60% of UK Business Sleepwalking Into Carbon Reduction Commitment Scheme

Posted on 05. Oct, 2009 by Ross in Corporate Policy, United Kingdom

With only six months before the start of the UK’s new carbon reduction cap-and-trade scheme, more than half have done nothing to prepare for their approaching commitments.

According to a survey by RSA, a commercial insurer and energy management firm, more than 40% of UK businesses aren’t aware of the UK government’s Carbon Reduction Commitment scheme, and nearly 60% haven’t yet done anything to prepare for it, .

Set to start in April 2010, the Carbon Reduction Commitment (CRC) will require businesses to purchase allowances for every tonne of CO2 they emit. It is estimated that allowances and related administration will amount to 11% of an organisation’s current energy spend, meaning that a business with a £500,000 annual energy bill will likely need to spend £30,000 on carbon allowances and £25,000 on CRC compliance-related administration costs.

All companies subject to the legislation will be ranked in a public league table according to their energy use and rewarded or penalised depending on their CRC chart position. Therefore, there are financial and reputational incentives to act early and reduce energy consumption. Despite this, RSA’s survey found that 75% of businesses are unaware of when the Carbon Reduction Commitment legislation comes into force and almost 60% have yet to start preparing. Alex Matthias, energy management leader at RSA, said:

CRC will be an important issue for many years to come and it is vital that organisations take advantage of the potential financial benefits by acting now rather than leaving it to the last minute and risking their company’s reputation and bottom line.

The Carbon Reduction Commitment’s early action metric, upon which the league tables and carbon allocation reimbursement will depend exclusively on for the first year, require businesses to attain the Carbon Trust Standard. Future CRC league table positioning will require companies to make substantial energy savings through high-return projects such as energy-efficient lighting retrofits. Companies such as transport giant Go Ahead! have already attained the Carbon Trust Standard through efficiency projects such as improving vehicle fuel efficiency and equipping depots with low-energy Somar Eluma.

For more information about the Carbon Reduction Commitment scheme, whether your business is likely to be required to take any action as part of it, or the best strategies for benefiting from the scheme, check out this Guide to the Carbon Reduction Commitment.