Why IT Departments and SMEs alike should care about the UK CRC Scheme but don’t

  • October 10, 2010 4:43 pm

In the UK companies covered by the CRC Energy Efficiency Scheme had until 30th September to register or face fines. But while general business awareness is low (only 50% of the approx 5,000 firms required to register had done so by the 4th October), awareness within IT functions is almost non-existent. This will hamper organisations’ ability to deal with the CRC and deliver the reductions that will lead to lower energy bills and lower CO2 emissions.

About the CRC Scheme

In the UK companies covered by the CRC Energy Efficiency Scheme (previously known as the Carbon Reduction Commitment) had until 30th September to register with the Environment Agency who is operating the scheme on behalf of the Department of Energy and Climate Change.

With around 50% of companies registered by the deadline, either as a full participant or as an information provider, many thousands of firms are facing fines and other penalties.

Currently the prevailing sense is one of apathy or ignorance regarding the existence of the CRC, let alone its impact.

In essence the CRC attempts to encourage greater energy efficiency by means of placing an additional cost on carbon emissions, requiring organisations to measure and report on these, and by use of league tables to show which organisations have performed better than others.

The impact on IT

How then, does all this affect IT? Very directly is the straightforward answer. In many service businesses and organisations the top 3 sources of power consumption are

  • Heating/Cooling
  • Lighting
  • Plug Load (all power consumption via devices that are plugged in)

In most organisations Plug Load is predominantly IT related, PCs, monitors, printers, faxes, copiers, network equipment and servers. In addition IT makes a significant contribution to the requirements for cooling with many server rooms requiring up to 150% more power for cooling the heat generated by servers, than for actually running the servers.

It should be clear that any business looking to reduce both their power bills and their liabilities under the CRC scheme should be looking at their IT environments as a key part of their strategy.

Greenocity Ltd, a specialist in providing advice to businesses about improving their IT related emissions, have discovered that while general business awareness of the CRC scheme is low, knowledge of the scheme within IT departments and CIOs is almost zero. Tony Fisher, MD of Greenocity comments “It is shocking that awareness of the CRC scheme among IT professionals is virtually nonexistent. Without IT involvement, organisations will miss vital opportunities to reduce their energy bills, reduce their CO2 emissions and increase their profits”

Unless and until IT becomes an active participant in organisations’ energy efficiency strategies, these strategies will be operating with one hand tied behind their backs. It is therefore imperative that organisations need to ensure that:

  • Their IT organisations understand the implications of the CRC scheme
  • IT is provided with responsibility for the Carbon Emissions it produces
  • Energy Efficiency becomes part of the overall IT strategy, along with availability, customer service etc.

With the nature of IT replacement cycles extending over a number of years, and the requirement for IT constantly increasing, organisations that bring their IT functions into their carbon reduction early will find that IT can start to contribute towards delivering the reduction in carbon emissions; those companies that do not involve IT will find that their IT functions may well be increasing the level of their emissions, simply through a lack of awareness and focus.

So what can IT actually do?

There are a number of approaches that IT can adopt, including PC power management (an extremely cost effective and straightforward method of reducing power bills and carbon emissions (http://www.greenocity.co.uk/powerdown).

Other solutions are more involved and need to be considered within the overall IT strategy. Initiatives such as virtualisation, cloud computing, thin clients, data centre design and consolidation can all contribute to a more energy efficient IT environment as well as simplifying the IT administrative burden.

One of the unique aspects of this legislation is that for organisations that truly embrace it and its aims, it will lead directly to lower power bills, an improved bottom line and a greener environment.

The impact on SMEs

Although not directly affected by the CRC scheme, SMEs would do well to pay close attention to it for a number of reasons

1) It may well be the case that their customers are involved, and when big customers are required to improve their efficiency, this is normally passed down the line to their suppliers as well

2) The CRC is likely to be expanded to cover increasing numbers of businesses and organisations, and it may only be a matter of time before it affects even SMEs

3) The key method of reducing CO2 emissions, is to reduce power usage. Getting smarter on using less power, leads to lower bills as well as lower CO2. Find me one SME that couldn’t benefit from lower power bills….

Greenocity Ltd (http://www.greenocity.co.uk) is a specialist provider of knowledge and advice to enable IT functions to deliver a more energy efficient and greener future, while reducing their organisations’ power bills. With extensive experience of IT across a range of organisations, and a deep knowledge of environmental issues and associated legislation Greenocity can provide the insights needed to deliver IT’s contribution to environmental improvements and lower energy bills.

