In identifying the organisational structure, it should be a relatively simple process where the organisation and/or subsidiaries are owned and operated in the UK. However, where a qualifying organisation has a foreign owner, the owner will be required to appoint of an agent to act on behalf of the subsidiaries within the UK. In doing so, regardless of whether or not the agent has direct control over the subsidiaries, they will be able to act as a representative to group all subsidiaries as one.
For CRC, undertakings such as companies, partnerships and unincorporated associations are grouped together using the tests in the Companies Act 2006. The definition of “undertaking” applies as set out in section 1161(1) of the Companies Act, but the definition is expanded in CRC to include unincorporated associations which carry out charitable activities. In some instances, CRC will bring together organisations that are not legally related. A vital first step is therefore to identify the group structure, including any franchise arrangements, joint ventures, private finance initiatives and landlord and tenant agreements.
CRC is restricted to UK energy use, but under the rules of CRC the group structure should be identified from the highest parent, even where it is overseas, to bring together all UK energy supplies in the entire group.
The government has proposed that state-funded schools (including academies) within Great Britain, will participate within the carbon reduction commitment scheme under the umbrella of their local authority. In doing so, it is the carbon footprint of the local authority that will be legally and financially responsible for participation in the carbon reduction commitment scheme, rather than the individual schools.
It is also the local authority that will be positioned within the carbon reduction commitment, rather than the individual schools.
The local authority will be subject to a number of obligations and duties including:
* Responsibility for calculating all local authority missions including state funded schools and academies
* Purchasing allowances to Cover the above permissions
* Monitoring and reporting annual energy consumption and surrendering allowances where appropriate
* Maintaining the evidence pack for auditing
However, while the local authority will be legally responsible under the carbon reduction commitment, a duty will be placed on schools to require them to supply the local authority with annual energy consumption data. At a minimum, the data will need to be provided to the local authority at least once a year and would typically take the form of complete energy invoices for all non-transport electricity and fuel consumption.
Local Authorities should be prepared to provide advice and services to schools, to ensure that they collectively reduce energy consumption, secure a high place in the CRC league and avoid penalties and fines.
Under the carbon reduction commitment, local authorities will be held legally and financially responsible for state funded schools within their geographical area. As such, the CRC aims to increase energy management practice between local authorities and the schools that fall under their umbrella.
Local authorities will be incentivised to assist schools with resources and energy management advice so as to ensure lower carbon emissions and a higher place in the CRC league table. In doing so, the local authority will benefit from better corporate social responsibility and reduced financial impact of the CRC, with the potential to receive substantial funding from bonus payments when allowances are recycled.
Schools will be required to provide their local authority with the necessary energy and emissions data for the carbon reduction commitment. While there will be an administrative cost and time associated with these tasks, it should be significantly outweighed by the benefits of increased energy efficiency.
In receiving energy management advice from the local authorities, schools should be able to significantly reduce energy consumption and costs. In most circumstances, it is considered likely that schools should be able to reduce energy consumption by over 20% by adopting no-cost or low-cost measures to reduce energy consumption.
Under the carbon reduction scheme, local authorities will be responsible for reporting at least 90% of their total emissions, including state-funded schools and academies.
Indicator 185, of the new Local Government Performance Framework in England, will require schools to provide their local authority with the necessary emissions data to fulfil this obligation.
The statutory local government performance indicator EEF/001a will require schools in Wales to report their emissions data to their local authority.
Local authorities should already be collecting information from schools that fall within their responsibility to the CRC.
Independent (writer) schools will be required to enter into the carbon reduction commitment if their highest parent organisation consumes more than 6000 MWh of half hourly metered electricity per year. Electricity consumption within private schools will not be included in any local authority involvement in the carbon reduction commitment.