UK Emission Reduction

Reports Stuart Ryan, 11th August 2010

Many businesses are unaware that by the end of next month they are required to register their energy use or face a fine for not doing so.

Failure to register for the Carbon Reduction Commitment (CRC) initiative by declaring energy usage will result in charges for every ton of greenhouse gas they produce.

The amounts of these payments could average £38,000 a year for a medium sized company and for larger companies this could be £100,000.

The scheme that was originally created under the previous Labour Government and implemented by the current Coalition Government is aimed at any company or large organisation that consumes more than 6,000 megawatt hours (MWh) of energy per year. This equates to a power bill of roughly £500,000 per year and any company that that meets this requirement needs to register by the end of September.

From April companies will need to buy permits for each tone of carbon dioxide emitted, for companies using 6,000 MWh that could be £38,000.

The main aim of the scheme is to provide a financial incentive for organisations to cut energy use and bonuses will be provided for those who make the biggest cuts which will be funded by fines for those with worst performance.

Although the scheme is designed to reduce emissions, at present of the 4,000 eligible organisations only 1,229 have registered leaving the remainder liable to paying fines.

The penalty for missing the 30^th September deadline is an immediate £5,000 fine and £500 per day after that. A further 15,000 companies are also required to register by the September deadline and they face a £500 fine for failing to do so.

The consensus for this failure of companies to register is the scheme has been poorly communicated and publicised and the Energy and Climate Change minister, Greg Barker, acknowledged the original scheme was complex and could have contributed to the slow registration of companies.

With the prospect of a “double dip” recession still far from not happening, companies may find additional fines putting more pressure on them as spending cuts are still being sought by consumers, companies and the public sector. However, if this scheme encourages less energy waste in the long term then the environmental and economic gains for reducing emissions will far outweigh the short term issues.

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