Greenocity’s managing director Tony Fisher can be contacted on +44 (0)7000 247 365 or via tony.fisher@greenocity.co.uk

Waypoint Consulting Ltd (http://www.waypoint-consulting.co.uk) specialises in providing knowledge and advice to SMEs to help maximise the benefits of their investments in IT, to facilitate improved efficiency and support business change. With extensive experience of Project Management, IT and Business Change programmes across a range of organisations Waypoint can provide practical suggestions and advice to help businesses become more effective and embrace the changes that will deliver business success.

Waypoint’s managing director Stuart Riches can be contacted via stuart@waypoint-consulting.co.uk or via www.waypoint-consulting.co.uk


CRC Energy Efficiency Scheme – What is it and how might it affect me

  • June 18, 2010 10:15 am

What is the CRC?

April 1 2010 saw the start of the UK CRC Energy Efficiency Scheme (aka Carbon Reduction Commitment), however it is clear that many businesses are still in the dark about what it is, how it works and whether it might affect them.

In brief the CRC is the UK Government’s mandatory scheme to encourage businesses and public organisations to take steps to measure and reduce their carbon emissions, and it attempts to achieve this via some simple (in theory) steps

1) All organisations covered by the CRC are required to calculate their estimated emissions based on their activities

2) They are then required to purchase allowances from the UK Government that will cover these emissions

3) Annually they are required to calculate their actual emissions, and dependent on whether they are better or worse than the purchased allowances, they will reclaim the cost of the allowances purchased plus or minus a bonus/penalty amount (initially of up to 10%)

This is an annual process so each year businesses will need to commit part of their cash flow to purchasing allowances, at the end of the year the business will receive this cash back (subject to the bonus/penalty) and will also be required to purchased allowances for the coming year.

Anyone covered by the CRC will therefore have a permanent cash flow impact, and may also be liable for a profit impact should their estimate be incorrect (very likely).

Who is covered by the CRC scheme?

To quote the Dept of Energy and Climate Change

Organisations are eligible if they (and their subsidiaries) have at least one half-hourly electricity meter (HHM) settled on the half-hourly market. Organisations that consumed more than 6,000 megawatt-hours (MWh) per year of half hourly metered electricity during 2008 qualify for full participation and need to register with the Environment Agency, who is the administrator for the scheme .Organisations that do not meet the 6000MWh threshold will have to make an information disclosure of their half hourly electricity consumption during 2008, which they submit once per phase. It is estimated that initially around 5,000 organisations will qualify for full participation, including supermarkets, water companies, banks, local authorities and all central Government Departments. Qualifying organisations will have to comply legally with the scheme or face financial and other penalties. A further 15,000 will have to make an information disclosure.

So in this initial phase the scheme will not directly affect SMEs although 2 caveats apply

1) The UK Government is committed to extending the CRC scheme to cover more and more businesses and organisations eventually covering most UK businesses

2) As many of us who have ever been part of a larger supply chain knows, what affects large businesses tend to be transmitted down to their suppliers.

This is the first in a series of articles trying to demystify the CRC along with blogs at www.waypoint-consulting.co.uk

Future posts will cover other aspects of the CRC scheme, how organisations can prepare for the scheme and how crucially they can use the scheme as a catalyst to save money by thinking more about how to reduce their energy consumption.

Increasing your IT Efficiency while reducing your Carbon Footprint

  • March 23, 2010 8:39 pm

One of the biggest changes facing businesses over the next few years is about to get underway. The UK Government’s introduction of the CRC Energy Efficiency Scheme which commences in April 2010 will have a profound effect on how businesses will need to monitor, control and reduce their energy use. It forms the cornerstone of the UK Governments legally binding commitment to reduce carbon emissions by 80% by 2050. For businesses needing to understand the carbon impact of decisions will become second only to understanding the financial impact.

In order to improve anything, it is first necessary to be able to quantify it, this is as true for CO2 Emissions as for anything else. It is essential therefore to be able to measure your starting point, this is known as your Carbon Footprint. A ‘carbon footprint’ measures the total greenhouse gas emissions caused directly and indirectly by a person, organisation, event or product. Once you have your footprint, this should form the basis for both ongoing Monitoring and Action Planning.

Action Planning can be used to identify potential opportunities to reduce the footprint, and caninclude a range of measures, some simple and quick, others more involved. Monitoring will enable you to understand the impact of changes on your overall footpint and will assist in demonstrating your commitment to, and compliance with, legislation such as the CRC.

In the vast majority of cases the changes that will deliver a reduction in the carbon footprint are the same changes that will deliver a more cost efficient, more manageable and ultimtely more effective IT environment.

In future posts I will consider in more details the various areas that need to be considered when developing an IT Carbon Footprint, and the sort of changes that can deliver the improvements that should benefit the profitability and effectiveness of the business as well as ensuring a reduction in CO2 emissions.