Corporate report

CRC annual report publication: 2014 to 2015 and 2015 to 2016

Updated 1 June 2020

1. Executive summary

The Environment Agency administers the CRC Energy Efficiency Scheme (CRC) for the UK on behalf of the Department of Business Energy and Industrial Strategy (BEIS) and the Devolved Administrations. This Annual Report Publication (ARP) covers the first 2 compliance years of Phase 2. The report covers energy and emissions data submitted by participants as well as the level of compliance and satisfaction of customers.

Phase 2 runs from 2014 to 2019 and consists of 5 separate compliance years. This phase has introduced a number of changes which mean that much of the information in the report is not directly comparable to that from previous compliance years as reported in Phase 1.

The key results for Phase 2 to the end of 2015/16 compliance year show:

• 1,858 participants registered for Phase 2; this is a small reduction in the number of participants when compared with the final year of Phase 1
• total energy use reported for 2014/15 was 110,611,902 megawatt hour (MWh) and for 2015/16 107,053,694 MWh
• total reported emissions for 2014/15 were 45,681,222 tonnes of CO2 and for 2015/16 were 41,265,628 tonnes of carbon dioxide (CO2)
• 98% compliance of participants with respect to the annual reporting deadline in 2014/15 and 2015/16

2. Introduction

2.1 The CRC Energy Efficiency Scheme

CRC is a mandatory scheme which aims to improve energy efficiency and cut emissions in large public and private sector energy users across the UK. There are approximately 1,869 currently reporting participants in the scheme including:

• supermarkets
• water companies
• banks
• local authorities
• all central government departments

These organisations are responsible for around 10% of the UK’s greenhouse gas emissions. The scheme aims to encourage organisations to develop energy management strategies that promote a better understanding of energy usage, and lead to improved energy efficiency.

The scheme is fully devolved across the UK and BEIS has developed the CRC policy in partnership with the Scottish Government, the Welsh Government and Northern Ireland Government. The Environment Agency administers core aspects of the scheme for the whole of the UK and is also the regulator for participants whose registered office or principal place of business is in England. Participants in:

• Scotland – regulated by the Scottish Environment Protection Agency (SEPA)
• Northern Ireland – regulated by the chief inspector in the Northern Ireland Department of Agriculture Environment and Rural Affairs (DAERA)
• Wales – regulated by Natural Resources Wales (NRW)

The scheme is split into phases. Phase 1 ran from 1 April 2010 until 31 March 2014. Phase 2 runs from 1 April 2014 until 31 March 2019. Each year CRC participants have to monitor their energy supplies and report this information into the CRC Registry. This is an online IT system which calculates their CO2 emissions in tonnes. Participants must purchase and surrender allowances to cover these emissions – one allowance for each tonne of CO2. You can find further information on the scheme on GOV.UK.

2.2 The annual report publication

The Environment Agency has produced this Annual Report Publication (ARP) under Article 58 of the legislation establishing the scheme – the CRC Order¹. This provides for us to publish information on the basis of participants’ annual reports plus details submitted when they registered for the scheme. We’ve developed the ARP with the government departments and other regulators responsible for the scheme’s design and implementation.

The ARP comprises 2 parts:

• a spreadsheet containing information for each participant for each compliance year
• a narrative report (this document) to provide context and explanation on the content of the spreadsheet and accompanying information on the CRC scheme

This ARP represents the third release of information drawn from the annual reports of CRC participants. It covers the 2014/15 and 2015/16 compliance years for Phase 2. See the Phase 1 reports.

¹CRC Energy Efficiency Scheme Order 2010 (Standard Instrument 2010/768) as amended by the CRC Energy Efficiency Scheme Order 2013 (Standard Instrument 2013/1119).

3. Content of the ARP

3.1 Baseline information for the ARP

This ARP is based on the information entered onto the CRC Registry by scheme participants. Their annual reports have to be submitted by the end of July for each compliance year. We’ve worked to help participants check the quality of their data while ensuring they remain responsible for the reports that they’ve submitted. Any participant who identifies an error in their report can resubmit the information onto the CRC Registry at any time. The information provided in this ARP is based on reports entered onto the CRC Registry by participants up to 31 October for that compliance year. If a participant has altered their data after this date for each compliance year it will not be reflected in this publication.

