Streamlined Energy and Carbon Reporting (SECR) is the proposed carbon reporting scheme set to replace the Carbon Reduction Commitment (CRC). Subsequent to a recent government consultation details are still to be finalised. However, our Carbon team share their insight on what they expect to see when it is launched and why acting now could be a significant benefit to your organisation.
What do we know
SECR is set to replace the expiring CRC scheme. It is likely to include at least those organisations that qualify for CRC, and could be extended to all organisations that qualify for ESOS. The model is to focus on reporting, without charging for the emissions in the manner that CRC does.
An increase in the Climate Change Levy (CCL) has already been announced to compensate for the treasury’s lost revenues from closing the CRC scheme. This will increase to 0.847 p/kWh as opposed to 0.583 p/kWh for electricity, similar percentage increases were announced for the other qualifying fuels.
The full details of the scheme should be confirmed by the end of July 2018, before the summer recess. It is anticipated there will be some debate on regulations in the Autumn of this year although there should be no further consultation.
What do we think is going to happen?
We’ve compiled our thoughts on how we expect the SECR scheme to unfold and the key changes from the CRC.
Qualification – Rather than qualify on an energy level threshold like the CRC (e.g. companies using more than 6GWh of electricity) we think the government will choose a large business definition instead, much like ESOS.
Rather than use the ESOS qualification rules which are based on employee number or turnover, one recommendation we hope the government would consider is to use the Companies Act definition of a large business. We believe this a better way of identifying significant energy consumers.
Reporting – Our preference for the scheme is that the reporting for companies will be linked with financial accounts. For quoted companies this will be via the annual Directors report and for unquoted companies this should be submitted again on an annual basis aligned to the financial year. We believe that the government will also take this stance, as opposed to reporting in compliance years that existed within the CRC scheme.
Mandatory entry – We believe there will be mandatory entry for all non-SME organisations. However, similar to ESOS we expect to see an exemption for small energy users.
Start date – Our thoughts are that there will be a fluid move between the CRC scheme ending and the commencement of SECR. With this in mind, we anticipate a start date of April 2019 for SECR; however, the chosen reporting method may impact this and will depend on an organisation’s financial reporting period.
No exemptions as a result of other schemes – We are not expecting there to be an exemption as a result of compliance with either CCA or EU-ETS. We think the scheme will need to be representative of organisations as a whole and giving exemptions would give rise to difficulty in comparing similar organisations.
How you can get ahead
We can help organisations get a head start on the SECR by working with them now to create a carbon footprint of their existing portfolio applying a similar methodology to that of Mandatory Carbon Reporting or Greenhouse Gas reporting.
The benefit of this would be that organisations would be able to streamline their reporting process and get a head start on year on year comparisons. By the first real reporting period they would then be able to make a year-on-year comparative analysis which would help support stakeholder engagement.
To find out more about our Carbon services call 01527 511 757 or email email@example.com