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The CRC league

In April 2011 the UK Carbon Reduction Commitment scheme will publish its first league table. How can you help your business to rise up the ranks?

At the end of March the UK government’s controversial Carbon Reduction Commitment Energy Efficiency scheme will have been up and running for 12 months. Designed to ensure large organisations are working to reduce their greenhouse gas emissions, the scheme requires all organisations that consume more than 6,000 megawatt hours of power each year to declare their energy use and from 2012 buy allowances equivalent to their emissions.

The scheme, which affects 5,000 public- and private-sector organisations including NHS hospitals and universities, has made headlines in recent months after the government announcement that revenues from allowance sales will no longer be recycled to participants who are successfully implementing energy efficiency schemes, but kept by the treasury. It is estimated the change will cost organisations £3.46bn by 2015.

Furthermore, in April 2011 the first league table of all the companies registered to the scheme will be published, allowing competitors, consumers, partners and the media to see how an organisation is performing in reducing is carbon dioxide emissions. The possible impact on reputation, and subsequently sales and profit, coupled with the massive increase in the costs of the scheme, are powerful incentives for all participants to lower their emissions quickly, but it can mean that they are overlooking their long-term approach.

The league table will rank participants on the basis of performance in three metrics:

• Absolute emissions
• Growth
• Early action.

The absolute emissions metric looks at the percentage of emissions reduction for the organisation compared to the previous year. It will be based on a rolling average of the past five years so, on any given year, the organisation will be compared with the previous five years. Once the absolute metrics have been calculated for each participant, they are then ranked, where the business with the highest absolute metric is given a score of 1, and the lowest a score of 5,000 (assuming 5,000 participants).
The second metric considers the percentage reduction in other carbon emissions per unit of turnover, which aims to recognise the growth of companies. As with the absolute emissions in the first metric, the second metric will operate on a rolling five-year comparison.
The final metric considers the early action initiatives made by the organisation to reduce their carbon emissions, but only in the first year of the scheme. This metric recognises actions such as installing automated meters and accreditation to the Carbon Trust Standard, or an approved equivalent.

During the first year of the scheme, the early action metric will be the sole indicator of performance for organisations, but the weightings change dramatically in the second and third years, as shown in table 1.

Table 1: Metric Weighting

This means that, while the early action metric is important for the first year of the scheme, organisations serious about committing to the scheme and lowering emissions long-term should be focusing on the absolute metric, which has the greatest overall weighting for organisations’ position on the league table and is based on continual improvement. This will need a much more systematic approach, than the quick-fixes encouraged by the early action metric. To perform well organisations have to continually improve over time and this is where adopting the plan-do-check-act approach used in management systems can offer great benefits.

BS EN 16001 is the European standard for energy management and was been written solely to help companies achieve continual improvements in energy usage. A certification standard, BS EN 16001 provides a set of requirements for a framework which offers organisations a systematic way to manage their energy consumption by developing and implementing an energy policy, identifying significant areas of energy consumption and targeting energy reductions.

For those organisations participating in the CRC for the foreseeable future adopting a management systems approach like that of BS EN 16001, may offer the best way to reduce carbon emissions on a continuing basis, which in turn could help them to climb the rankings of the CRC league and potentially soften any blow from the introduction of a carbon tax.

Published: 16 November 2010