Best Practices For The Carbon Reduction Commitment

Published: 16 September 2008

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26 pages, 11 figures

Introduction

From April 2009 the carbon dioxide emissions of at least 5,000 private and public sector organizations in the UK must be measured and reported by law under a DEFRA scheme called the Carbon Reduction Commitment. Many organizations are woefully unprepared for this legislation and at least ten per cent will fail to comply in the first two years. Individuals responsible for Carbon Reduction Commitment compliance — in energy, finance, environment and CSR roles — need to understand the best practices for compliance. Otherwise they may face the wrath of the CEO due to large unbudgeted costs and reputational damage.

How You Benefit

This unique and detailed research provides best practices advice from a commercial perspective. The analysis covers best practices for Carbon Reduction Commitment carbon management strategies, compliance management, financial management, reputation management and business planning. This report will help individuals thrown into the CRC management cauldron to achieve low-cost compliance and prepare for a much tougher regime in 2013.

THE CRC MAKES CARBON MANAGEMENT MANDATORY

Key Features Of The Carbon Reduction Commitment
Key Actions To Respond To The Carbon Reduction Commitment

DEFINE A CARBON MANAGEMENT STRATEGY FOR CRC COMPLIANCE

Pick From Three CRC Carbon Management Strategies
1) Minimal Compliance
2) Robust Compliance
3) Carbon Reductions
Flying Blind On CRC Compliance Poses Multiple Risks
1) Failure To Register For A Carbon Reduction Commitment Account
2) Failure To Report Emissions Data
3) Under-Reporting Emissions
4) Surrendering Insufficient Allowances

COMPLIANCE MANAGEMENT: MEET DEFRA’S DEADLINES

DEFRA Defines The Timeline, The Environment Agency Implements
Practical Steps To Ensure Compliance With The CRC

REPUTATION MANAGEMENT: THE CRC LEAGUE TABLE

Public Ranking Of All CRC Organizations
Annual Change In Emissions Is The Core Metric
Additional Metrics: Carbon Efficiency And Early Action
Potential Headaches From Changes To CO2 Emission Baselines

BUSINESS PLANNING: PREPARE FOR A TOUGH REGIME FROM 2013

Phase One From 2010 To 2013 Is A Soft Regime
Phase Two Will Make Carbon Reductions A Material Financial Issue

KEY CONCLUSIONS

Make Carbon Management Mandatory From April 2009
Meet DEFRA’s Deadlines To Ensure Compliance
Engage The Finance Team To Manage Budgetary Issues
Learn How To Avoid Reputational Damage From The League Table
Bring The CEO On Board For Business Planning By 2011

TABLE OF FIGURES

Figure 1. UK Government CO2 Emission Reduction Targets 1990-2050
Figure 2. How Organizations Will Respond To The CRC In Phase One
Figure 3. Three CRC Compliant Carbon Management Strategies Will Emerge
Figure 4. Timeline For Practical Steps To Comply With The CRC
Figure 5. Large Organizations Will Implement Carbon Management Software
Figure 6. CRC Allowance Purchase Mechanisms Years 1-4
Figure 7. CRC Requires A Plan For Cash Flow Management
Figure 8. CRC Organizations Need To Budget For Bonus/Penalty Payments
Figure 9. Firms Face Direct CO2 Comparisons: The UK’s Top Four Food Retailers
Figure 10. How Carbon Reduction Strategies Impact The CRC 5 Year Rolling Average
Figure 11. Phase Two Bonus/Penalty Payments Will Be A Material Financial Issue