Back in October 2016 (time flies in energy management!) I wrote about the upcoming abolition of the Carbon Reduction Commitment (CRC) scheme following George Osborne’s announcement as part of the autumn statement. Rather than try to simplify the scheme by continuously making changes to it, the plan is to scrap it and replace the main aspects with two separate mechanisms:

• Replace the CRC charge by increasing Climate Change Levy
• Replace the CRC reporting aspect with another scheme, details TBC.

In January, stakeholders were invited to provide information as part of a Government consultation about the proposed Streamlined Energy and Carbon Reporting (SECR). The nature of the consultation gave some clues as to what the most likely reporting scenario will be, as follows:

• SECR will include electricity, gas and transport fuel. It seems likely that although scope 1 and 2 carbon emissions through greenhouse gas reporting will continue for quoted companies, for other large organisations the scope will not include fugitive and other process emissions (good news, as these have a disproportionately high administrative burden to record).
• An intensity metric is also likely to be included in order to provide relevant year on year comparison. These will be left for the company or sector to choose the most relevant metric – most likely £ turnover, FTE numbers, floor area or production figures.
• SECR will be aligned to the financial year of the organisation. This means that where a company reports on energy use for other purposes, we should see a reduction in the time required for collation.
• SECR will form part of companies’ annual reports to Companies House. The mechanism with which this is carried out is likely to be based on the easiest solution working with Companies House.
• SECR will apply to all ‘large’ companies. The largest uncertainty in the consultation is around which definition of ‘large’ should be used. There are pros and cons to all suggestions – aligning it to the companies act definition will mean that qualification will be easy to define, as these companies already have reporting requirements to Companies House. Aligning it to ESOS would also make sense, as those that qualify will already undertake a level of energy collation as part of the ESOS legislation. However, both of these methods could include companies that have very little energy use, where using a CRC-style energy use threshold would exclude these.

BEIS are currently analysing the feedback from the consultation. We await the outcome and will alert all our customers once there is any concrete guidance about how the Streamlined Energy and Carbon Reporting will be administered.

Abby Davey, Senior Compliance Consultant

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