The News Green News Councils could lose millions of pounds to CRC says analyst
28 October 2009
UK local authorities could lose millions of pounds as a result of the government's Carbon Reduction Commitment (CRC), said analyst Analysys Mason.
Analysys Mason said the UK’s local authorities will each have to budget up to £1.2m for the CRC in 2011.
But many public sector bodies in the UK are failing to prepare appropriately for the CRC, said the analyst. It said public sector bodies are implementing environmentally conscious initiatives, but are often failing to tie this in with the specific requirements of the CRC. In particular, they often lack information to understand how the CRC might affect them.
The CRC requires organisations to measure and report on and ultimately reduce their energy consumption. Organisations who fail to meet targets - both in measuring and reducing consumption - will be hit with a financial penalty.
David Eurin, an Analysys Mason analyst, said, "In a time of higher energy costs and tighter budgets, the CRC could add another 4% to the energy bills of public organisations that drop to the bottom of the CRC rankings."
Eurin said that as the CRC is based on relative positioning, public sector and private organisations will effectively compete with each other, with the least compliant organisations making net payments to the most compliant ones.
The first priority for public sector bodies is to become CRC-compliant. This means compiling detailed energy consumption information. The Environment Agency plans to conduct audits of up to 20% of registered organisations each year. The cost of non-compliance - currently estimated at £20 per MWh of electricity - could run into millions of pounds for a typical local authority, said Eurin.
The next objective relates to energy efficiency. Under the CRC framework, public sector bodies will be in direct competition with private companies for places in the CRC league table. This ranking will be mostly based on organisations’ success in reducing energy usage.
Investing in energy monitoring systems should therefore be at the core of public sector bodies’ plans, Eurin said. To fund these plans, priorities may have to be reshuffled or new budgets secured.
One way to gain a head start in the initial CRC league table is for organisations to be certified by the Carbon Trust Standard, as some councils have already done or are working towards.
More on what councils should be doing to alleviate the effects of the CRC is available here
