Companies have just days to start complying with new regulations on carbon reduction.
Firms could face penalties that will hit their bottom line even before carbon trading begins in 2011 unless they get in line with the Government’s new Carbon Reduction Commitment (CRC).
From April 1, organisations with annual electricity bills of approximately £1 million or more must start measuring and accurately reporting their energy usage to Government auditors.
Those that submit late or inaccurate data could be penalised and publicly chastised for those failures.
Business advisor KPMG’s work with organisations preparing for the CRC has found that compliance failures, such as incorrect reporting, pose the greatest immediate risk to both reputation and the bottom line.
The firm’s experience shows two thirds of businesses are currently misstating their carbon numbers by a margin that will incur fines.
From April 2011, the Government will publish league tables ranking participants on their success at managing and reducing their carbon emissions.
“This will inform a bonus and penalty system which effectively sees money from the worst performers given to those nearer the top, to reward their performance.
Jon Gorrie, sustainability adviser at KPMG, said: “There are still signs, even at this late stage, that many of the scheme’s participants are not yet fully prepared for the CRC. Some are hopeful of a last minute postponement of the scheme, thinking this is signalled by the delays in clarifying some of the more complex areas of the scheme.
“However we believe the scheme is going to start in April and all organisations should be prepared by now.
“The penalties for late or inaccurate data submission mean organisations could find themselves incurring unexpected costs and their efforts to establish green credentials could be severely set back.
“Furthermore, many organisations don’t fully understand the implications of the CRC league table’s early action bonuses so may miss out on this form of potential return on investment.
“The Government’s hope is that the scheme will incentivise large, non-energy intensive organisations to reduce their carbon emissions; indeed it expects to achieve an annual saving of 4.4 million tonnes of CO2 by 2020. We estimate the CRC will affect up to 5,000 full participants while a further 10,000 or more will have compliance obligations, although will not have to trade carbon - for now.”
Companies will have to establish whether they use more than 6000MWh of electricity – approximately £1 million – and also retain copies of energy bills and statements from 2008 and build a register of fixed source energy use and emissions. The new regulations also require firms to recognise any emissions where landlord-tenant confusion might arise and start measuring their carbon footprints from April 1.
Mr Gorrie said: “Organisations that understand the scheme have an opportunity to be rewarded for improved energy efficiency while others will be penalised and face reputational damage. The scheme effectively creates a financial and reputational price for not being green.”
* A checklist of how to comply
* If you have any mandatory half hourly meters you are caught by the scheme.
* Determine 2008 electricity use. If this is less than 6000MWh, you still have to report but won’t have to pay for carbon.
* Collate and retain copies of bills and statements from 2008.
* Build a register of fixed source energy use and emissions.
* Recognise any emissions where landlord/tenant confusion might arise.
* Familiarise yourself with all the deadlines for registration and data submission.
* Start measuring your full carbon footprint within the scheme from April 1, 2010.
