Registration for the UK’s CRC Energy Efficiency cap-and-trade scheme ended last Thursday and the Environment Agency has published lists of the 12,112 companies and organisations that have declared their energy use and the 2,778 now registered as full participants.
As the chart below shows, there was a last minute rush by declarers to register their energy use, but in fact the rate of registration of participants actually slowed down in the last week. But according to a report from Business Green, a further 400 companies were finalising their registration and the Agency has said that those organisations already registered accounted for more than 90% of the electricity consumption expected to be covered by the scheme.
The numbers that have signed up are considerably less than originally expected by the Environment Agency – 20,000 declarers and 5,000 participants. But the Agency has lowered it’s estimates as registration has progressed. Seven weeks before the deadline it estimated that in fact just 3-4,000 companies would be actively involved in the scheme ‘as many businesses that qualify for the CRC are owned by larger conglomerates, that incorporate multiple businesses’. By the end of the registration period 3,000 seemed to be the target number, which, with the expected late registrations, has been achieved. (Why the number of energy declarers is just 60% of the original estimate is not clear).
In August The Environment Agency wrote to organisations urging them to register even if their data is incomplete or inaccurate; "We will work with you to resolve any errors in the information you supply. This will not affect your compliance." Just as well, because those that haven’t declared their electricity use face a fine of £500 for each half-hourly electricity meter they fail to declare. For prospective scheme participants the penalties are £5,000 plus £500 a day until they do register (up to a maximum of £45,000).
The does seem to have been considerable confusion about registration. Energy company npower carried out a survey a couple of weeks before the phase 1 deadline that found that one in five businesses registering for the scheme may not have submitted the correct information. The study of 100 UK financial directors showed that of those that had completed their CRC registration 23% found the process confusing. Many (24%) also reported issues with compiling data from multiple sites across their business and over one in 10 didn’t fully understand what was required of them to complete registration. Npower concluded that the results highlight the confusion still felt by businesses and that they faced longer term problems under the scheme.
But concern is wider than that. The UK’s Committee on Climate Change (as set up by the Climate Change legislation) has recommended that the Government re-designs the scheme prior to the start of the second phase (2013-2017), in order to reduce its complexity.
The current intention is that a cap is set from 2013 with a fixed number of allowances made available to organisations through an auctioning system. However, the Committee believes that the scheme is already complex and would become more so if a cap and auction were to be introduced. Instead the scheme could simply rely on the impact of the cost to companies of buying an unlimited number of allowances at a fixed price, together with the reputational incentives of the published performance league tables.
Well this is the scheme that the Environmental Agency said, in more than one presentation I went to, would be as simple as possible. In fact the quest for simplicity was given as a reason why no special provision was made for the fact that ICT is a green ‘enabler’ i.e. will help organisations reduce emissions elsewhere. ICT is in danger of being labelled as a polluter by the CRC. Clearly the ‘simplicity’ has not been effective (although I’m not sure that removing the cap-and-trade aspect from a scheme designed to be cap-and-trade is going to help).
On the brighter side, the fact that the scheme has not been straightforward in its introduction does mean that discussions around the legislation will rumble on and awareness can only increase. The legislation could even turn out to be more effective if ICT’s role as an enabler is recognised and we should certainly see a continued take-up of carbon management software solutions as the ongoing debate continues to give the CRC high visibility.