Carbon Reduction Commitment (CRC)
July 8th 2009 
The Environment Agency is in the process of writing to all half hourly consumers of electricity, and if your organization receives one of these letters you will need to take action under the Carbon Reduction Commitment (CRC).
For some organizations, it may be immediately clear that you do not meet the necessary qualification criteria and therefore exempt. For others, there is an intricate range of tests that must be undertaken to demonstrate whether you are exempt from the CRC or not.
There has been much written and talked about the CRC but as with many things in the energy and environmental space, very little action. Encore has responded to this apathy by creating a dedicated subsidiary to focus exclusively on the CRC requirements of organizations through Encore Carbon Services led by Andy Dewis.
In order to create a more action focused approach to the CRC, Encore Carbon Services have developed the tools and models required to administer and optimize the CRC process. Using these tools and models Encore can provide detailed estimates of the commercial exposure facing your business. Simply email carbonservices@encore-international.net and we will complete a tailored information sheet which quantifies CRC value drivers outlined below and calculates the CRC exposure for your business.
Kind regards, |
Mark Dickinson |
Managing Director |
Encore International Group |
CRC VALUE DRIVERS
There are three primary value drivers that make it essential for your organization to escalate this requirement to the top of the corporate agenda
Value Driver 1: Legality
Effective participation in the CRC is a statutory requirement, failure to demonstrate adequate corporate governance and prepare proper processes can incur significant fines and possibly custodial sentences.
Offence |
Mid Size* Penalty |
Your Estimated Penalty |
Incorrect Reporting |
£ 1,366,666 |
Email carbonservices@encore-international.net to find out |
Failure to keep adequate records |
£ 170,833 |
Repeated Failure to keep adequate records |
Custodial Sentence |
*Mid-Size: CO2 emissions for the mean emissions average (mid-sized company emissions) based on 2007 emissions data
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Value Driver 2: Strategy
The CRC is going to create an obligation for a significant cash outflow for your business in April 2011 of which 90% will be re-paid in October 2011.
Mid Size Consumer Parameters |
Mid Size *Stats |
Your Estimated Stats |
Total CO2 emissions (tonnes) |
28,400 |
Email carbonservices@encore-international.net to find out |
Total annual CRC spend (not counting recycled amount returned) |
£340,810 |
Total double payment* amount in April 2011 |
£681,621 |
*Mid-Size: CO2 emissions for the mean emissions average (mid-sized company emissions) based on 2007 emissions data
*After the first operating year of the scheme (2010/2011) there will need to be a double purchase of emissions allowances
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Value Driver 3: Risk Management
In addition to meeting your statutory obligations and understanding the short term cash impact of the scheme the CRC introduces a new risk & reward equation for your organization. By year 5 of the scheme this could have the following cost impact on your business depending on your position in the league table.
Mid Size Conusmer League Postion |
Mid Size* Bonus / Penalty |
Your Estimated Bonus / Penalty |
League Position 2 |
£ 206,000 |
Email carbonservices@encore-international.net to find out |
League Position 2000 |
£ 41,000 |
League Position 4900 |
- £ 198,000 |
*Mid-Size: CO2 emissions for the mean emissions average (mid sized company emissions) based on 2007 emissions data
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The commercial implications for a customer’s performance under the scheme can be summarised as:
- A high place in the league table could mitigate over 50% of the CRC cost and give you a significant marketing opportunity
- A mid table ranking will leave your costs relatively unchanged and possibly result in competitive pressure from more ‘environmentally friendly’ competitors
- A low place ranking could see your costs increase by over 50% including additional PR costs to mitigate pressure on the order book
The challenge is to make sure that the money you spend on improving your position in the league table is worth the benefit. This is not just the benefit under the scheme but also the additional costs / benefits associated with the publication of your position within the scheme and external commercial benefits in core energy reduction.
Email carbonservices@encore-international.net to quantify what this means for your business.
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