Dave Covell provides an update on the recently implemented Carbon Reduction Commitment scheme

Healthcare trusts must cut primary energy consumption by 15 per cent between 2000 and 2010, to shave £50 million off the NHS’ annual energy bill and reduce its carbon emissions. They have to do this with tighter budgets and in the face of legislation that puts a price on carbon.

The Carbon Reduction Commitment Energy Efficiency Scheme (CRC) encourages improvements in energy efficiency. It will help achieve the government’s target of an 80 per cent cut in carbon emissions by 2050. 

By 2020, it is envisaged that the CRC will cut annual emissions by 4.4 million tonnes. It will affect around 20,000 organisations, including many in the NHS.

Major energy users will need to buy allowances equivalent to their anticipated CO2 emissions for the year ahead. Participants will be ranked in a league table, with financial incentives for organisations that reduce emissions and deductions from recycling payments for organisations in the bottom half of the league table.  

Twenty per cent of organisations will be audited annually. Inaccurate submissions carry a penalty of £40 for each tonne of CO2 incorrectly reported, mistakes in the evidence pack mean a £5,000 fine and, ultimately, imprisonment is the potential penalty for submitting false information.

What you need to know

The CRC came into force on 1 April 2010. An introductory phase runs to 2013 (three years, April to March), while subsequent phases each last for seven years. From April, organisations register and start compiling emissions data for the first reporting year, the “footprint year” - 2010/2011. 

Results have to be reported by the end of July 2011 – or there is a fine of £5,000, plus £500 for every day you are overdue. The first league table will be published in October 2011.

At the start of each compliance year, capped allowances will be sold by the government. During the introductory phase, the price is fixed at £12 per tonne of CO2. After the initial sale period, participants can buy or sell allowances among each other. After 2013, the cap will be removed and the cost of carbon is expected to rise significantly. 

Planning and preparation

Eligibility

Eligibility depends upon the total half-hourly metered (HHM) electricity use between 1 January and 31 December 2008. More than 6,000 MWh (mega-watt hours) per year means full participation. Organisations between 3,000 and 6,000MWh have reduced obligations.

NHS organisations meeting the above criteria and classified as legally distinct entities will participate individually in the CRC.  With private finance initiatives, public private partnerships or build, design, finance and operate agreements,  the joint venture’s energy use is aggregated with the majority owner (> 50 per cent), i.e. the NHS.  Where no owner has a 50 per cent plus stake, the joint venture is a separate organisation and must qualify for the scheme in its own right.

Metering and data capture

CRC qualification is based on electricity consumption, but all energy use falls into the scheme - gas, oil, coal, liquefied petroleum gas (LPG) etc. Auditable data can take months to collate and, with utility suppliers producing on average one in 10 bills inaccurately, organisations must review their metering strategy, sub-metering and recording of fiscal metering information.

A director of the organisation takes responsibility for supplying the Secretary of State with the evidence pack, containing structural records, energy consumption and special event records such as a meter breakdown. He or she can establish a process for the ongoing monitoring and reporting of data in-house, outsource it, which can also help with planning for future improvements, or opt for a combination of the two.

Early Action Metrics

An organisation’s position in the league table is based on three metrics:

  • Absolute metric: percentage change in absolute emissions year on year
  • Early action metric: Automatic Monitoring Reading (AMR) for core consumption and the Carbon Trust Standard, by 1 April 2011
  • Growth metric: the growth/decline of an organisation

In year one, the early action metric accounts for 100 per cent of the ranking. In year two (2012), it accounts for 40 per cent with the absolute metric at 45 per cent and the growth metric 15 per cent. In year three (2013), the split becomes 20 per cent, 60 per cent and 20 per cent respectively.

By taking a proactive approach to reducing carbon emissions, the NHS is not just reducing its exposure to carbon costs and avoiding fines; it is lowering costs, positively affecting reputation, potentially opening up a new income stream, and reducing the depletion of the world’s resources.