Yorkshire firms told to get ready for carbon reduction legislation

YORKSHIRE firms face fines equivalent to 10% of their annual energy bill for failing to comply with new Carbon Reduction Commitment (CRC).

That’s according to Carbon Trading Yorkshire – a simulated carbon trading scheme, which has been buying and selling simulated carbon credits since February in an attempt to understand the true impact of the legislation.

The 44 members, which include Yorkshire Bank, Northern Foods and Marshalls as well as public sector organisations, will share their experiences at a conference being held tomorrow.

The event will feature speakers from the Environment Agency, KPMG, Yorkshire Bank, Carillion Facilities Management, DLA Piper and a major high street fashion retailer as well as carbon trading specialists and the Bradford University School of Management.

The new CRC rules create a mandatory cap-and-trade scheme for large organisations in the private and public sectors where carbon permits will have a price and will be traded between organisations.

Financial incentives will be given to reduce carbon dioxide emissions, meaning excessive emissions will become very costly.

According to Ben Wielgus, lead CRC advisor at KPMG, many Yorkshire firms are miscalculating the carbon they generate and not identifying the hidden financial and reputational costs on non-compliance.

“We have completed around 20 CRC readiness reviews with a range of organisations and have found that many finding it challenging to report accurate carbon numbers and most would have triggered a fine from the Environment Agency,” he said.

“These fines can easily be 10% of an organisation’s annual energy bill so these are very significant sums.

“However, there are a number of actions organisations can take to significantly reduce this risk and we have been working with CTY members to assess their effectiveness.”

Joanne Pollard, managing director of CO2Sense Yorkshire, which is co-hosting the event with KPMG, said that CTY had been a great success in helping businesses learn the skills they need to avoid paying fines.

“CRC is a major commerical challenge, which if handled carefully can boost their bottom line. This even will help us communicate these lessons,” she said.

Any organisation that pays a UK electricity bill and consumes more than 6,000 MWh of electricity per year will be required to participate in the Carbon Reduction Commitment (CRC).

The requirement affects public bodies, government departments, companies or groups of companies, and includes banks, supermarkets, cinemas, hotels and local authorities. Around 5,000 organisations will be included across the UK.

From April 2011, carbon permits will have a price and will be traded between organisations.

If a company wants to emit more than its carbon allowance, it must buy credits from others who are cleaning up their emissions.

If it emits less, it has allowances in hand that it can sell to those doing less well – thus creating a market in carbon.

CO2Sense Yorkshire is a not-for-profit company owned and funded by the regional development agency Yorkshire Forward.