Carbon Reduction Commitment Scheme as at April 2009
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As retailers and property owners prepared for the introduction of this statutory scheme, designed to encourage greater energy efficiency and emissions reduction from commercial property in the UK, this presentation examines the benefits and the shortcomings.
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Carbon Reduction Commitment Scheme as at April 2009
- 1. The Carbon Reduction Commitment and Retailing Jane Milne Director of Business Environment British Retail Consortium
- 2. BRC Retail Members We represent: • Over 80% of the retail industry. • 30,000 smaller and medium sized retailers. • Over 70 major retail members, with over 190 facias • A broad church of large to small; out of town to high street; food and non-food; stores and online/direct.
- 3. Where is energy on your Board’s priorities? • Insert cost diagram to demonstrate how trivial energy costs are
- 5. Are you a near miss - or are you still caught? • If you had at least one HHM but less than 6,000 MWh (~£0.5m) electricity consumption you have to make information disclosures • If you used over 3,000 MWh (~£0.25m) this includes total annual consumption • If your non-inventory turnover is around [£12m] pa as a non-food retailer this could apply to you - or a lower figure for a food retailer with refrigeration
- 6. Are you a tenant - or a landlord? • Wherever you are a tenant, if your landlord is the counterparty for the electricity supply, they are responsible for the emissions - but do you understand what is being done to improve energy efficiency and what the impact on your service charges will be? • Wherever you are a landlord, the reverse will be true - what are you doing about it?
- 7. Groups, parents and franchises • All fascia should be under a single registration and report, with any single subsidiary which would qualify in its own right separately identified (M&A) • Default is for parent company to report, but if the group includes manufacturing capacity, would this company have more expertise? • Are you able to capture and verify data from franchisees? Are you building provisions into your franchise contracts to require information exchange and incentivise energy efficiency
Editor's Notes
- In the current tough trading environment retail Boards are looking at driving down costs - but with people (40%) and property (35%) accounting for the greater part of costs, aside from inventory, that’s where the focus will be. Regulatory requirements like the CRC, as well as a number of voluntary initiatives, mean that someone on the Board needs to be driving energy and emissions management
- Over the last twelve months the financial crisis has caused some of the largest retail stocks to plummet. The retail sector has fallen by around 25% in the last year The erosion of capital in the company makes riding out tough trading conditions all the more difficult. Companies may have to look at other ways of raising capital if required.
- Around 15,000 companies are likely to fall into this category, around 3 times the number that will actually participate in the CRC An information disclosure includes providing the administrator with a list of all your organisation’s HHMs settled on the half hourly market, a calculaiton of how much electricity you have consumed through all HHMs, including any AMR meters Note that HHM info is sent by supplier to the address of HHM (Half Hour settled meter) ie not HQ of the organisation. Therefore you need to trace all your HHMs and AMRs (Automatic Meter Reading meter) throughout the organisation. The information disclosure for the introductory phase must occur between 1 April 2010 and 30 September 2010, based on electricity consumption in 2008 calendar year. It is made online via the CRC registry. Don’t think you’ve escaped if you are not caught by the CRC as a participant or a larger non-participant. The Climate Change Act duties on the SoS to publish guidelines for companies on [ ] to review progress against targets so amendments to company law will require annual reporting of emissions by large and medium sized companies - expected as a mandatory requirement by 2012 rather than the current voluntary approach. And any retailer who is a signatory to the BRC’s ‘A Better Retailing Climate’ will already be assembling their data for our baseline year of 2005 and our first reporting year of 2008 in order to assess our voluntary sectoral agreement to reduce emissions from our buildings by 15% between 2005 and 2013.
- Any stats on tenanted v owned retail property? Direct metered versus landlord supplied NB that even where individual retail units are separately metered, the common areas of eg a shopping centre will normally fall to the landlord The CRC guidance says ‘in the case of landlords and tenants, energy used in leased buildings is the responsibility of the customer who has the contract with the energy supplier. This means that if you rent space for your undertakings and you are billed by the supplier, you are responsible for that electricity under CRC. If you are a landlord organisation and you pay the bills, then you are responsible for the electricity use. A landlord or tenant can never be considered an agent [under the regs]. The Government is planning to issue more detailed guidance for landlords and tenants in due course’ [Section 2.1 of the CRC User Guide, March 2009]
- Organisational groups must participate as a single entity, even where the group has large subsidiaries which would qualify in their own right. One part of the group must act as the primary member, in general the highest parent organisation - an overseas parent organisation must nominate a UK agent to act as the primary member Qualification is based on the organisational structure on 31 December 2008 so must aggregate annual half hourly electricity usage from all the subsidiaries they owned on that date to determine whether a group qualifies Groups For each large subsidiary the primary member must provide separate information on annual emissions in the annual report, and must notify the administrator in the event of a sale or purchase of such a subsidiary When M&A or a sale of a qualifying subsidiary occurs during a phase or between the end of the qualification period and the start of a phase the seller must notify the administrator. Sale is deemed to have occurred at the start of the compliance year and buyer must report the full year emissions for that participant and surrendering sufficient allowances to cover these. If the buyer did not previously qualify it must register and participate for the subsidiary only during that phase, and assess whether the whole group must register in subsequent phases. M&As or sales of a small subsidiary does not need to be reported as these smaller organisational changes are accounted for via the growth metric Who should report? Considerable expertise is required from a range specialisms to make the report. It may be that a heavy energy using subsidiary, such as a manufacturing arm, has more of the requisite expertise available and is best placed to perform this function for the group. Either way, a Director must be nominated as the responsible for the evidence pack submitted for the Group. Franchises Franchisors are responsible for the energy use of all their franchisees, even if the franchisee is legally owned by another CRC organisation The franchisee should give their franchisor data about energy use - the franchisee can request an annual energy statement from their supplier - unless the franchisee is a tenant and the landlord is responsible for the energy bills when the usual landlord arrangements apply Other vertical distribution agreements such as distribution or licence agreements are treated like franchises