The purpose of carbon legislation
On the 27th of June 2019 the UK today became the first major economy in the world to pass laws to end its contribution to global warming by 2050. The target will require the UK to bring all greenhouse gas emissions to net zero by 2050, compared with the previous target of at least 80% reduction from 1990 levels. This is to be achieved my many different types of legislation, incentives and penalties to ensure that the UK comply with its 2050 target.
What has carbon awareness in the UK done so far?
The UK has already reduced emissions by 42% while growing the economy by 72% and has put clean growth at the heart of its modern Industrial Strategy. This could see the number of “green collar jobs” grow to 2 million and the value of exports from the low carbon economy grow to £170 billion a year by 2030.
What does compliance require?
SECR requires businesses to include their energy use (including electricity, gas and transport) emissions and an intensity metric in their annual Directors’ report for financial years beginning on or after 1 April 2019. The government will not specify the exact procedures that should be used for energy and carbon reporting, nor will they specify which intensity metrics to use. They will however create guidance on good practice. All SECR participants must provide a narrative commentary on energy efficiency action taken in the financial year.
Quoted companies must continue to report on scope 1 and 2 greenhouse gas emissions (direct greenhouse gas emissions from owned or controlled sources and indirect emissions generated by purchased energy). Additionally, they’ll be required to report on global energy use, where appropriate. Unquoted companies will now also be required to report scope 1 and 2 emissions. Reporting of scope 3 emissions (all indirect emissions not included in scope 2) will remain voluntary for both quoted and unquoted companies.
SECR has been designed to make energy and carbon reporting simpler, aligning with existing reporting mechanisms to reduce the burden of compliance requirements on organisations. It will also contribute to the government’s Clean Growth Strategy ambition of enabling business and industry to improve their energy productivity by at least 20% by 2030.
SECR has replaced the CRC scheme that ended on 31 March 2019. The CRC scheme required all qualifying organisations to purchase carbon allowances to cover their carbon emissions. As a result, CRC charges were added to the Climate Change Levy (CCL) increasing the CCL on electricity to 0.847p/kWh, and the CCL on natural gas to 0.339p/kWh in 2019/20. Increases of 45% and 67% respectively.
PES Carbon service
Your carbon manage will also be leasing with your key stakeholders within the business to ensure that all data provided is correct and legally compliant. You will be able to login to your Insight account and run a SECR status report at any time detailing if you are compliant and any areas of focus that are required to ensure compliance is achieved and maintained.
Every July, your Carbon Manager, will produce a fully comprehensive SECR compliance report along with a supporting evidence pack that will be loaded to an online shared drive and hard copy sent in the post for auditing purposes should your organisation be audited by the environment’s agency.
Each September, a review of the last submissions will be completed including internal audits to ensure compliance is met.
The monthly maintenance of your carbon emissions will ensure that there is minimal impact to your business when the report needs to be filed and ensures that the business will always be ready to submit an audit, report and compliance without the need to undergo costly and disruptive data collection exercises.
The methodology for ensure compliance year after year with minimal impact to business processes, is to approach the report as an ongoing service, ensure that the below process cycle is adhered to, making carbon compliance a process and not a project.