the CRC, and that they are clear on the timescales involved, as failure to comply with any aspect of the scheme could lead to enforcement measures including financial or other penalties.

Qualification period

Before each phase starts there is a qualification period, a registration period, and then a footprint year when participants work out their emissions responsibility. There is undoubtedly a considerable administrative burden on those who are responsible for information disclosure, as all records must be collated and kept in an evidence pack, which must then be kept up-to-date throughout the scheme.

The new structure of the CRC will prompt companies to look more closely at the credentials of their suppliers. Conformity to government environmental standards remains a priority and under the amended scheme greater visibility of these credentials will be required. The CRC will therefore open up greater opportunities for suppliers with a strong track record in working within stringent government policies.
The better an organisation performs in terms of reducing its emissions, the higher it will appear in the annually published league table; and there will undoubtedly be competition among those looking to feature as high as possible within the league table as organisations vie to underline their commitment to meeting government-set targets.

HVAC contractors and consultants will therefore play a vital role in helping organisations implement any measures that will yield cost and energy savings, from upgrading existing systems to incorporating renewables such as biomass or solar.
Above all it is important for professionals to remain positive - regardless of the uncertainty that currently surrounds the CRC. The legislation represents an important step for the Government in meeting its target of an 80 per cent reduction of carbon emissions by 2050, compared to the 1990 baseline. It should be viewed as a positive incentive for UK organisations to reduce their carbon emissions and to cut costs by reducing their energy bills, and there is an important role for HVAC consultants and contractors to play if they want to be at the forefront of such a ground-breaking scheme.