UK carbon cap-and-trade still unclear
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The CRC Energy Efficiency scheme may apply to many more organisations than first thought
CRC Energy Efficiency, the UK government’s carbon cap-and-trade scheme, was still mired in confusion even as it came into effect in April 2010
On 1 April 2010, the UK government’s CRC Energy Efficiency scheme, came into force. Under the scheme, previously known as the Carbon Reduction Commitment, many of the UK’s largest organisations are obliged to publicly report their electricity consumption, and the largest consumers must take part in a carbon cap-and-trade scheme, buying and trading allowances for the carbon they produce.
The CRC scheme applies to any organisation – public or private – that has “a total half-hourly electricity consumption over 6,000 megawatt-hours (MWh) once electricity used for transport and domestic accommodation has been excluded” and that had “at least one half-hourly electricity meter (HHM) settled on the half-hourly market” last year.
The scheme is expected to have significant repercussions for corporate IT departments, as the energy consumption of their data centres is now a matter of regulatory compliance.
But even as the scheme came into effect, there was confusion over how many organisations the CRC scheme applies to, and to what degree. A March 2010 report in the Financial Times newspaper claimed that the government had underestimated the number of organisations to which it applies by a factor of six, citing sources from within the Environment Agency.
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“Ministers have told the business community for more than a year that about 5,000 to 6,000 companies in the commercial sector will be covered by the incoming regulations,” the report alleged, “but in fact as many as 30,000 could be involved.”
This is just the latest controversy surrounding the scheme. Many in the IT industry question the wisdom of penalising high carbon producers, arguing that it punishes data centre services suppliers which, they claim, can reduce the overall carbon emissions by apply energy-efficient technologies within their facilities.
And more broadly, some critics argue that carbon cap-and-trade schemes merely postpone a much-needed move to more sustainable energy sources.
After a confusing start, the next government will have to ensure that the mechanisms, the applicability and even the goals of the CRC scheme are better communicated, if those goals are to be achieved.
Daniel Lowe, managing director of hosting provider UKSolutions, sees the cap-and-trade scheme as a tax on cloud computing
Essentially, the initiative to make UK businesses more sustainable is a good and necessary move. However, the plan to tax companies for high energy consumption is completely misguided and will potentially hinder the growth of cloud computing. The scheme is ill-informed as it will penalise the data centre sector, which traditionally consumes large amounts of power but uses and distributes this power efficiently. [The extra cost] will hit data centres and will inadvertently be passed on to customers, and will reduce the benefit of outsourcing to the cloud.
Simon Godfrey, UK sustainability champion at SAP, argues that the success of the scheme depends on how effectively emissions information is managed
The success of the CRC is going to depend heavily upon the quality of data captured in the first year. It’s critical that organisations collect accurate data, and for many this will be a significant challenge. The CRC league tables are only the beginning. They will show organisations how they compare with others and maybe provide some motivation for improvement. But the value of the right set of tools is that businesses will be shown how they can make substantive reductions in energy use and therefore reduce their greenhouse gas emissions sustainably.