3.2 Information in the ARP spreadsheet

The spreadsheet contains the following information based on participants’ reports in the Registry:

• registration number
• organisation name
• trading name (where submitted/entered)
• regulator
• disaggregation information – where disaggregation has occurred, this will show the CRC registration number of the disaggregated participant
• number of designated changes – this figure shows the total number of designated changes that have occurred to a participant since registration for this phase
• organisation type
• sector code and description – for companies the codes and descriptions are based on the Standard Industry Classification (SIC) codes; for public sector organisations and participants who classified themselves as an Organisation of Individuals (OOI) at registration, the public body and OOI type is specified
• CRC Emissions in tonnes of CO2 (tCO2): 2014/15 and 2015/16
• Renewable Obligation Certificates (ROCs) emissions (tCO2): 2014/15 and 2015/16
• Feed In Tariffs (FITs) emissions (tCO2): 2014/15 and 2015/16
• Self Supply ROCs and FITs emissions (tCO2): 2014/15 and 2015/16
• Self Supply Renewables (tCO2): 2014/15 and 2015/16

For convenience the data in the spreadsheet is divided into 3 main pages:

• first – shows each participant and their CRC emissions
• second – provides further detail for each participant and includes sector information and renewable emissions
• third – shows participant responses to corporate responsibility questions

A fourth page provides explanatory notes on these data fields.

See the data covering each participant’s total CRC emissions (tCO2) for each compliance year in Phase 1.

3.3 Simplification changes to the scheme and comparability of data

The CRC Energy Efficiency Scheme Order 2013 introduced a number of simplifications and modifications to the scheme, including the participant qualification criteria and reporting requirements. Some of these changes applied immediately, starting in the last 2 compliance years of Phase 1 (for example reducing the number of fuels to be reported on to 2 – electricity and gas used for heating), while others only took effect in Phase 2 (for instance the exclusion of energy supplies used for metallurgical and mineralogical processes). All changes made are detailed in the CRC Phase 2 guidance document.

These changes mean that much of the information in this Phase 2 report is not directly comparable to that presented in the reports for Phase 1.

4. Participation, emissions and allowances

4.1 Number of participants

Organisations that qualified for Phase 2 of CRC were required to register by 31 January 2014. Phase 2 changes to the qualification criteria, as well as organisational changes, have altered the size of the participant group. The total number of participants registered for Phase 2 is 1,858. This has risen to 1,869 in 2015/16 due principally to the disaggregation of some participants. In contrast there were 2,039 reporting participants in the last year of Phase 1. The participants in the scheme remain as mostly large, non-energy intensive public and private sector organisations and government departments. Of the 1869 registered participants, 1,344 (72%) are private and 496 (26.5%) are public organisations. The remaining 29 (1.5%) are made up of charities and other organisations.

4.2 Energy and emissions reporting

For Phase 2 participants are only required to report on 2 fuels; electricity, and gas used for heating. There is also a distinction between electricity imported from off-site and that generated on-site, where the on-site generated electricity has a lower emission factor to remove the transmission loss factor. The figures in Table 1a and 1b show the total sums of the reported emissions (which are reported individually in the spreadsheet) for 2014/15 and 2015/16.

Table 1a: 2014/15 reported energy use and equivalent CO2 emissions

Fuel/supply type	Total energy reported	Total CO2 emissions (tCO2)
Imported electricity (MWh)	70,409,213	37,663,662
On site generated electricity (MWh)	1,804,476	886,592
Gas (MWh)	38,398,213	7,130,968
Total	110,611,902	45,681,222

Table 1b: 2015/16 reported energy use and equivalent CO2 emissions

Fuel/supply type	Total energy reported	Total CO2 emissions (tCO2)
Imported electricity (MWh)	67,357,288	33,431,544
On site generated electricity (MWh)	1,925,064	882,641
Gas (MWh)	37,771,342	6,951,443
Total	107,053,694	41,265,628

4.3 Forecast allowance sales

In Phase 2, the process for purchasing allowances has changed. In Phase 1, there was only one government sale of allowances each year, which took place at the end of each reporting period. For Phase 2 there are 2 fixed price government sales of allowances – one ‘forecast’ sale and one ‘buy to comply’ sale. The forecast sale is held in April for the relevant compliance year.

A forecast sale allows participants to purchase allowances against predicted emissions for the current or future compliance years within the Phase. Forecast allowances cost less than buy to comply allowances, as shown in Table 2, which acts as an incentive to encourage better management and budgetary control of anticipated energy usage. The allowance prices are set annually by government.

Table 3a and 3b detail the allowances purchased in the forecast sale for compliance years 2014/15 and 2015/16.

Table 4 provides information on the forecast sale completed in April 2016 for the third compliance year (2016/17).

