From April 2010, the CRC Energy Efficiency Scheme will create a direct link between many organisations’ emissions and their bottom line. Hugo Seymour looks at how early planning can maximise the opportunities of the CRC.

The CRC Energy Efficiency Scheme (previously called the Carbon Reduction Commitment) due to start in April 2010, will initially apply to approximately 5,000 companies and public sector organisations. Members of the scheme are required to buy permits to emit carbon dioxide in advance and will receive refunds proportional to their performance in emission reductions relative to other scheme participants. They will need to accurately record their energy use to avoid potentially large fines for organisations that fail to report accurately and on time. It is the first UK legislation to directly place a financial value on carbon emissions from non energy-intensive sectors, but unlikely to be the last.

In order to prepare for the new regime, companies or participating public sector entities will need to have a detailed plan in place to address the reporting and carbon reduction requirements of the CRC. They will need an accurate picture of their current energy use and emissions and use this to create a forecast of how these may change in the future.

This forecast will then need to be factored into their financial and operational planning. For most this will require the fitting of modern energy meters and a move from energy bills and spreadsheets to purpose-built carbon management software. This becomes particularly important in ensuring that organisations have the right and sufficient information to identify reduction opportunities and track the performance of reduction projects and investments.

While there are some obvious 'quick wins' in this respect, such as switching off lighting and equipment when they are not required, fitting occupancy sensors or simply turning the thermostat down (or up in the case of air-conditioning), in the longer term participants will need a more comprehensive reduction strategy. Many of the solutions will depend on a company's circumstances and activities and a consultant may be required to identify where emission reduction can be targeted most effectively.

With the introduction of financial incentives and penalties, the cost-benefit analysis of investing in energy efficient equipment has changed so even if the energy savings alone do not justify the investment, it may be that the CRC has tipped the balance towards the replacement of older equipment, which can have a significant effect on emissions.

Another key feature of the CRC scheme is that the participants’ relative performance in terms of emission reductions will be made public and, inevitably, the press and environmental groups will draw attention to the performance of organisations in the league table. Proactively tackling carbon emissions could provide reputational, as well as financial benefits.

The sooner organisations realise the need for a holistic plan to address the CRC scheme and pursue the potential benefits that a comprehensive carbon management strategy can deliver, the lower their risks will be and the more likely they will be to turn their CRC activity into a positive outcome.

Hugo Seymour is a carbon consultant at Greenstone Carbon Management, a specialist carbon solutions company. See www.greenstonecarbon.com

Case study: Carbon reductions from IT upgrade

Greenstone recently conducted an appraisal of the energy consumption and associated carbon emissions of the current ICT estate of a local authority. As a likely future participant in the CRC, the authority was keen to understand their exposure as a result of using this equipment, and the potential financial and carbon reduction opportunities that could be achieved through a phased upgrade of their IT estate.

Greenstone used its carbon accounting software package to calculate the carbon emissions of the equipment currently used by the local authority. The software was then used to model how their emissions profile changed as new, more efficient equipment was phased in over a three-year period, starting with new server equipment before rolling out to the desktops and laptops, printing, network equipment and telephones.

The results showed a 30% reduction in emissions in the first year of the phased introduction, compared with the baseline case. This rose to over 70% reduction in annual emissions compared with using the old equipment as the volume of new equipment increased.

In addition to the quantified reduction in electricity consumption by the equipment itself, the project is likely to result in further reductions due to decreased cooling demand in the server rooms, meaning less use of air conditioning.