Do you qualify for CRC Phase 2? Register soon to avoid a fine

4th December 2013

Introduction

The CRC Energy Efficiency Scheme (CRC) is a UK Government initiative to reduce carbon dioxide emissions from organisations meeting certain qualification criteria. If an organisation meets the criteria, it must participate in the CRC. The first phase of the scheme runs from April 2010 to the end of March 2014. However, registration for Phase 2 of the CRC scheme is now open.

The fact that an organisation did or did not participate in Phase 1 of the scheme is irrelevant for determining whether it is required to participate in Phase 2.

Organisations that meet the qualification criteria assessed in relation to the period from 1 April 2012 to 31 March 2013 will have to participate in Phase 2. If they have qualified, participants have to register in the scheme before 31 January 2014.

Organisations that register as participants for CRC in Phase 2 will have to monitor and report on their energy use for five compliance years. They will also have to purchase allowances to cover their carbon dioxide emissions. This provides a direct incentive for organisations to use their energy efficiently and so limit their carbon dioxide emissions.

The qualification criteria

The CRC scheme applies to private and public sector organisations. There are certain prescribed public bodies known as mandated participants (i.e. all UK central government departments and devolved administrations, plus certain other public bodies), which must participate in the CRC scheme regardless of the amount of electricity they consume. All other public and private organisations that meet the qualification criteria, apart from particular bodies that are exempt, must take part in the CRC scheme. These other organisations will need to check if they are part of a group because qualification is assessed on a group basis, and the CRC scheme rules contain detailed provisions in relation to groups.

Organisations that are not mandated participants qualify for Phase 2 if they, or their group, met both of the following criteria between 1 April 2012 and 31 March 2013:

• they had at least one settled half hourly electricity meter; and
• they consumed 6,000 megawatt hours or more of qualifying electricity supplied on the settled half hourly market.

Some electricity use is excluded from the CRC scheme and as such doesn’t count as qualifying electricity.

Registration

Mandated participants and other organisations that qualify for the CRC scheme have to register on the Environment Agency’s online registry.

The window for registration is from 4 November 2013 to 31 January 2014. If an organisation required to participate in Phase 2 of CRC does not register, it may be subject to penalties. The organisation may be fined £5,000 for not registering by the deadline, with a further fine of £500 per working day until it registers (subject to a maximum of 80 working days). This gives a potential maximum fine of £45,000. The names of non-compliant organisations may also be published on the Environment Agency’s website.

It is therefore important to ensure that you have assessed whether your organisation, and the group it forms part of, qualifies for the CRC scheme at an early stage. If it does, you will need to ensure that you have all of the information necessary to complete the registration process prior to the deadline of 31 January 2014.

Further information

For more information on the CRC scheme, please contact our team.