Carbon Reduction Commitment to save 1.2 MtC by 2020
24th October 2007 – London, UK
But is that anywhere near ambitious enough?
The non energy intensive sector has long been neglected by the legislative framework in this country and it is high time that a policy instrument of this nature was instated. As Magali Saint-Donat of EDF explains, “even if a company’s total energy bill is huge, it is a small proportion of operational costs so it is easy to ignore”. As a result effective market mechanisms are going to prove essential if much needed change is to be promptly undertaken.
These commercial and public sector organisations may not be ‘energy intensive’ but between them they use the equivalent of 21 million tonnes of oil and, according to recent estimates, emit over 15 million tonnes of carbon a year. With the economic and environmental imperative for change becoming ever clearer this is not a sector we can afford to ignore.
For those of you that don’t know, the Carbon Reduction Commitment is a mandatory cap and trade scheme designed to deliver dramatic carbon savings from large non energy intensive organisations. The scheme will cover emissions from any organisation with mandatory half hour metered consumption of more than 6000MwH/year. This will roughly equate to an annual electricity bill of over £500,000. To avoid overlap with existing measures, emissions covered by Climate Change Agreements or the EU Emissions Trading Scheme will not be included. The scheme is due to be fully launched in 2012 with an introductory phase, in which the government will set trading prices, beginning in 2010.
The exact operating mechanisms are being discussed at present. A period of open consultation concluded on October 9th and the government response is expected shortly. The system will be broadly based upon the auction of tradable emissions ‘allowances’
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The Carbon Trust has conservatively estimated that “businesses in the UK waste some 10–20% of the energy they buy through poor control” and the Energy White Paper released earlier this year suggested that “the non energy intensive business sector could save up to 5 MtC and the public sector 1Mtc by 2020 through adoption of cost-effective energy efficiency improvement.”
Why then have we set the target of this exceptionally well meant scheme at a paltry 1.2 MtC reduction?
Andrew Warren, of the Association for the Conservation of Energy (ACE), has suggested that a target reduction of at least 3m would be far more appropriate and I am inclined to wholeheartedly agree. As the scheme gets underway it is important that we not only consider the application of more stringent measures for the organisations involved but also contemplate the inclusion of far smaller firms. There are several million SMEs in the UK and together they are responsible for over 10 million tonnes of carbon a year!
The CRC is a much needed policy development but it is important that we get this right. With concern over the operation of the proposed ‘league table’, which will determine how the auction revenue is returned, and unease about the effectiveness of self-certified monitoring already raised, there is clearly a long way to go.
To have your say in this heated debate and find out exactly how the CRC is going to affect your business join us in London on the 6th and 7th of December for the 2007 Efficient Energy Management Summit [www.emtoday.com]
Contact
Chris Morris
Director, EMtoday
t. +44 (0) 207 375 7167
e. cmorris@emtoday.com
w. www.emtoday.com
