Verdantix Says Finance Directors Face A Carbon Reduction Investment Dilemma
London, UK. April 1, 2009. Finance directors face a painful catch-22 situation on carbon investments due to the recession and the early action metrics for the Carbon Reduction Commitment, according to new analysis from the independent research firm Verdantix. Energy efficiency and carbon management investments made today will influence the size of bonuses and penalties from the first compliance year of the CRC which starts in April 2010.
“The CRC creates two unappealing alternatives for under pressure finance departments” said Verdantix Director Rodolphe d’Arjuzon. “Finance executives have to either invest cash in digital meters and carbon reduction initiatives to get a high score in the CRC league table or if they need to conserve cash they will suffer a low score in the CRC league table – possibly being one of many worst performers. This could incur the wrath of the CEO. But delay looks more likely than action because the first CRC league table will be published in October 2011.”
The Verdantix analysis of the recently released CRC guidelines from the Department for Energy and Climate Change (DECC), combined with detailed research on the UK’s energy consulting and energy efficiency market indicates that:
Carbon measurement needs to start on April 1, 2009. To qualify for The Carbon Trust Standard for the first CRC compliance year (April 2010 to March 2011) organizations need to demonstrate reductions in CO2 emissions over the previous year. This means that if a firm’s energy and carbon measurement programme is not under way today the opportunity to profit from the CRC’s early action metric has already evaporated. This metric accounts for 50 per cent of the score.
Sixty organizations already qualify for higher CRC scores. According to the Carbon Trust, over 60 organizations have already achieved the standard for carbon measurement, management and reduction. Firms like B&Q, Kyocera, Thames Water and Diageo as well as public sector bodies like Woking Borough Council and King’s College London will earn financial rewards in the first recycling of CRC payments due in July 2011. That leaves 4,940 other organizations scrambling to catch up.
Investing in AMR technologies needs more buy-in. Finance directors still have an opportunity to increase their CRC league table score by investing in automatic meter reading technologies. By voluntarily installing Automatic Meter Reading (AMR) technology prior to March 31, 2011 organizations can ensure they do not end up at the bottom of the CRC league table. But finance directors focus on more pressing financial issues – such as cash flow – with the result that AMR investments fall off the radar.
“Given the depth of the economic crisis, most finance directors simply don’t have the time to discuss funding for energy efficiency and carbon management initiatives. The CRC deadlines all look too far away from the current financial year” said d’Arjuzon. “But by ignoring the carbon issue today, they are storing up a world of trouble for 2011. And the ability to improve a CRC league table score dwindles with every passing month. As the economy improves in the second half of 2010 our research suggests that organizations will rush to buy AMR technologies – because by then that will be the only way to avoid being the worst performer in the CRC league table.”
About Verdantix
Verdantix is an independent business research firm focused on climate change, business sustainability and energy efficiency. For more information please visit www.verdantix.com
Press Contact
Helen Fletcher, Media Relations Manager
press@verdantix.com
Wednesday, 01 April 2009