Energy Reduction Verification and the UK’s mandatory energy efficiency scheme

   By Malcolm Dowden, Solicitor and Environmental Law Consultant

The UK Environment Agency’s CRC Project Executive Andrew Hitchings has confirmed the British Standards Institute’s ‘Kitemark’ scheme for Energy Reduction Verification (ERV) as an approved ‘Early Action Metric’ for the CRC Energy Efficiency Scheme, the UK’s mandatory ‘cap and trade’ scheme for energy consumed by qualifying public and private sector organizations.

Around 20,000 large and public and private sector organisations, including foreign-parented corporations with business operations in the UK, will be directly or indirectly involved in the CRC scheme.  Of those, an estimated 5,000 organisations must register by 30 September 2010 as full CRC Participants. Participation requires organisations to disclose carbon emissions and purchase allowances for each tonne of CO2 they emit. A league table will rank organisations according to their emissions reductions and whether they have adopted any ‘Early Action Metrics’.  The cost of allowances purchased under the scheme will be ‘recycled’ to Participants, either in full or in part depending on their position in the league table.  In the initial phases of the scheme, adoption of ‘Early Action Metrics’ is likely to be the key to full recovery of costs.

The Kitemark scheme aims to provide a simpler alternative to both the Carbon Trust and CEMAR standards which do not guarantee or provide the structure around which long term reductions can be identified, managed and realised. It also aims to provide clear and independent information about energy performance to stakeholders including investors, regulators, consumers and (significantly) contracting authorities as part of public procurement processes.

Although ‘comprehensive’ for CRC purposes, the Kitemark scheme intentionally excludes emissions resulting from transport and other sources that fall outside the CRC reporting requirements on the grounds that they would ‘complicate measurements’.  Consequently, organisations with emissions that fall within any other mandatory or voluntary reporting scheme may have to run several verification schemes in parallel, potentially increasing the costs and complexity of compliance.