Carbon Reduction Frequently Asked Questions
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This FAQs page has been developed to provide answers to the questions that were raised during the sessions on the initial recruitment day event. The questions will be updated as and when there are any changes to National Guidance.
Additional questions will be added to the page in response to enquiries the project team receive.
Q. If I have a Climate Change Agreement (CCA) will I be exempt from the CRC?
Q. How are charities affected by the CRC?
Q. How are the export / or import of heat treated within the CRC?
Q. Will achieving ISO 16001 give any benefit within the CRC?
Q. Can I use estimates of energy use in CRC?
Q. What is the early action metric?
Q. What is the situation regarding joint ventures and private finance initiatives (PFI)?
Q. I'm a landlord / tennant - who is responsible for CRC?
Q. Is street lighting included in the CRC?
Q. What happens if my organisational structure changes during the scheme?
Q. Are individually rented homes under local authority housing associations included in the CRC?
Q. If I have a Climate Change Agreement (CCA) will I be exempt from the CRC?
A: There are three circumstances when an organisation can be exempt from CRC due to its emissions being covered by a Climate Change Agreement.
1. Single entity exemption
If you are a single entity participant and at least 25% of your energy use emissions are covered by CCA, you will be exempt from CRC for all your emissions for that entire phase. If for any reason you cease to be covered by a CCA, you must participate in CRC from the beginning of the next compliance year.
2. Group member exemption
If any member of your organisational group has at least 25% of its emissions covered by a CCA, that member is treated as exempt when working out your groups total footprint emissions.
If for any reason the member ceases to be covered by that CCA, its emissions will then have to be included in CRC as part of the organisation's total from the beginning of the next compliance year.
3. Residual group exemption
If, after the removal of a member classed as exempt above, your organisation's half hourly electricity consumption in the footprint year is less than 1,000 MWh, then your entire organisation would be exempt from that phase of CRC.
If any of the exemptions above apply in your case, you must:
- register as a participant, and
- produce a footprint report detailing all emissions, including those covered by CCA's or EU ETS
- compile and maintain an evidence pack as appropriate, and
- participate in CRC for all parts of your organisation not exempted in the case of the Group member exemption
If at any time your CCA ceases or changes, you must inform the administrator.
A. It does not make any difference when determining if a company is in the CRC whether the company has an IPPC permit. However, in the future, the energy efficiency component of IPPC will be moved to a more light touch approach where these processes are also covered by CRC.
Q. How are charities affected by the CRC?
A. The statement in the CRC Users Guide advises that 'the scheme covers participants' direct and indirect emissions of carbon dioxide from energy consumption. Energy consumption is the consumption of supplies of electricity or gas and the consumption of certain other fuels but only insofar as the consumption related to the conduct of a business, a public function or a charitable function. Therefore it must be assumed that charities who have a Half Hourly meter and consumed 6,000MWh of electricity in 2008 would be covered by the CRC.
Q. How are the export and / or import of heat treated within the CRC?
A. The Government has decided that all heat use will be zero rated for emissions. The reason for zero rating heat is to provide an incentive for CRC participants to import heat and so increase the size of the market for the heat in the UK, resulting in an increased potential for CHP and the use of surplus heat (surplus heat is a by-product from power generation and some industrial processes).
At present, the UK heat market is relatively under developed. As a result approximately 500TWh per year of surplus heat is disposed into the atmosphere and water courses in the UK. If heat markets were developed such that some of this heat could be used to displace on-site heat generation, it would result in significant carbon savings.
The zero rating of heat will mean that all heat use is treated the same for reporting purposes, removing the need for the heat customer to keep documentary evidence on the source of the heat, for instance whether it was generated by burning biomass or gas (as any benefits of more efficient generation would have accrued to the generator).
Q. Will achieving ISO 16001 give any benefit within the CRC?
A. ISO 16001 will not give any benefits in the CRC in relation to league table positions. The main benefit of ISO 16001 would be in helping gain the Carbon Trust Standard as one of the criteria is showing good carbon (energy) management which can be demonstrated by having an energy management system in place such as ISO 16001.
