The Carbon Reduction Commitment energy trading scheme comes into force in April, but building owners should be preparing for it now if they want to avoid a hefty bill

The government’s Carbon Reduction Commitment (CRC) regulations are now less than four months away. This mandatory emissions trading scheme aims to improve the energy efficiency of our built environment by tackling emissions not already covered by climate change agreements and the EU Emissions Trading Scheme.

In a nutshell, participant organisations will have to monitor their energy use, report on their equivalent carbon emissions and purchase allowances for each tonne of carbon dioxide they expect to emit. These will be sold by the Environment Agency at the start of each scheme year. Each building’s performance will then be published in a league table, open for all to see.

Designed to be revenue-neutral, the highest performers will receive a “recycling payment” from the Environment Agency from the revenue raised from the sale of allowances. Poor performers will get rather less. There is, therefore, a direct incentive for organisations to reduce their emissions.

Qualification for the scheme is based solely on having had at least one half-hour electricity meter settled on the half-hourly market and a total half-hourly electricity consumption of at least 6,000MWh in 2008. Organisations that have at least one half-hour electricity meter, but whose annual energy consumption is less than 6,000MWh, have reporting obligations only, although the threshold for full participation is expected to be lowered in subsequent phases of the scheme.

Anyone who has a half-hour meter installed, but hasn’t yet collated their total energy consumption from such meters in 2008 should do so now. Failure to register may lead to a fine when the scheme opens in April.

Prospective participants should also ensure now that they have a programme in place to monitor and report on their total energy consumption. This goes much wider than simple electricity use and includes other energy sources and fuels so it will pay to identify these now and practice monitoring their use.

Failure to register may lead to a fine when the scheme opens in April

The government estimates that about 20,000 public and private sector organisations – including retailers, leisure outlets and health trusts – will be required to participate in some way. About 5,000 organisations are likely to qualify as full participants.

The CRC is just the beginning. On 17 November, political agreement was reached on the revised Energy Performance of Buildings Directive (EPBD). This requires all new buildings to be “nearly zero energy” by December 2020; new public buildings must be nearly zero energy by 2018. A “nearly zero energy” building is, logically, one with very high energy efficiency – and what energy it uses should largely come from renewable sources, including renewable energy produced on-site or nearby.

The carbon footprint of a building can be divided into three sources: the embodied energy in their construction, their operational design and their actual operational energy consumption.

The revised EPBD will address the second of these; the CRC will encourage efficient design and use, but nothing yet addresses buildings’ embodied energy. This could be regulated through a number of vehicles, and through either the planning or building control regimes. Conditions could be attached to planning permissions that require the carbon footprint of the construction phase and materials to be approved or regulated in some way; a code of practice could be drawn up, similar to those for sustainable homes and low-carbon buildings, but covering the use of materials and technologies for construction. Other possibilities are to extend BREEAM to cover the construction phase and materials used or a requirement could be introduced for a carbon management plan to be prepared as part of the construction process, along the lines of site waste management plans.

Together, the CRC and EPBD are a steps in the right direction, indicative of a changing tide of opinion and a sign of growing understanding by governments of the need to act if we are to limit climate change to no more than a two degree increase. More will need to be done, though, if the latest projections for the impacts of climate change are to be avoided.