Our Environment and the Deadline you Need to be Aware Of

by 28 January 2019

As it’s becoming ever more apparent- our environment is at considerable risk. Climate change, our carbon footprint, energy efficiency, we need to take drastic action. The government has taken measures to address this with a number of different initiatives (all in support of the Clean Growth Strategy) these include:

  • The Climate Change Levy (CCL) a tax on energy that aims to encourage businesses to reduce carbon emissions, lower energy usage and become more energy efficient by increasing the effective price of energy.
  • The Carbon Reduction Commitment Energy Efficiency Scheme (CRC), a mandatory carbon emissions reduction scheme that applies to large energy-intensive organisations in the public and private sectors within the UK.
  • There is also the Streamlined Energy & Carbon Reporting (SECR) framework, to simplify carbon and energy reporting requirements for companies, thus reducing emissions and energy costs.

It was established that the CRC was to be abolished at the end of the 2018-19 compliance year as part of the March 2016 budget announcement. As a result, it would be replaced with the SECR and subsidised by an increase in the CCL. The SECR would substitute the guidance and reporting obligations. The CCL, as the UK’s only carbon tax on energy bills, would increase to cover the financial properties. Both of which begin at the start of April 2019.

If we concentrate on the CCL, a review of the rates (see table below) shows modest increases until 2019/20, at which point they jump 45% to £8.47/MWh on electricity and 67% to £3.39/MWh on gas.  Emphasising the need for consumers to be aware of this deadline. As mentioned above these significant increases are due to the government seeking to make up a shortfall in revenue resulting from the end of the Carbon Reduction Commitment (CRC) scheme.

Table source: Gov.uk

It’s worth highlighting that until August 2015, Levy Exemption Certificates (LECs) supported generation from renewable sources (such as biomass or wind) and customers on renewable energy were exempt from paying the CCL. However, since that date, the charge has been applied to all business users.

Larger businesses that currently pay CRC could however see lower energy bills in April 2019 despite the rise in CCL rates, dependant on when their allowance was bought. If at the start of April, during the Forecast Sale (in the 2018/19 compliance year), then a lower price can be secured.

For most businesses, the only way to mitigate the effect on increasing CCL charges is to reduce the amount of energy consumed. CCL is charged on a pence per unit basis so the less you use the less you pay.

You can review your current energy data and identify potential savings, which can be achieved by changing behaviours, such as reducing usage during non-working hours or implementing energy-saving technologies.

With regard to the SECR, the exact criteria for large businesses who must comply is as follows:

  • 250+ Employees
  • An Annual Turnover of £36m+
  • An Annual Balance Sheet of £18m+

Businesses consuming less than 40,000 kWh per annum will be exempt.

For further details please see our previous article The ‘Who, How and What’ of the new Streamlined Energy and Carbon Reporting Scheme (SECR).

Utility Team works with companies of all sizes to help reduce their carbon footprint in a variety of ways and has initiatives which can support this. If you are interested in discussing your options, then please contact us, email: enquiries@utilityteam.co.uk or phone: 02476 997901.

 

Article written by: Ben Mason, Corporate Pricing Analyst