Expert Advice

Will you lose profit through the CRC Energy Efficiency Scheme?

Will large UK organisations affected by the CRC Energy Efficiency Scheme (CRC EES) achieve a profit or a loss while setting up an effective framework for lasting energy efficiency and savings? Is the scheme another piece of well-intentioned legislation/taxation that will simply add to the red tape burdening business and government as they try to escape the prolonged downturn?

The CRC EES is a carbon trading scheme which incentivises large corporations to make energy efficiency improvements. It's the mandatory part of the UK's overall commitment to reduce carbon emissions by 80% by 2050 and it applies to all UK organisations using 6,000 MWh of metered energy per annum – effectively anyone spending £500,000 on energy/annum or more. Current estimates suggest that around 5,000 organisations will be directly affected, but this could be as high as 20,000 when wider supply chains or subsidiaries are considered.

The scheme's compliance metrics and refunding of carbon credits year by year is very heavily weighted towards early actions. IT professionals and FM personnel need to act now.

Chris Smith, sales and marketing director, on365,

CRC confusion
In my company's discussions with facility managers, IT and data centre professionals, it is clear there is still a degree of confusion over the potential costs of the scheme. There is also a lack of understanding of when the scheme's 'early actions' need to be taken to help achieve compliance. Part of the problem is split responsibilities: the IT function is often the biggest consumer of energy in non-energy firms but the FM department still picks up the bill. Research by Loughborough University of IT and data centre professionals conducted in 2009 found that 56% never saw their corporate electricity bill.

Another difficulty is that many organisations regard the CRC's first year as a "year of measurement" after which they can draw up their plans. The reality is that the scheme's compliance metrics and refunding of carbon credits year by year is very heavily weighted toward early actions. IT professionals and FM personnel need to act now.

Although the CRC EES demands 'up front' investment in energy monitoring and management, those organisations that can prove readiness will eventually see reimbursement of their carbon credits purchased. Another key point that is being taken extremely seriously by consumer brands in particular is that organisations' progress on compliance will be shown in league tables scheduled for publication in autumn 2011. Top performers will enhance their corporate reputation but non-compliant firms could see brand damage if they are portrayed as laggards on reducing carbon emissions.

So which measures should organisations be taking to achieve CRC EES compliance and reduce energy costs?

There are two essential and practical steps that FMs and IT professionals should quickly plan for:

1. Understanding their energy consumption: Provision of half-hour metering throughout the power distribution systems.

2. Gain an approval status from a CRC-approved monitoring framework such as the Carbon Trust Standard; (they can also adopt the EU Code of Conduct on data centre efficiency which will also point data centre professionals towards more energy efficient operations over the longer run).

It's estimated that at the entry level, it will cost an organisation £60,000 in 2011 to buy credits and administer the costs of CRC EES. By completing these requirements, organisations will find themselves towards the top of the league table and could get more money back than they have paid out.

In practical terms, it is no different from the constant pressures from CEOs that IT and data centre managers are already under to cut costs.

Chris Smith, sales and marketing director, on365,

The CRC EES certainly presents a challenge to UK organisations and it demands that they plan 'early actions' on driving energy efficiency. However, in practical terms, it is no different from the constant pressures from CEOs that IT and data centre managers are already under to cut costs. It's worth remembering too that real help is at hand with the EU Code of conduct on data centre efficiency published several years ago. The code has practical tools, such as balanced scorecards to help IT managers reduce energy consumption. Critically, it also includes practical advice to help IT professionals better manage their existing IT assets -- without embarking on further capital outlay.

Practical steps like these will help IT and data centre professionals establish practical energy efficiency measures. This will help with CRC EES compliance and driving efficiencies that respect organisations' changing operational needs and available resources. They will also set out practical measures to reduce energy costs that will help IT professionals make an effective business case to the CEO -- now and in the future -- for carbon management.

Chris Smith is the sales and marketing director at data centre and server management consultancy on365 and a Contributor to SearchVirtualDataCentre.co.uk

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This was first published in June 2010

 

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