Q. Can I use estimates of energy use in CRC?
A. Original copies of energy bills, meter readings or fuel delivery invoices should be used to work out energy use. You can make estimates of energy use in CRC but any estimates are subject to an automatic 10% increase.
This uplift applies to all energy use estimates made in CRC. For metered energy use, data will only be classed as an estimate and therefore subject to the uplift, where estimates are based on less than 6 months of auditable accurate data which includes the supplier statement, energy bills or internal records, of actual meter readings (or self meter readings). The Environment Agency, who will be administering the CRC, will issue further guidance on suitable approximation and estimation techniques in due course.
Q. What is the early action metric?
A. There are two components to the early action metric:
1. The percentage of your organisation's emissions from electricity and gas (excluding those covered by mandatory Half Hourly Meters (HHMs)) which are covered by voluntarily installed automatic metering (AMR) at the end of March 2011.
2. The percentage of your organisation's annually reported CRC emissions covered by the Carbon Trust Standard (CTS) or the Energy Efficiency Accreditation Scheme (EEAS) at the end of each compliance year of the introductory phase.
As an example, organisation Y had total energy use emissions of 10,000 tCO2 during compliance year 1, the financial year April 2010 to end March 2011. Its electricity and gas emissions not already covered by mandatory HH metering were 5,555 tCO2. At the end of March 2011, organisation Y had 1,640 tonnes of these emissions covered by voluntary installed automatic meter reading, 30% of the total of these emissions.
Under CRC, this percentage is taken as fixed for the entire phase and therefore does not change (even if organisation Y increased the percentage of its emissions covered by voluntary AMRs after March 2011).
Also at the end of March 2011, organisation Y had 4,400 to tCO2 covered by a valid CTS (or EEAS) certificate.
For organisation Y the overall percentage would be:
- Year 1: 37% [(50 x 30/100) + (50 x 44/100)]
- Year 2: 41% [(50 x 30/100) + (50 x 52/100)]
- Year 3: 42% [(50 x 30/100) + (50 x 54/100)]
Q. What is the situation regarding joint ventures and private finance initiatives (PFI)?
A. If your venture, Private Finance Initiative, Public Private Partnership or Build Design, Finance and Operate agreement has a majority owner (>50%) then the joint venture's energy use is aggregated with that of the majority owner organisation.
Where the venture has no single owner with a stake greater than 50%, the joint venture is counted as a separate organisation and must assess if it qualifies for the scheme in its own right.
In the case of PFI schools, where the PFI company is the counterparty to the energy supply contract, the energy use will be attributed to the PFI company.
Q. I'm a landlord/tenant - who is responsible for the CRC?
A. In the case of landlords and tenants, energy use in leased buildings is the responsibility of the customer who has the contract with the energy supplier. This means that if you rent space for your undertakings and you are billed by the energy supplier, you are responsible for that electricity under CRC. If you are a landlord organisation and you pay the bills, then you are responsible for the energy use.
Government is planning to issue more detailed guidance for landlords and tenants in due course.
Q. Is street lighting included in the CRC?
A. In many cases street lighting has an un-metered supply (UMS) of electricity and would be a non-core supply. However, because of the significant amount of energy this service uses, it is likely to be included in the CRC to meet the 90% target. Within the CRC un-metered supplies of electricity will be seen as an estimate. This means it will be subject to an adjustment factor that will increase the amount of carbon allowances that need to be purchased.
If participating authorities have in place a method called "pseudo half hourly metering" for street lighting this will provide a more accurate measurement that will not be subject to the adjustment and would then be reclassified as a core source.
A. If your organisations has at least one HHM settled on the half hourly market, but your total electricity consumption through all HHMs was less than 6,000 MWh over the course of the qualification period, you must make an information disclosure under CRC. This is done via the online CRC registry.
The information you disclose:
- helps improve Government's understanding of energy use, and
- helps make sure that all HHMs settled on the HH market have been accounted for.
