Carbon Reduction Commitment Energy Efficiency Scheme: Defining the Way Forward

David Kidney MP delivered the Keynote Address at GovToday's Carbon Reduction Commitment Energy Efficiency Scheme: Defining the Way Forward Conference and Exhibition on the 16th March 2010. 


Good morning and thank you for having me here today. I'd like to talk to you about the CRC Energy Efficiency Scheme, something I think you've all come to know as CRC.


Businesses, governments and public bodies all over the world are recognising the role they can play in tackling climate change. There is an urgent need for public sector and businesses to play that role. And this is not something the government can do alone, everyone needs to play their part.


This action, this fundamental change in behaviour, if united, and in large enough numbers it could result in getting a real change globally, in how we combat climate change.


Aim and Benefit of The Scheme


Which is why, on the 1st April, the CRC Scheme will come to fruition. It is aimed to get attention at boardroom level, to encourage changes in behaviour and infrastructure.


It's designed to raise awareness and encourage that change in behaviour that I'm talking about. Because increasing our energy efficiency, not just reducing our emissions, is essential for this country getting to a low carbon destination.
But that's not the only benefit, as the scheme will save you money. In fact, by 2020, businesses will save a billion pounds a year. And at the same time, the CRC scheme will prevent at least 4 million tonnes of CO2  entering the atmosphere.


The CRC targets the UK's largest private and public sector organisations. And the threshold has been set at 6000 MWh/annum.


The simple fact is, the costs saved by improving your energy efficiency through the CRC will greatly outweigh any costs from the scheme. And the threshold for qualification has been specifically chosen, so that the CRC will capture those organisations who will benefit financially from taking part.
And why are we introducing this? Because climate change demands that we conserve our resources. Because if we don't limit our temperature rises to two degrees there will be consequences to our climate; and because it is the socially responsible thing to do.


Heating and powering work places accounted for a tenth of the UK's emissions in 2008. And there is compelling evidence from the Carbon Trust, that shows only a third of cost effective measures are being taken up, even among leading companies.  This needs to change and the CRC will make it happen.


I'm not saying that CRC is the only answer to climate change but it leads the UK in the right direction. And it will bring about that change in our behaviour which is so urgently needed. 


But we are also thinking practically for how organisations can realistically make these changes.


Through last year's budget, Salix Finance invested almost £55 million in public sector bodies all over England, for energy efficient technologies.
All this, with an additional £5 million has now been allocated for more than 1,400 projects across 200 public sector bodies - which will not only cut emissions, but reduces fuel bills too.


And reducing energy use makes business sense - UK businesses could save over £3 billion a year on their energy bills through being more energy efficiency.


We must not ignore the opportunity of a low carbon economy. The global market for low carbon goods and services already worth £3 trillion. And that is projected to grow to over £4 trillion by 2015.


Given the recent financial climate, I'm sure you'll agree that's welcome news.


Now I'm conscious that the CRC scheme has come under some criticism in the media. I think it's a real shame that something so important like the CRC has been mis-interpreted in the media as a hindrance and a beauractic one at that.


Organisations like the National Theatre, Hilton Hotels and the London Fire Brigade have all given us their support to the scheme.


While it is true that the CRC will affect thousands of businesses - public and private; we think that the number of organisations that will have to participate in the scheme, will be roughly 5,000.


A further 15,000 - 20,000 organisations who have a half hourly meter settled but who don't consume enough electricity to qualify will need to make a simple information declaration, but they won't need to do anything else. 
Of course, we won't know the exact final number of participants until after the scheme has gone live. But I can tell you that we have estimated roughly 4-5000 organisations will qualify. 


The information from the electricity companies has allowed the Environment Agency (EA), the administrator of the CRC scheme, to contact each of the organisations that will have obligations under the CRC - so we are confident that the scope of this scheme has not been underestimated.


It has also been said that we haven't done enough to raise awareness of the scheme.  Since 2008, we have sent out 13,000 letters to private and public bodies informing them of the scheme. And the EA held two national events, one in Manchester in February, and in London earlier this month to help raise awareness. We have also published three consultations since 2006. The first was in November 2006, this was the start of the CRC, but at the time it was known as the Energy Performance Commitment.


In June 2007, we launched a second consultation on the implementation proposals for the CRC to secure the required emissions reductions. In March 2009, the third consultation was launched on the draft order to implement the CRC - it closed on 4 June 2009.


