NHS energy use costs £400 million annually and results in around one million tonnes of carbon emissions.

If the NHS met its primary energy consumption reduction target of 15 per cent by 2010, the total energy bill would be cut by £60m. That’s the equivalent of running a small community hospital, or carrying out 7,000 heart bypass operations, according to the NHS Confederation in its report Taking the Temperature.

The NHS, from April 2010, will have to improve its performance by law. The Carbon Reduction Commitment, a compulsory emissions trading scheme, will mean major energy users will buy allowances equivalent to their CO2 emissions and force them to decide on the most efficient means of reducing emissions.

Over the entire UK economy, the CRC aims to save 4 million tonnes of CO2 and £1 billion every year by 2020.

While reducing emissions, it is hoped the scheme will save organisations money beyond the costs of participating but, with the financial pressures on the health sector and the energy required for its efficient operation, this is not the easiest of tasks.

The CRC scheme will give bonus payments to organisations which reduce their energy use, and good or bad PR will come from the performance-based league table. More significant a motivation is a range of fines and even imprisonment for the submission of false information.

Allowances will be sold at the start of each compliance year. During the introductory phase, they will be sold at a fixed price of £12 per tonne of CO2, after which organisations can buy and sell from each other. 

From April 2011, organisations will have to buy two years of allowances at once – and will put a substantial burden on the cash flow of the health service and could impact on patient care.

The good news is that with meticulous planning, CRC can be to your advantage. We have outlined five steps to ensure you comply, avoid the pitfalls and potentially make money from the scheme.

Step 1 – Who’s affected?

NHS bodies are included regardless of whether they meet the general 6,000MWh annual usage qualification threshold. The Secretary of State for Health is the legal entity for the NHS and health department-sponsored bodies.

Only hospitals already under the European Union’s Energy Trading Scheme or with over 25 per cent of its emissions covered by a Climate Change Agreement will be exempt from the CRC.

Step 2 – Information gathering

All energy use must be calculated in determining CO2emissions. Most health estates managers will have good electricity information already, but data is also required on gas, oil, coal and LPG consumption.

Facilities managers must begin monthly readings now in order to compile the reports required in July 2011 and so calculate a realistic estimate of their annual consumption. Failure to do this will lead to an inflated estimate, costing more in the long term.

The Environmental Agency, as CRC regulator in England and Wales, will audit 20 per cent of organisations annually. If your evidence pack is out of date, you report inaccurate information or fail to submit the annual report, substantial fines must be paid.

Step 3 – Early Action

To encourage action before the start of the Introductory Year, beginning April 2010, the Government has introduced two Early Action Metrics.

The first metric is Automatic Monitoring Reading for all electricity and gas consumption, meaning that meters are read and recorded remotely.  The second is the Carbon Trust Standard.

Adopting both puts an organisation high on the league table during the introductory year. As the government will reward high performers, achieving the Standard could be worth up to £1.20 per tonne of CO2.

Step 4 – Reduce Emissions

The next step is reducing energy use. A mitigation strategy comprising a five or 10-year plan of improvements is necessary and advice should be taken from a carbon management specialist to ensure the CRC is cost-neutral or even a money-maker.

Particular focus should be placed on staff behaviour and improvements in the management of energy as well as “technical fixes”.

Step 5 – Ongoing reporting

The final step is critical: establishing a process for the ongoing monitoring, collection and reporting of data. Organisations can nominate someone in-house to do this, outsource it or choose a combination of the two.

Following these straightforward steps and following good advice will make sure you are well equipped to deal with this new scheme, and can even make it a real positive. Everyone in the NHS has a role to play.