The publication of the government’s response to the Streamlined Energy and Carbon Reporting (SECR) consultation last week has finally brought some clarity to what, if any, the replacement for Carbon Reduction Commitment (CRC) reporting will be.
We have been aware since 2016 that the financial element of CRC is to be encompassed in the Climate Change Levy increases from April 2019, but the reporting component, which is a significant portion of the work currently undertaken for CRC, has been less clear. The basics of what has been determined are as follows:
- Mandatory reporting of Scope 1 and 2 Greenhouse gas emissions on an annual basis via the current system of company accounts reporting.
- Applicable to all quoted companies and large UK incorporated unquoted companies with at least 250 employees or annual turnover greater than £36m and annual balance sheet total greater than £18m (two criteria or more must apply).
- Option for organisations using low levels of energy (less than 40,000 kWh per annum) to opt-out.
- Inclusion of Limited Liability Partnerships.
There are a few notable differences that are particularly relevant to TEAM customers.
Firstly, this is a scheme targeting the private sector only, which is a diversion from the current CRC requirements. Many public sectors organisations such as local authorities, NHS Trusts and Universities will now no longer be required to submit their annual carbon emissions to a central register in this way.
However, these organisations are still subject to the Emissions Reduction Pledge 2020. This is set of principles committing organisations to act in pursuit of the voluntary target set in the Clean Growth Strategy to reduce greenhouse gas emissions by 30% by 2020/21, compared to a 2009/10 baseline. Despite the soft nature of this current set up where organisations can currently choose to become involved and actively report back, there is a suggestion of a more ambitious and possibly mandatory target once this first reporting period has ended.
Secondly, the data to be reported will include transport which is not currently included in CRC. The scope of what is to be reported is much more closely in line with that of the Greenhouse Gas reporting that all UK listed companies have been required to complete since 2013.
These current Greenhouse gas reporting requirements have impacted around 1,200 companies, but the consultation response suggests that the new SECR stipulations will take this figure up to around 11,900. This is approximately the same number of organisations affected by the ESOS requirements.
Finally, there is a concern that the system of reporting, through company accounts, does not provide the same rigour in standardising the calculation methodology or presentation of figures, which may limit aggregation or comparability between organisations.
Despite the apparent lack of reporting requirements for public sector bodies within SECR, it seems highly unlikely that carbon emission reduction won’t continue to be a relevant and significant target for all UK organisations. The ambitious targets that were set out in the Climate Change Act in 2008 and the legislated carbon budgets which have been set out as a result of this ensure that the monitoring of greenhouse gas emissions and the work to reduce them will continue to be of paramount importance.
SECR will be introduced from April 2019.
TEAM’s experienced consultants offer a range of professional services to help organisations understand and get the most out of energy schemes and initiatives. This includes CRC reporting, ESOS, and the transition to SECR. Find out more.