The CRC Energy Efficiency Scheme is a mandatory commitment for all UK businesses using more than 6,000 MWh through half-hourly meters annually (this equates to around £500,000 in yearly energy bills), starting in April 2010. About 15,000 businesses will have to make an information disclosure under these rules, but around 5,000 businesses will actually qualify for full participation - including local authorities and central Government departments. Participation will cost an average of £38,000 per year - these projected expenses include the cost of staff and their appropriate training for the CRC reporting procedure.

The Environment  Agency will administer registration, running the CRC online registry and selling allowance on behalf of the government.  Evaluating and enforcement of action for non-compliance will be responsibility of (the regulators) the Environment Agency for England and Wales, the Scottish Environment Protection Agency (SEPA) and Northern Ireland Environmental Agency (NIEA).

If your business has a hour-hourly meter but consumes less than 6,000MWh per year, your business will not be compelled to be involved in the CRC Energy Efficiency Scheme but you will need to disclose some information to the CRC administrator: a list of the half-hourly meters that your business uses and your annual energy usage from them should it exceed 3,000MWh per year.

If your business is a subsidiary of a larger organisation but qualifies for the CRC Energy Efficiency Scheme in it's own right, for the purposes of the CRC scheme your business can disaggregate itself from your parent group/organisational body and participate independently.

Instructions for how to access qualification packs was sent to the billing addresses of all half-hourly meters settled on the half-hourly market in November 2009. Further details on information disclosures was given in those packs. The CRC Energy Efficiency Scheme Qualification Packs and supporting guidance are themselves available online, as part of a government effort to reduce paper waste and cut costs.

Unfortunately this is not possible. The qualification period for the introductory phase of the CRC Energy Efficiency Scheme was 2008 - it is the energy bills from that year from which participation will be decided. Qualifying organisations will have to purchase their carbon allowance which is fixed for the introductory period. The first sale date is April 2011. If a business' energy consumption is greater than 6,000MWh a year, the cost of the allowance will be higher. During each compliance year an organisation must report their emissions and pay an equivalent allowance.

An organisation's carbon output will be assessed against a league table, with penalties being higher at the bottom end of the table. Therefore actions taken now to reduce your business's energy usage will strongly count towards your position in the first three years' league tables, which will be published as a way of judging the relative performance of participating companies. In reducing your carbon, you will not only reduce your operational costs but also prevent future penalties. Unused carbon allowances can be sold at a fixed price of £12 per tonne of CO2, offering an additional incentive.

League table positioning consequently has important financial implications for business involved with CRC Energy Efficiency Scheme. Reimbursement of CRC credits is modified by league table positioning, so that companies at the top of the table can actually profit from their involvement with the scheme.

The CRC Energy Efficiency Scheme will eventually operate over seven-year cycles, but the initial introductory cycle will run for three years from April 2010 and consists of four key phases:

1. Qualification period (2008)
2. Registration period (April-Sept 2010)
3. Footprint year (April 2010-2011)
4. Compliance years (April 2010-2013)

As already mentioned, the introductory cycle's qualification period has already expired. In order to get the scheme up and running, the other three phases of the CRC Energy Efficiency Scheme will run concurrently. The Registration period requires all firms mandatorily affected to register with the scheme, outlining their total energy usage across the company (not just the electricity usage through half-hourly meters, but emissions dealt with under the Climate Change Agreements and the EU Emissions Trading Scheme are exempt).

The Footprint year requires monitoring of emissions which will be used as a baseline for following years, whilst Compliance years require the purchase of carbon allowances to cover emissions sufficiently. They are bought on a yearly basis in advance based on projected emissions, then unused CRC credits can be traded on the secondary market.

Purchasing credits for the first year has been deferred by twelve months. The first round of CRC Energy Efficiency Scheme purchasing is in April 2011, with the carbon credits on sale will be at a fixed price of £12/tCO2. This round of allowance purchases will cover only the second year of the scheme - a previous version of the scheme had intended to demand retrospective purchases for 2010 too, but this has now been dropped. Businesses will be forced to buy credits for those emissions that they estimate they will use across 2011.

