The Government's Carbon Reduction Commitment (CRC) has received a high level of publicity this year.
This new legal compliance regime comes into force in April of next year and has forced local government to think seriously about energy consumption and CO2 emissions. The final shape of the regime has now been announced by the Department of Energy and Climate Change (DECC) following the third consultation process.
In October the DECC issued the Government Response and Policy Decisions document – the product of analysing the 276 responses to the exercise, against a background of the earlier exercises – and proposed the shape of the scheme. While the CRC in general has not changed much, there are some changes for the better; unfortunately other areas (principally the rules on schools) have led to disappointment amongst local authorities.
The first point to note is that the regime has a new title. In order to reflect the fact that it is about energy efficiency to reduce CO2 emissions, it has now been rebadged the ‘CRC Energy Efficiency Scheme', but thankfully still shortened to CRC.
The scheme remains focused on the reduction of energy usage and on energy efficiency. It also forms an important part of the wider governmental framework, which is receiving unprecedented publicity in the run up to the next intergovernmental conference in Copenhagen in December.
The definition of public sector organisations that are covered by CRC has also been changed – this time to link it to the Freedom of Information Act (FOI) 2000. There, each local authority (and other bodies) have a listing, which will apply for CRC as well as under the main purposes of that Act. Formerly, the rule was that each public body with independent legal status would be covered. Anyone who has looked in detail at the structure of the FOI on this point would doubt that it has made the situation any clearer or easier.
Of more importance is the fact that the first of the three years which make up the introductory phase will be a ‘reporting only' year, and local authorities will not have to buy allowances to cover their energy usage during that year.
This is yet another change around from the early years of the scheme, reflecting the fact that time is marching on, against a background of the recession. Originally, the first ‘footprint year' was to be separate to the ‘compliance years', then they merged them for the first year (so they are concurrent). Now the first year is not to involve the parting of money at all.
This will be welcomed by local government. It should mean the considerable number of local authorities that participate in the first year without the benefit of sufficient preparation have the shock of their actual emissions figures being significantly different to their predictions, without the first of the financial penalties (namely to have to purchase more allowances) applying. However, the second of the financial penalties (recycling payments from the pot of money held by the Environment Agency) will apply as each local authority will have bought allowances in April 2011 (for the financial year 2011-12). This is also dependent on an authority's place in the league table.
The league table will still be produced, notwithstanding that its only a reporting year and so the reputational issue is also still a live one.
For that part of the exercise, the Government has also relaxed the rules on the ‘early action metric', which determines how places in the league table for the early years are allocated. The first year is dependent on having achieved the Carbon Trust Standard (CTS) – or equivalent, another concession – and having Automatic Meter Reading equipment (AMR). Each is allocated 50% of the marks. The Government has now accepted that if an organisation has done preparatory work of this nature it should be rewarded for the two years after that, with the early action being rated at 40% of the marks in year two and 20% in year three. This is a major incentive to take the early steps towards CTS and AMR.
For schools, the rules will not change from those proposed. This caused the Local Government Association to comment that the Government really didn't listen to what was being said about the unfairness of an authority being responsible for a school's emissions, without any control over how the delegated budget is spent. Schools are likely to favour people over energy efficiency and this may be a problem.
Authorities are worrying about this, as there are numerous and complex rules on schools and the Department of Children, Schools and Families has hardly scratched the surface in its work to analyse how this will operate. The Government has said that it will look at the potential for adjusting schools budgets, dependent on performance in reducing emissions and the LGA is taking this up with them. Few authorities, however, take a view other than they are being left to sort out the problem.
Finally, there is the issue of how energy generated from renewable sources is treated. This is a difficult area, with competing views. On the one hand, it can be legitimately argued that energy generated at local level which is 100% renewable should not be covered under CRC. However, the Government takes the view that if a generator claims either ROCs or the Feed-in-Tariff on that energy, then it is treated in the same way as any other energy fed into the grid, or there is then a double benefit/payment.
The Order to legally introduce the CRC can be expected before Christmas, together with more guidance from the EA. The Government must be quietly pleased with the profile that the impending CRC has achieved this year. Now we know what needs to be done, there is just the little issue of actually doing it!
Stephen Cirell is programme director for Cornwall Council and responsible for CRC. E-mail scirell@cornwall.gov.uk
