Carbon Reduction Commitment – Deadline has passed, but don’t get caught out, warns ACCA

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Firms of all sizes need to get to grips with their carbon accounts and include the Government’s CRC in their future planning.

Qualifying businesses should have signed up to the Government’s Carbon Reduction Commitment (CRC) by 1st April, but according to the ACCA (Association of Chartered Certified Accountants), many firms are unclear about whether it affects them or not – and what they should do if it does

Under CRC, organisations buy allowances equal to their annual emissions, with a cap on the total allowances available. The revenues will eventually be recycled back to participants based on how well they perform, which the Government hopes will create an incentive for better energy management.

Henning Drager, ACCA Head of Sustainability, says: “The CRC is aimed at businesses, including their subsidiaries, which consumed more than 6,000 megawatt hours of electricity in 2008. But even if a business consumes less than this, they still have to make an information disclosure if they have one or more half-hourly meter (HHM) on the half-hourly market.”

Henning continues: “The Government assumes that big business will be predominantly affected, but SMEs ought to check their eligibility so they don’t get caught out and face a hefty £5,000 fine for non-compliance.”

The key dates and details are:

• 1 April 2010 – 31 March 2011 is the first year of compliance, when companies should register for the scheme or make an information disclosure to the administrator. They need to monitor energy supply over this period and collect records for their evidence pack.

• Between April 2010 and the end of September 2010, businesses that meet the electricity consumption criterion must register via the online CRC registry. Those that do not meet the criterion for consumption, but do have an HHM settled on the half-hourly market, must make an information disclosure via the CRC registry.

• In 2011-12, the second year of compliance, businesses need to:

1. Buy allowances
2. Submit a footprint report
3. Submit an annual report
4. Surrender allowances, and
5. Receive a revenue recycling payment

Henning Drager concludes: “SMEs have a huge part to play in helping the UK achieve its carbon emission target, but first they must know exactly what is expected of them. CRC is a worthy initiative, but could potentially prove a burden. It needs careful handling and management by the Government and businesses alike.”

The Department of Energy and Climate Change has produced a guide on CRC, which is available to view online.