Experience from two CRC-mimicking pilot schemes suggest organisations will be wary of trading allowances, and should allow plenty of time and effort to comply with the new regulation.
In Yorkshire 45 bodies ranging from banks and councils to NHS trusts have volunteered for an online simulation of the CRC running since January 2009.
The initiative, organised and funded by regional development agency Yorkshire Forward, allows for imaginary trading of allowances. Training sessions covered emissions reporting, trading and the use of marginal abatement cost curves (see p 15) to help participants find the best ways to cut CO2 emissions.
Pete Stevens, who manages the emission accounts of participants, says electricity suppliers varied in their willingness to help; some were running 12 months behind in providing data.
Once all the baseline energy use data had been received from participants, mostly covering the period 2008/09, an emissions cap was set at 5% below their combined total emissions. Imaginary allowances to cover this were sold in January at £12 per tonne of CO2 – the same as in the CRC’s introductory period.
To date there have been four days in which participants can trade allowances among themselves. So far there have been just 11 offers to buy or sell with only two deals concluded. Many participants say they will wait until nearer the year’s end before buying allowances to cover their emissions or selling any surplus. The scheme is now being expanded to include more firms.
In the other CRC pilot, 34 local councils have spent a year trading carbon – with imaginary money – as part of the Local Government Information Unit’s (LGIU) Carbon Trading Councils programme. The first trading year ran from April 2008 to April 2009. About 45 councils, two police authorities and 10-15 hospitals are expected to take part in the pilot’s next round.
Councils experienced problems collecting suitable data. Some found finance departments had aggregated information on electricity consumption but included only its value, not the kilowatt hours. A couple of others inadvertently missed a nought off their estimated emissions.
“It looks like it takes about a year to know what the unknowns are,” says scheme coordinator Andy Johnston. Only now are participants starting to think about possible energy savings.
Traded volumes were very low and the LGiU found some participants needed substantial help with registration and allowance auctions. Dr Johnston fears the Environment Agency, the CRC administrator and one of its regulators, will be overwhelmed if participants in the real scheme need just as much assistance and clarification.