Briefing: Ten steps to CRC compliance

The Carbon Reduction Commitment Energy Efficiency Scheme comes into force today, 1 April 2010, and will affect thousands of businesses and other organisations within the region, whether large or small and whether private or public sector.

With hefty financial penalties for non-compliance, including fines starting at £5,000 for those who fail to register within the strict time limits, you need to be asking questions, capturing data and making important decisions now.

Here is a guide to CRC compliance from Bill Chandler, legal director at Hill Dickinson:

1. Are you caught by the scheme? Read the user guide and other sector-specific guidance on the Environment Agency website and sign up for email updates. Remember that financial year 2010-11 will be the qualification year for the next phase of the scheme, so even if you are not caught now you cannot ignore CRC indefinitely.
2. What is the extent of the 'organisation' for CRC purposes both in 2008 and now? Remember that groups of companies are viewed as one, as are a franchisor and its franchisees, whilst the scheme generally treats 50:50 joint ventures as separate organisations. It is possible in certain circumstances to register different parts of the organisation separately if they would each qualify in their own right.
3. What electricity meters were you responsible for in calendar year 2008? Any organisation that was responsible for even a single half-hourly electricity meter (HHM) in that year will have to take action during the registration period. If consumption through HHMs exceeded 6,000MWh in 2008, then full participation within the CRC scheme will be required; otherwise an information disclosure needs to be made.
4. Do you have any Climate Change Agreements in place? Full or partial exemption from CRC may be available where CCAs exist.
5. Who will be responsible for CRC within your organisation? You will need to nominate appropriate contacts, one of which must be at board level or equivalent.
6. Don't forget to register. Whether you are a full participant or just need to make an information disclosure, you need to register online between 1 April and 30 September. Fines start at £5,000 for failure to register as a participant and can rise to £45,000, while failure to make an information disclosure will cost you £500 per HHM.
7. Don't leave it until the last minute. Registration is not technically complete until the Environment Agency has validated your details, which could take a couple of weeks. And there is no need to wait for the general election to pass, since CRC has cross-party support. Organisations seeking separate registration of different parts of the organisation are advised to complete their initial registration by 30 June to allow time to complete the "disaggregation" by 30 September.
8. Establish a system for ongoing compliance. Registration must be viewed as the start of CRC compliance; participants should establish foolproof and robust procedures for the ongoing collection and monitoring of data and to ensure that deadlines for purchasing allowances and submitting reports are diarised.
9. What is your carbon reduction strategy? Good performance will be rewarded within the CRC scheme both financially through enhanced recycling payments and reputationally through a good position in the annually published league table. In the early years, there is credit to be obtained for achieving Carbon Trust standards and installing automatic meter reading so that the organisation has better data to work from. We are working closely with many clients on their longer term emissions reduction strategies through initiatives such as combined heat and power (CHP).
10. What about the landlord and tenant situation? Landlords who incur CRC costs will need to make decisions on whether to pass on those costs to tenants. Some landlords are intending to include specific CRC provisions, rewarding and penalising their own tenants according to the tenants' emissions, while others intend to engage tenants through other means such as increased dialogue and introducing green leases. Tenants will need to be conscious of the CRC status and attitude of their landlords.