CRC laggards face heavy fines

Companies failing to submit greenhouse gas emissions footprint reports and their first annual emissions data under the CRC this year will face heavy fines

Companies failing to submit their first reports under the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme could face fines equivalent to 5-11% of their energy bills, management consultant PricewaterhouseCoopers (PwC?) has warned. Despite this risk, PwC says preparedness for the deadline remains patchy. ?

PwC points out that some 3,000 organisations, mostly with energy bills in excess of £500,000 a year, will need to submit footprint reports and CRC annual reports by 31 July 2011. These must be based on usage data for electricity, gas, diesel and other fuels across all of their sites, verified by the company and can be spot audited by the Environment Agency. Organisations and their subsidiaries are full CRC participants if they have at least one half-hourly electricity meter settled on the half-hourly market and consumed more than 6,000 megawatt-hours (MWh) per year of electricity during 2008 (CRC Special Report, December 2010).

Henry Le Fleming, carbon reporting specialist at PwC, points out that last year’s registration phase was the easy part: “Many companies won’t have stress tested their processes, systems and controls for gathering the data. If they have large numbers of sites with shared responsibility for energy bills it could be more difficult than expected.”

PwC warns that late filing will earn a £5,000 fine for each report, plus £500 for every day the report is outstanding. It adds that inaccuracies leading to over- or under-reporting of emissions can attract fines of £40 a tonne. For an organisation spending £20m on energy, a 20% inaccuracy would result in fines of £1m, it says. It adds that “a company with a £1m energy bill which was 20 days late in submitting reports, and made a 20% error in the numbers in its annual report, would face fines of just over £80,000”.

Mr Le Fleming said getting the the CRC footprint report right is vital. “Using this effectively will enable some companies to reduce exposure by 10%, as the sources cannot be changed for the next three years.” This is because organisations are entitled to exclude up to 10% of their minor emissions, though this is now under review (ENDS Report, February 2011). 

PwC adds that accuracy of data is even more important now, in the absence of revenue recycling to participants from emissions allowance purchasing, and will also have reputational implications through the organisation’s position in CRC league tables.