Firms Face Fines For Ignoring Carbon Rules

The UK’s carbon reduction law may have loopholes, but it is essential to meet the UK’s energy shortage – and IT managers are falling behind in complying with it, according to speakers at a London conference.

The Carbon Reduction Commitment is a “cap and trade” scheme designed to reduce the amount of energy used by the largest energy consumers in the country.  Although it has already started very few organisations have registered – even though failure to comply with the rules could eventually mean a £50,000 fine, according to CRC consultant Andrew Jones of ITM Communications,

Cleverly written legislation

“We are halfway through the registration period but only ten percent of organisations have registered so far,” Jones told the Green Enterprise Forum in London last week. ” I am amazed that so few people understand the impact this legislation will have on their businesses.”

The legislation is “cleverly written” he said, and designed to change businesses’ behaviour using market forces rather than the blunt instrument of taxation. Before it came into force, it was criticised for being confusing, and experts from the BCS (British Computer Society) warned it risked being too punitive. Some businesses have said it will actually reduce the use of renewable energy, while others believe that businesses may not be able to install smart meters in time.

The country’s top 5000 electricity users have until September to register, and the programme will then gradually ramp up. In 2011, companies will have to buy permits, at an initial price of £12 per tonne of CO2, and in 2013, companies have to start reducing their emissions by five percent every year – or buy more permits in a public auction, where prices are expected to rise dramatically.

Failure to comply with the regulations, or submitting false statements could result in fines of up to £50,000, Jones warned.

Data centres will be among the first parts of any organisation to be required to change, as in most cases, they are the largest energy consuming departments, and are currently rapidly expanding in energy use. IT and communications currently have exponential energy growth, even though they are expected to help the rest of the business world to reduce emissions, pointed out another speaker at the event, Catalina McGregor, a liaison officer to the United Nations ITU-T agency: “ICT is a drop-out form the Kyoto protocol,” she said.

“Data centre managers have benefited from a doubling of power consumption every four years, so to stop growing would be tough,” said Jones. “This legislation will require a five percent cut every year –  and that’s going to be almost impossible!”

Legislation designed to change behaviour runs the risk of becoming a game, and companies will be searching for loopholes, he warned. In discussion at the Forum, members of the audience suggested that the regulations would drive a move to outsource as much as possible, since that moves the electricity bill outside the organisation, and permits are bought by the company that pays the bill, not the company that uses the services.

Also, some companies may attempt to win from the system by postponing energy-saving measures until the fourth year of the scheme, when the financial paybacks are greatest, and the costs of not saving energy are also high.

Although reducing energy use is presented as a way to prevent global warming, there is a much more immediate need for it, said Jones: a lack of electricity generation capacity in the UK means power simply may not be available for servers. “Our rising demand at a time of falling generation capacity is the real problem,” he said. “From 2015 we will have more demand than capacity.”