How to meet the Carbon Reduction Commitment

Mark Hunter

1 Conduct a self-diagnosis Harry Morrison, general manager of the Carbon Trust Standard, says that any organisation likely to be covered by the Carbon Reduction Commitment (CRC) should act now to prepare for registration. “This means assessing your carbon emissions right across your corporate group, including any subsidiaries,” he says. The CRC will apply to about 5,000 organisations which used more than 6,000 megawatt hours (MWh) of electricity in 2008. Failure to register between April and September 30 next year will incur penalties of £5,000 plus £500 per day.
2 Identify quick wins The CRC will reward organisations that take early action to reduce their carbon emissions. Terrence Clark, senior vice-president of CA ecoSoftware, a carbon management system, says that companies should aim for the soft targets first. “Most organisations can make significant savings just by sorting out their lighting systems and by making sure that the heating and cooling systems in their data centres aren’t competing with each other.”
3 Aim for top of the table Organisations will be ranked in a league table according to their carbon-cutting performance. “There’s a financial and reputational risk if you just do the minimum,” according to Mr Clark. “Will your customers still want to trade with you if you are at the bottom of the table?”
4 Change the culture Reducing carbon emissions requires action at every level, from the shop floor to boardroom. Paul Maryan, director of sustainability at Hyder Consulting, the environmental consultants, draws a parallel with the culture change that followed health and safety legislation.
“In the 1970s if you went on to a factory floor in a hard hat and high-visibility jacket you’d have been laughed at. Now you can’t go into any workplace without the proper health and safety equipment. But you can still turn on every light and have the heating on and the windows open and no one will challenge you. That culture will change and companies will soon be talking about their good record on carbon reduction in the same way as they talk about their good record on health and safety.”
5 Budget wisely From April 1, 2011, companies in the CRC will have to buy carbon allowances at £12 per tonne of CO2 to cover their emissions. This is still considerably cheaper than the price of the energy consumed in the first place.
6 Get ready to trade Companies with allowances left at the end of the year will be able to trade the excess on the open market. This creates a win-win situation for companies whose good carbon management policies, the Carbon Trust estimates, will have shaved 10 to 15 per cent off their energy bills already. “Allowances are going to become a very tradable commodity,” Mr Maryan argues. “If you come in under what you’ve bought, then you’d be mad not to sell on the excess. But if you’ve exceeded your allowances, then you’ve got to buy more and that could get expensive.”
7 Get on top of your data For the largely public and service sector organisations affected by the CRC, measuring every carbon emission is a mammoth task — so much so that companies such as Tesco are bringing in specialised IT systems to do the job. “A number of people across the business have been involved in measuring, documenting and reporting on our emissions — a time-consuming, largely manual task,” Mike Yorwerth, IT director at Tesco, says. In an effort to cut its global carbon footprint by 50 per cent, the company has installed a carbon management software system. This will “streamline the process of data management, helping to reduce errors and operational expenses,” Mr Yorwerth says.
8 Gain the Carbon Trust Standard The standard is awarded for good carbon management and will grant companies in the CRC an “early action metric”. This will qualify the company for bonus payments and promote it up the league table.
There are also more immediate financial benefits. “Over 100 organisations have now achieved the standard and between them their improved carbon management has saved them over £50 million a year,” Mr Morrison says.
9 Install a smart meter Companies using automatic meter readings (AMR) will also receive an “early action metric”. The metering must cover both electricity and gas and be able to capture, store and retrieve data at half-hour intervals. It must also be linked to a software system that can provide usable data.
10 Plan for the future According to Mr Morrison, the CRC is likely to get tougher as time goes by. “The price of carbon will increase, so you need a long-term strategy on carbon management. Fortunately, what the CRC does is provide a financial framework so that companies don’t have to do this in isolation.”