Out-Law News 2 min. read

Carbon Reduction Commitment Performance League Table published


Today, the Environment Agency has published the eagerly anticipated Performance League Table which details the performance of all participants under the Carbon Reduction Commitment Energy Efficiency Scheme (the CRC). 

Originally set to be published in October 2011, the Performance League Table rates the performance of CRC participants against three weighted metrics: the early action metric, the absolute metric, and the growth metric.

The Performance League Table, available on the Environment Agency's website, will be available for all the public to see.

Published annually, it identifies the names of all participants in order of performance, together with details of a company's trading name where appropriate and its weighted scores. The better a participant organisation has performed in line with the Environment Agency's interpretation of the weighted metrics, the higher it will appear in the Performance League Table.

The Early Action Metric measures whether participants have taken voluntary steps prior to, and during, the Introductory Phase (or Phase 1) of the CRC to improve energy efficiency and reduce their CO2 emissions. It is determined by the percentage of emissions covered by automatic metering and the Carbon Trust Standard (or equivalent approved standards). The Early Action Metric will only apply to Phase 1 of the CRC.

The Absolute Metric measures how a participant's emissions have changed over the previous compliance year of the CRC compared to a rolling average, whilst the Growth Metric measures a participant's change in emissions relative to its turnover. Both of these metrics will be relevant for next years Performance League Table.

"The Environment Agency has experienced practical problems in dealing with the application of the Early Action Metric to many participants annual return figures and it will be interesting to see if they now amend the rules so that the rankings going forward more accurately reflect an individual participant`s efforts to reduce its emissions,” said Linda Fletcher, environmental law expert at Pinsent Masons, the law firm behind Out-Law.com.

The CRC is a mandatory scheme aimed at improving energy efficiency and cutting CO2 emissions in large public and private sector organisations not currently covered by the EU Emissions Trading Scheme. Organisations caught by the CRC have to measure and report on their emissions.

It was originally planned to be revenue-neutral but this is no longer the case and revenue from the sale of carbon allowances will not be 'recycled' back to participants. Instead revenue generated will be kept for the public purse.

Before this change, made in the Comprehensive Spending Review, and changes made to the CRC in 2011, participants would have received bonus/penalty payments according to their position in the Performance League Table. These were to be paid from the revenue collected from the sale of allowances.

The Government has, by removing the recycling payment, taken away a significant financial imperative for participants to strive for a high ranking in the Performance League Table. That said, reputational incentives remain unchanged and brand is still very important for many participants.

The League Table does not distinguish between sectors, nor the capacity of sectors to improve their energy efficiency.

“The long awaited table shows the issues that have been raised by participants as to the need for a sectoral table as no meaningful comparisons can be easily made as to who is performing well when it comes to reducing its emissions," said Linda Fletcher.

The CRC came into force on 22 March 2010 and applies to the whole of the UK. It covers carbon dioxide emissions from non-energy intensive large public and private sector organisations that are not already covered by Government regulation. Qualifying organisations include large businesses, retailers, banks, landlords, supermarkets, hotel chains, restaurant chains, water companies, telecommunications companies, Government departments, large local authorities and universities.

In June 2011, the Government announced its plans to disencumber and further simplify the CRC scheme.

The Department for Energy and Climate Change (DECC) has made clear its intention to retain the CRC notwithstanding its aim to reduce the administrative burden on participants and overlaps with other schemes, and to provide much needed certainty for business.

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