CRC: Environment Agency publishes first Performance League Table

Practical Law UK Legal Update 5-511-4428 (Approx. 5 pages)

CRC: Environment Agency publishes first Performance League Table

by PLC Environment

2010/11 Performance League Table

On 8 November 2011, the Environment Agency (EA) published the first Performance League Table (PLT) under the CRC Energy Efficiency Scheme (CRC). PLTs are sometimes also referred to as just League Tables or Performance Tables.

The various documents relating to the 2010/11 PLT can found in the section called "Trading and league tables" on the EA website: Environment Agency: CRC Energy Efficiency Scheme. Please note that it may take some time to download these documents due to the high number of people wishing to view the documents.

Put in very simplistic terms, the PLT is intended to:

Rank the energy efficiency of participants in the CRC.
Provide a reputational driver for organisations in the private and public sectors to become more energy efficient.

However, many critics would argue that the PLT does not achieve either of these objectives (see Comment below).

PLT in three parts

The 2010/11 PLT is divided into three parts:

The main PLT shows all the participants according to their ranking, which is based on a weighted score derived from a number of metrics (see PLT metrics below). For participants in the private sector, the name of the organisation is the name of the parent company (so well known brands may not be immediately apparent from the main PLT if they are a subsidiary of a larger group with a different name).
A summary scorecard for each participant, which can be accessed through hyperlinks in the main PLT.
A more detailed scorecard for each participant, which can be accessed through hyperlinks in the summary scorecards. This scorecard provides details of the larger subsidiaries within a group of companies (known as "significant group undertakings" (SGUs)), details of which of those larger subsidiaries have been "disaggregated" from the parent group (and therefore are participating in the scheme on their own), details of any renewable energy generated on-site by a participant (although this will not count towards their ranking in the PLT) and details of any voluntary "tick-box" questions the organisation has chosen to reply to.

The private and public sectors are ranked together. There are no sector-specific tables.

The information used to rank participants under the three metrics (see PLT metrics below) is taken from the annual reports that CRC participants were required to submit by 29 July 2011 (see Legal update, CRC: Environment Agency guidance on penalties for failure to submit annual report).

There are 22 participants at the top of the PLT, all of whom have a weighted score of 2092.5. There are over 700 participants at the bottom of the PLT, all of whom have a weighted score of 402. There are a whole host of other participants with a weighted scores somewhere in between those two figures. Participants with the same weighted score are all ranked together in alphabetical order.

PLT metrics

Rankings in PLTs in general are based on three metrics:

Early Action Metric (EAM), which is described below.
Absolute Metric, which is a measure of how a participant's emissions have changed over the last year as compared to a rolling average of the previous five years.
Growth Metric, which is designed to credit participants that were able to de-couple their emissions from their growth (that is, organisations that grow in a "low carbon" way).

However, the EAM is the only metric that is relevant in the 2010/11 compliance year of the scheme.

The EAM is designed to give participants credit for actions they have taken to reduce their emissions before the start of, or during, Phase 1 of the scheme. The EAM is based on two equally weighted factors, which relate to good energy management:

The percentage of a participant's energy consumption in respect of which a participant has chosen to install automatic metering (AMR) (see Legal update, CRC: Environment Agency clarifies use of automatic metering in the Early Action Metric).
The percentage of a participant's CRC emissions that are covered by either the Carbon Trust Standard (CTS) or another equivalent accredited scheme (see Environment Agency guidance: CRC Energy Efficiency Scheme: The Carbon Trust Standard and Equivalent Schemes).

Each metric is given a weighting, which is then used to rank participants in the PLT. The EAM has a 100% weighting in the 2010/11 PLT. The metric weightings for the 2011/12 PLT will be as follows:

EAM: 40%.
Absolute Metric: 45%.
Growth Metric: 15%

Further information on the CRC

For more information on:

PLTs in general, see Practice note, CRC Energy Efficiency Scheme: overview: League Table, metrics and recycling payments.
The CRC in general, see CRC Survival Kit.

Comment

The 2010/11 PLT has been fiercely criticised.

Many argue that the PLT is not an accurate indication of an organisation's energy efficiency since the only metric that is relevant for the rankings in the 2010/11 PLT is whether an organisation has installed AMR or signed up to a carbon accreditation scheme such as the CTS. There is no recognition in the PLT for organisations that have put in place other types of energy efficiency measures or which had already put in place measures before the CRC came into force.

When the CRC first came into operation in April 2010, it was envisaged that the revenue from the sale of CRC allowances would be recycled back to participants based on their rankings in the PLT. However, in October 2010, the government announced that this would no longer be the case and that the revenue from the sale of CRC allowances would instead be used to support the public finances. Not surprisingly, this caused a great deal of consternation and has resulted in many organisations viewing the CRC as a carbon tax rather than a real driver for energy efficiency (see Legal update, CRC: Government scraps recycling of revenue from the sale of allowances).

The government outlined, in June 2011, the main changes it plans to make to the CRC from Phase 2 onwards. Although the government has said that PLTs will be retained, it has also said that it may revise the reputational element of the PLTs in light of evidence of how the scheme has operated in the early years (see Legal update, CRC: Government outlines detailed proposals to simplify the scheme).

For further commentary on the 2010/11 PLT, see:

Meanwhile, the government will be announcing, before the end of the year, whether it plans to use its powers under the Climate Change Act 2008 to impose a legal obligation on companies to report on their greenhouse gas emissions. For companies that are already required to report on their emissions under the CRC, this could result in a difficult interaction between two different reporting obligations. For more information, see Legal update, Defra consults on options for mandatory GHG emissions reporting for UK companies.

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