The EA also published guidance last November, with further guidance coming before the end of this month. So I urge everyone who is affected by the CRC to take a look at what the guidance has to say. 


Many organisations have already started to prepare for a low carbon future and are taking early action.


First Direct, for example, have a programme where idle computers are turned off at 7pm. Since 2006, First Direct have saved £200,000 a year on their energy bills and reduced their emissions by 1,500 tonnes of CO2 per year.


Citigroup set themselves a global target for CO2 reductions. They monitor their own emissions by a simple computer system, set up by themselves, that collects half hourly data. Which then goes to an in-house database. To date, this database has provided the evidence needed, for Citigroup to become more carbon conscious. And the CRC will help them focus on energy efficiency; and help improve the economic credentials of these projects.


These are simple actions but, they go a long way.


Now, no one in this government expects to introduce something like this without actively taking part in it ourselves. All government departments are taking part, even those that don't meet the threshold.


The Carbon Trust are using my department as an example of how an organisation can demonstrate what an energy efficient department could look like. When we first moved to Whitehall Place, the building had one of the worst energy performance ratings in Whitehall. We rose to the challenge and now our estimated savings are £74,000 per year, from becoming more energy efficient - and this prevents 327 tonnes of CO2 entering our atmosphere.


The public sector alone is directly responsible for around three per cent of the UK's emissions, so I see the CRC scheme as an opportunity for the public sector to demonstrate leadership on climate change and energy efficiency.


But that's not all, we have also taken other measures to make sure we lead by example, in reducing our emissions and becoming more energy efficient.
All new schools will be zero carbon by 2016, and the NHS aims to reduce its 2007 carbon footprint by 10 per cent by 2015.


We have the Climate Change Levy (CCL) which applies to all but the smallest businesses. And the Climate Change Agreements, which are forecasted to save over 11 million tonnes of CO2 this year.


And last but not least, we are still very much committed to reducing our emissions by 34  per cent by 2020; and 80 per cent by 2050. As we have legislated to do so in the Climate Change Act 2008.


So to conclude, all companies, future and existing, public and private, must become part of a climate change solution that accepts their constraints on greenhouse gas emissions.


We need to push ourselves to make as many reductions as possible, in our own energy use first, but also become energy efficient. And the CRC is one of the ways we are leading by example in tackling climate change. We know what must be done, but it falls to everyone to act with a similar sense of purpose and embrace that change in behaviour. Because it is an opportunity not only to protect the environment, but also to help the public sector, our businesses - and in turn - help the economy to grow.


GovToday invites you to comment on any of the issues raised in this article.


For further information on any of the policies mentioned above please visit the Department for Energy and Climate Change website:

Comments (4)
Richard Best
MIHEEMA Statutory Standards Engineer
Coventry and Warwickshire Partnership NHS Trust

As this is due to be implemented in April 2010 it appears that the subtle approach has washed over some areas. However following the conference on Tuesday I am sure that the message about CRC may catch on pretty quickly.

Richard Best
MIHEEMA Statutory Standards Engineer
Coventry and Warwickshire Partnership NHS Trust

Is there any thought being given towards a regional conference that can be held closer to the local areas, for example in the Midlands.

Dr. Andrew Wallace
De Montfort University

In response to Richard, and hopefully of interest to many of you: Here at IESD (the Institute of Energy and Sustainable Development, at De Montfort University, Leicester) we are working with the health sector, and others, to deal with the CRC EE scheme, and carbon reduction in general. We are doing some of this by using KTPs - knowledge transfer partnerships - which are financially supported by the government. We welcome any enquiries from interested organisations. Please contact me, Dr Andrew Wallace, on [ awallace at ]. Incidentally, thanks to David Kidney MP for taking my question at the conference.

Richard Morley

Many UK businesses are still confused about what the CRC Energy Efficiency Scheme will mean for them and the sign up rate for participation has been low since the Scheme started on the 1st April this year. A major reason for this is we is that, frequently, there isn’t one single individual within the business who is tasked with monitoring the CRC. Each person involved in the scheme – from Company heads, to finance directors and facilities managers need to be made aware of the role they play in participation. Giving companies the right information on what they need to do to register and about the early action metrics they need to put in place by April 2011 is crucial. These include installing AMR (Smart metering) with aM&T; software, and implementing the Carbon Trust Standard with Envido.

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