Table 2: Forecast and buy to comply sale prices per tonne of CO2 for 2014/15 and 2015/16

CRC compliance year	Forecast sale price	Buy to comply sale price
2014/15	£15.60	£16.40
2015/16	£15.602	£16.90

²This forecast sale price has been corrected from the previously published price of £16.10. See information about this correction.

Table 3a: 2014/15 Compliance year forecast sale showing the number of CRC participants involved and total value of allowances purchased

Sector type	Number of participants	Allowances purchased (£15.60 per allowance)
Private sector	212	£124,566,530
Public sector	255	£117,175,984
Total	467	£241,742,514

Table 3b: 2015/16 Compliance year forecast sale showing the number of CRC participants involved and total value of allowances purchased

Sector type	Number of participants	Allowances purchased (£15.60 per allowance)
Private sector	253	£271,410,968.40
Public sector	271	£204,088,918.80
Total	524	£475,499,887.20

Table 4: 2016/17 Compliance year forecast sale showing the number of CRC participants involved and total value of allowances purchased.

Sector type	Number of participants	Allowances purchased (£16.10 per allowance)
Private sector	202	£150,707,125.10
Public sector	230	£117,487,093.50
Total	432	£268,194,218.60

4.4 Buy to comply allowance sales

The buy to comply sale allows participants to purchase additional allowances from government, if needed, to meet their surrender obligations following annual reporting.

Table 5a and 5b detail the numbers of participants involved in the 2014/15 and 2015/16 buy to comply sales and the value of allowances purchased. These purchases correspond to just over 31.8 million tonnes of CO2.

Table 5a: Total number of CRC participants involved and financial value of allowances purchased in the 2014/15 buy to comply sale.

Sector type	Number of participants	Allowances purchased (£16.40 per allowance)
Private sector	1,170	£445,573,338
Public sector	300	£76,708,950
Total	1,470	£522,282,288

Table 5b: Total number of CRC participants involved and financial value of allowances purchased in the 2015/16 buy to comply sale

Sector type	Number of participants	Allowances purchased (£16.90 per allowance)
Private sector	1,025	£361,974,390.70
Public sector	238	£65,483,072.20
Total	1,263	£427,457,462.90

5. Compliance and enforcement

5.1 Annual report submissions

Participants must submit annual reports by the dates specified in the CRC Order 2010 as amended. The rates of compliance against these deadlines are shown in Table 6. These figures take into account changes in the number of participants reporting for each compliance year. They exclude failures to submit reports in cases of insolvency. The Phase 1 figure is presented as an average over the 4 compliance years.

Table 6: Percentage of participants compliant with reporting deadlines

	Phase 1 2010 to 2014 average %	Phase 2 2014/15 actual %	Phase 2 2015/16 actual %
Percentage of participants compliant with the annual report submission deadline	97%	98%	98%

6. Civil penalties

Under the CRC Order, the regulator has powers to issue financial civil penalties in the event of a non-compliance. The Order also provides that the penalty of ‘publication’ may be imposed to bring attention to a non-compliance. Where this is done the civil penalties imposed are published on GOV.UK.

Penalties are published for a 12 month period, unless a longer timeframe is warranted. As of the 1 December 2016, 21 civil penalties have been published:

• 8 relating to reporting failures from Phase 1
• 7 due to Phase 1 incorrect reports
• 5 relating to Phase 1 Allowance Surrender Failures
• 1 registration failure for Phase 2

The total value is £627,375.

7. Participant comments and feedback

7.1 Customer satisfaction

For Phase 2 we increased the options available to participants for providing feedback on our performance. These include:

• our annual customer survey
• our programme of compliance audits
• the continuous customer survey
• through our help desk

To date, 83% of customers who responded to this survey rated our overall service as satisfactory or better. Of these, 66% rated our overall service as good or excellent.

8. Future developments

8.1 The business energy efficiency taxation review

In the 2015, Summer Budget the government announced that they’d review the business energy efficiency tax landscape. They’d also consider how to simplify and improve the effectiveness of the regimes involved. CRC was included in this review.

A public consultation named ‘Reforming the business energy efficiency tax landscape’ was launched on 28 September and closed on 9 November 2015. The purpose of the consultation was to obtain views on the business energy efficiency tax landscape, to review and consider the interactions between business energy efficiency policies and regulations.

In the 2016 Spring Budget, the Chancellor announced that the government has decided to work with the Devolved Administrations to close the CRC Energy Efficiency Scheme (CRC) following the 2018/19 compliance year. No purchase of allowances will be required to cover emissions for energy supplied from April 2019. It was announced that organisations will report under the CRC for the last time by the end of July 2019, with a surrender of allowances for emissions from energy supplied in the 2018/19 compliance year by the end of October 2019.