The highest profile environmental issue at present is climate change - and a swathe of legislation has and will be implemented to back up UK Government commitments to reduce green house gas emissions. Much of this legislation will affect both Local Authorities and Valpak members in the future.
The Climate Change Levy (CCL) is an energy tax which came into effect on 1st April 2001 and applies to energy used in the non-domestic sector (industry, commerce, and the public sector). The CCL was accompanied by the introduction of Climate Change Agreements (CCAs) which provide up to an an 80% discount on the levy if challenging targets are agreed and met for improving energy efficiency or reducing greenhouse gas emissions. CCA targets are generally agreed at manufacturing sector level and are intended to ensure that UK industry remains competitive against non-UK companies who are not subject to the CCL.
The principal statutory mechanism through which each EU Member State currently strives to meet its commitments to reduce greenhouse gas (GHG) emissions specified under the Kyoto protocol to the UNFCCC (United Nations Framework Convention on Climate Change is the European Union Emission Trading Scheme (EU ETS). This scheme covers electricity generation and the main energy intensive industries - power stations, refineries and offshore, iron and steel, cement and lime, paper, food and drink, glass, ceramics, and engineering and vehicles which account for around 50% of UK CO2 emissions. The EU ETS is an emission "cap and trade" system, the first phase of which ran from 2005 - 2007; Phase II runs from 2008 - 2012.
The Carbon Reduction Commitment
The next tranche of compulsory carbon emission reduction legislation, due to take effect at the beginning of 2010, is the Carbon Reduction Commitment (CRC). The Carbon Reduction Commitment (CRC) will be the first compulsory UK legislation to ration energy use amongst medium to large sizes businesses and public sector organisations. Its aim is to encourage non-energy intensive business / public sector stakeholders to reduce their CO2 emissions by a total of 1.2M tonnes by 2020 (-26%).
Participation in the CRC will be compulsory for all organisations in England, Wales, Scotland or Northern Ireland with electricity consumption of more than 6,000 MWh p.a. from half-hourly meters unless the energy use falls under one of the proposed exclusions or exemptions. The exemptions are for energy use falling under the EU ETS or energy use which is already covered under a CCA. Whether or not an organisation will be subject to obligations under the CRC will be determined based on its electricity consumption for the year 2008. The CRC is due to take effect in 2010 with the first three years being a fixed price 'trial' period before a full 'cap and trade' mechanism takes effect.
The current Government estimate is that between 4 - 5,000 UK organisations will be affected in this new 'cap and trade' emission legislation. Those who are affected will have to purchase CO2 emission allowances issued by the Government to cover annual CO2 emissions from all energy sources except transport fuel, and then submit the required amount of permits during end of year reconciliation period. Non-participation for those obligated will be a criminal offence with various administrative fines currently under consideration by the Government. However, the scheme as a whole will be revenue neutral to the exchequer.
Next steps
Full details of the CRC are still under consideration by the Government and will be subject to further consultation; however, much of the broad scope of the scheme has been published. Valpak will be offering comprehensive help and advice to those affected by the CRC and intends to provide competitive CRC compliance services when the scheme takes full effect in 2010.
If you would like to find out more then please email info@valpak.co.uk.