Some companies have already begun to feature the cost of CRC credits into their budget plans. The extra burden of a year's worth of carbon penalties at once also gives your company a clear choice: do you spend money in order to be allowed to spend money on energy bills, or spend money to save money on energy bills. Energy efficiency projects are often side lined due to cash flow considerations: the CRC Energy Efficiency Scheme will force your business to budget extra funds - how you choose to use them will have a critical effect on your company's long-term profitability, with energy-efficiency investments guaranteeing increased profits year-on-year.

The money collected by the UK Government from the scheme is now no longer recycled directly back to the participants at the end of each Compliance year: the Government now pockets all of the monies generated.

Fixed-rate allocation purchases are exempt from VAT, as are safety valve purchases over the introductory phase. Trading in CRC Energy Efficiency Scheme allowances on the carbon market, however, will be taxed by the government.

This means that the CRC Energy Efficiency scheme now is effectively a carbon tax, as of last October 2010's government Spending Review.

Annual league tables will detail companies' performances over the year, which are expected to be made public in order to further incentivise energy efficiency. The league table will include an absolute metric (carbon emissions), a growth metric (carbon intensity) and an early action metric.

The absolute metric is the base metric on which the league table will be constructed and will be the percentage change of annual emissions relative to the organisation’s previous five year rolling average.

The growth metric will measure the organisation’s percentage change in emissions per unit of turnover relative to its average emissions per unit of turnover. For the public sector it will be per unit of revenue expenditure rather than unit of turnover.

The early action metric will only feature in the Introductory CRC phase, and will be calculated from measures put in place before the CRC Energy Efficiency Scheme – equal weighting between the percentage of emissions covered by automatic metering and the percentage of emissions covered by the Carbon Trust Standard certificate or an equivalent scheme.

Members of schemes of equivalent nature to the Carbon Trust Standard may qualify for the early action metric by measuring and demonstrating an absolute carbon emissions reduction over the past three years without using offsets; using a transparent, evidence-based, high-quality carbon management system which is available to all CRC participants; verified by independent and accredited third parties.

The weightings for the three metrics in deciding league table placements will be:

This means that for the first year of the scheme, league table rankings will be decided purely on the early action metric, meaning that attaining the Carbon Trust Standard will massively impact your company's CRC refund. To find out how what is required to attain the Carbon Trust Standard, let Green Energy (EU) Ltd show their range of energy-saving technologies that can help you to meet those requirements, 

The CRC Energy Efficiency Scheme is a very high-profile environmental initiative which is attracting a huge amount of public and media attention, especially regarding the positioning of well-known brands in the league table. Where does your business figure in this . Are you near the bottom?  Does this harm your brand's reputation?

As well as attaining Carbon Trust Standard certification and getting smart meters for your energy supplies in order to maximise your early action score, greater energy efficiency is the key to benefitting from inclusion in the CRC Energy Efficiency Scheme.

Although investing in on-site renewable energy generation would seem to be an obvious method of lowering carbon emissions, some renewable energy generation will not be exempt (if Renewable Obligation Certificates (ROCs) are issued), and will be included at the grid average emission factor. This is so that the Government does not double up on incentives for renewables which it has under other schemes. However, credit for investing in onsite renewable energy generation will be given alongside - but not as a part of - the CRC Energy Efficiency Scheme league tables.

Additionally, emissions from the transport of people and goods are exempt. Both these exemptions mean that the focus for improvements has been strongly narrowed towards energy efficiency projects. An initial tier of efficiency measures can be based on changing workplace behaviour. Encouraging employees to switch off lights and power down computers when not in use can make some energy savings and, in these times of economic turmoil, staff can more easily appreciate the benefits of helping their company to cut energy costs rather than cut employment costs.

The strongest way to make improvements to energy efficiency is to make investments in low-energy technology upgrades, especially in areas such as heating, refrigeration, energy monitoring and lighting. For example, Green Energy's use of Redwell Infrared Heating, combined with Eco Cooling, can save up to 70-80% on commercial and industrial energy bills for heating and cooling , with Return On Investment (ROI) periods of between 12-36 months. Businesses installing such energy-efficiency product, will receive great financial rewards and will also gain huge environmental savings and will thus protect their brand image.

Further action could be taken by embarking on more capital-intensive projects such as systems integration, green data centres and on-site generation, which generally have smaller additional carbon savings and longer ROI periods.