How will climate change cheme affect my business?
The Carbon Reduction Commitment Energy Efficiency scheme could save your business money, according to carbon consultant Zaour Israfilof
The carbon consultant
Zaour Israfilof, 3 Carbon Elements
The Carbon Reduction Commitment Energy Efficiency scheme (CRCEE) is a new climate change agreement introduced in April 2010. Up to 5,000 organizations will have to participate fully in the scheme, in addition to 15,000 which must measure their carbon footprint and report it to the government.
You may also want to watch:
Understandably, the most interesting aspect of the scheme for participants is its financial impact.
The scheme was designed to be revenue neutral as most of the money collected from participants will be refunded. Each participant will get a bonus or penalty depending on its performance in the league table.
- 1 Aldi approved - but who will build pedestrian crossing?
- 2 Partner pays tribute to 'love of my life' after Thorpe stabbing
- 3 Prison staff should have performed CPR on paedophile teacher, report finds
- 4 New hope for Open building as talks over future revealed
- 5 Homes in Norwich and Thorpe St Andrew may have no water
- 6 £1.3m property for sale on one of most popular roads in Norwich
- 7 Sold out start for Norwich's Junkyard Market ahead of expansion across UK
- 8 RAC apologises to woman and autistic son for 'abandoning' them
- 9 Photographs show the sorry state of Anglia Square's buildings
- 10 Team behind Norwich restaurants reopen closed hotel
There is a common misconception among participants that the maximum they could lose is the maximum penalty on their spend on allowances in that particular year. Many will be surprised to learn that this is incorrect.
The refund is based on three factors:
1. Early Action Metric - this is to reward participants which took voluntary carbon reduction measures before the start of the scheme
2. Performance in reducing the company's own emissions compared to previous years
3. The amount of allowances a participant purchased in the baseline year as a proportion of the total allowances purchased by all participants in the same year.
The third factor is the most significant in establishing CRCEE's financial impact. The entitlement to a proportion of the total refund pot (before the bonus or penalty based on its position in the league table) remains the same.
If the pot shrinks (i.e. the total emissions of all participants decreases) then the refund a participant is entitled to shrinks too.
This base amount is then adjusted by the bonus or penalty factor determined by the league table.
Thus CRCEE employs a clever recycling formula which rewards those that reduce their emissions most quickly relative to those that reduce emissions more slowly or even increase their emissions.
To break even from this measure, participants need to reduce their emissions at the same rate as the overall fund is shrinking.
The scheme also creates the secondary market in which participants will be allowed to freely trade their allowances and make additional profit. However any profit or loss made when trading allowances on the secondary market will not count towards the refund and will be subject to tax.
Companies will also need to factor in the cost of compliance. This includes staff time, registration charges, administration fees, charges levied by the government etc.
3 Carbon Elements is a professional carbon consultancy set up by graduates of the world's first carbon MBA course at the University of East Anglia. For details visit www.3carbonelements.co.uk
About Ask the Experts
Are you running a business and need advice on a tricky issue? Or are you thinking of becoming your own boss but not sure if it's for you? Then the Evening News Panel of Experts is here to help.
The panel - all experts in their fields - can answer questions ranging from problems with tax returns and affordable IT to general business advice, the benefits of green practices and how to deal with the emotions of going it alone.
Do you have a question for the panel? Email Evening News senior business writer Sam Williams at email@example.com.