The government’s Streamlined Energy Carbon Reporting (SECR) was introduced in April 2019. Replacing the CRC Energy Efficiency Scheme (formerly known as the Carbon Reduction Commitment), it is designed to promote energy efficiency within businesses and thereby reduce carbon emissions, supporting the UK’s commitment to environmental targets.

The new framework introduces mandatory carbon and energy reporting for a larger number of businesses than ever before, with an estimated 12,000 required to report – three times more than the 4,000 required to report under CRC.

Despite the significant number of businesses impacted, SECR has not been highly publicised, and industry estimates suggest that only around 30 per cent of qualifying business are aware of their obligations.

Find out if you need to comply by reading our guide to SECR.

What is the SECR?

The SECR is an annual reporting framework that aims to encourage qualifying organisations to implement energy efficiency measures that reduce greenhouse gas emissions.

Organisations that qualify for the new legislation need to calculate and report on their annual energy consumption and carbon emissions from 1 April 2019.

What is the qualification criteria?

Quoted companies

Quoted companies of any size that are required to prepare a Directors’ Report under the Directors and LLP reporting regulations that were updated in 2018, are required to comply with the SECR framework.

Quoted companies in this respect are those listed on the London Stock Exchange, the New York Stock Exchange or NASDAQ, or the European Economic Area State.

Large unquoted companies and large limited liability partnerships

Unquoted companies incorporated in the UK which are required to prepare a prepare a Directors’ Report under the Directors and LLP reporting regulations that were updated in 2018, and which are defined as “large” are required to comply with the SECR framework.

Large companies are defined as meeting two or more of the following criteria:

  • Organisation’s turnover is £36 million or more
  • Organisation’s balance sheet totals £18 million or more
  • Organisation has 250 or more employees

How to comply

Qualifying organisations will need to disclose their energy consumption and emissions relating to their use of electricity, gas and transport beginning from 1 April 2019, from the UK and offshore area, within their public Director’s Report. Limited Liability Partnerships (LLPs) are required to disclose the data within an Energy and Carbon Report.

Who is exempt?

Low energy users are exempt from disclosing their detailed energy and carbon data. A low energy user is defined as an organisation that uses 40 MWh or less during the reporting period.

In addition, companies that are incorporated outside of the UK are not required to report on energy and carbon in their Directors report.

Organisations will still need to comply with ESOS

The legislation builds on existing mandatory reporting of greenhouse gas emissions, such as the four-yearly cycle of the Energy Savings Opportunity Scheme (ESOS), meaning that if ESOS applies to your business you will need to submit the required data under both frameworks.

Transitioning from CRC to SECR: What’s new?

The final reporting year concluded for the CRC Energy Efficiency Scheme at the end of March 2019. The SECR removes the necessity for qualifying organisations to buy allowances equal to an organisation’s carbon dioxide emissions. It also changes the submission of the data from the Environment Agency to Companies House.

The CRC required a registration fee of £950.00 and an annual subsistence fee of £1,290. There is no fee attached to SECR beyond the administrative and related costs of compiling the data and submitting the report.

 The risk of non-compliance

Qualifying businesses that fail to comply with SECR could find themselves issued with a civil penalty. It is expected to be a lighter approach than the non-compliance with both ESOS and CRC, the latter of which carried fixed penalties of £50,000 for false or misleading statements, and a fine of £5,000 for late registration, with further fines of £500 per day to a maximum of 80 working days.

 Turning compliance into an opportunity

Although SECR brings carbon reporting to a larger number of businesses than ever before, looking beyond the compliance requirements can offer an opportunity to improve energy efficiency, allowing significant savings on energy spend.

By identifying how and where your business is using the most energy you can take steps to reduce your energy consumption and associated costs.

On average, a business can reduce its annual energy costs by 20% through improving energy efficiency and energy management.[1] And the savings don’t always require a significant investment. The Carbon Trust identified that savings of 5-10% can be made with a small expenditure, such as installing or optimising lighting or heating control systems, changing the way you measure and monitor energy consumption, or engaging your staff to change their behaviour.[2]

 Next steps

The requirements of carbon reporting can be complex, but engaging with a commercial energy auditing organisation can enable you to meet your requirements. We work with a partner organisation who can evaluate your consumption data by carrying out the required audits, completing the necessary reports and submitting the data to ensure you meet the compliance deadline.

If you are uncertain about whether the SECR guidelines apply to your business, contact one of our energy consultants who can review your account and evaluate your need to comply.

 

[1] Carbon Trust Energy Efficiency Programme

[2] Carbon Trust 2011 publication ‘Energy Management’

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