If you are required to make an information disclosure, you must:
- provide the administrator with a list of all organisation's HHMs settled on the half hourly market, and
- calculate how much electricity you consumed through all HHM, including any AMR markets
If you consume more than 3,000 MWh in the qualification year, you must also disclose your total annual consumption of half hourly electricity during the period. This is to improve the data available to Government on energy use in the target sector.
If you consume less than 3,000 MWh in the qualification year, then you will need to tick the appropriate box on the online form.
Your energy supplier should be able to tell you if you have any HHM settled on the half hourly market and your electricity consumption through these meters.
Information disclosure takes place during the registration period. For the introductory phase. this is 1 April 2010 until 30 September 2010.
Q. What happens if my organistional structure changes during the scheme?
A. It is likely that there will be changes to the organisational structure of many participants during the scheme. For example, an organisation may buy or sell subsidiaries, an entire CRC participant may be purchased by another organisation, or a Government Department might restructure.
To minimise administrative burdens on both participants and the administrator, CRC will not require you to report on all changes in your organisation.
However, buying or selling a large organisation or subsidiary can have a significant affect or your CRC emissions. CRC therefore takes account of significant organisational changes, known as 'designated changes', as described below.
Selling a principal subsidiary
Principal subsidiaries are subsidiaries that would be eligible to participate in CRC in their own right were they not part of another organisation. As they are large organisations, these subsidiaries contribute significant amounts of emissions to the total of their participating highest parent organisation - so selling one has a large impact on an organisation's total CRC emissions.
In order to account for this, when an organisation sells a principal subsidiary:
- the seller must notify the administrator
- the administrator then adjusts the seller's records to remove the principal subsidiary and the emissions they are responsible for from the seller's baseline figures, and
- the new baseline figures will be used to calculate the seller's subsequent performance in the scheme and revenue recycling payments.
The sale is deemed to have taken effect at the start of the compliance year. Therefore:
- the seller will not report emissions for that subsidiary or participant for that year
- the buyer will report the full year emissions for that subsidiary or participant, and
- revenue recycling payment will be adjusted accordingly. Even if the seller's CRC energy consumption is now below the qualification level, the seller must continue to participate in CRC for the rest of the phase.
Buying a principal subsidiary or entire participate
If a CRC participant buys a principal subsidiary from another CRC participant, or that participant in its entirety, their baseline figures are also adjusted. The buyer is then responsible for:
- reporting on the emissions of that prinicipal subsidiary or entire participant, as part of the buyer's total CRC emissions, from the start of the compliance year in which subsidiary was bought, and
- surrendering sufficient allowances to cover the total CRC emissions.
For example, if participant organisation Y sells a principal subsidiary to organisation Z on 15 September 2012, midway through a compliance year, organisation Z is taken to be responsible for the emissions of that subsidiary from April 2012 onwards, the start of that compliance year.
In the event of a principal subsidiary changing hands more than once during a year, the organisation owning it at the end of that year is the organisation that must report the full year emissions for that subsidiary.
Buying a participant or principal subsidiary as a non-participant
If a non-CRC participant buys a principal subsidiary or CRC participant, the buyer will then be obliged to:
- register and participate in CRC for the remainder of the phase, but only on behalf of the organisation it has acquired (i.e. it does not need to calculate its total CRC emissions and must only buy and surrender allowances for the organisation it acquired)
- assess whether, for the next phase, it qualifies for the scheme as an entire organisation and take action accordingly
When purchasing a CRC participant or principal subsidiary, you should ensure the seller provides the necessary information in order for you to be able to comply with the requirements described above.
Buying or selling smaller subsidiaries and sites
If you buy or sell a small subsidiary that would not qualify for CRC in its own right, you are not required to report it to the administrator, and there is no change to your emissions baseline in these cases.
Instead, these smaller organisational changes during each phase are accounted for via the growth metric.
Q. Are individually rented homes under local authority housing assocations included in the CRC?
A. Only energy used in housing offices and not individual rented homes needs to be included in the CRC.
