Streamlined Energy & Carbon Reporting (SECR)

What it is and what it means to your business

In 2019 the Carbon Reduction Commitment (CRC) scheme will end and the new SECR will be introduced. 


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What We Know So Far

What is SECR?

Streamlined Energy and Carbon Reporting (SECR) is the UK Government's name for the replacement legislation to a number of existing and some soon to expire programmes covering energy and carbon reporting and taxation. 

These policies and what we know so far includes:

Policy Description Likely Changes
CRC Formally known as the Carbon Reduction Commitment, the scheme requires large energy users (who consume over 6,000MWh per year) to monitor, report and buy allowances for the amount of emissions they produce each year. The scheme comes to an end following the current compliance year (2018/19).
CCL The Climate Change Levy is a tax applied to electricity, gas and solid fuel use by businesses. The main rates will be raised in April 2019 to encourage greater energy efficiency and to balance out the loss from the closure of the CRC scheme (so that it is fiscally neutral).
CCAs Climate Change Agreements enable businesses to claim discounts from the CCL tax by agreeing target reductions at a sector or individual level with the Environment Agency. Rates will increase in 2019 to account for the increase in the CCL.
M-GHG Reporting Mandatory Greenhouse Gas Reporting applies to all quoted companies and requires that they measure and report their greenhouse gas emissions on an annual basis. Will likely remain unchanged.
ESOS The Energy Savings Opportunity Scheme (ESOS) requires large organisations to assess their energy use and energy efficiency opportunities every 4 years. (For more info on ESOS) Will likely remain unchanged.
 

Why do we need SECR if we are just going to pay more in CCL?

All the way back in 2006, The Company's Act described a regime where all large businesses (and we read that as all private businesses apart from SMEs) report carbon emissions in the annual reports and accounts. So far, this has been enacted only for FTSE Main Market Companies (proving ground perhaps?).

With pressures on the UK to meet its climate change targets, we suspect that the government will enact carbon reporting on this wider scale.

But you might ask why should we not just rely on ESOS? The Energy Savings Opportunity Scheme (ESOS) stems from EU legislation and in our view is somewhat separate from SECR. Additionally, ESOS only applies to large entities and - most importantly - only requires reporting once every 4 years and proven reductions are not obligated. Therefore, ESOS alone cannot be relied upon to generate the scale of carbon savings year on year that we need to mitigate climate change.

In our view, SECR, implemented properly, will harmonise reporting, removing the multiple carbon reports with different reporting dates and will be streamlined to be consistent with financial reporting years. It will also make it easier to monitor and achieve reductions in carbon and cost each year. 

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What It Means To Your Business

For the time being, the government has not announced its exact plans so for the most part you could just wait until we know precisely what the changes will be. However, if your business is already doing ESOS, there is a good argument to be made for starting to assess and report your carbon footprint on an annual basis now. ESOS uses very similar datasets to a carbon footprint assessment, so whether you are assessing yourself or with consultant support, this means that converting your ESOS dataset will be easy and will save on resource time (and cost if you are going externally). Regular monitoring will also help you maximise and track your reductions whilst also preparing you for potential changes in future legislation.

Getting ready for legislation is one thing; by completing your carbon footprint assessment you will also be adopting what is best practice for many businesses that already voluntarily disclose their emissions, e.g. as part of the CDP (formally known as the Carbon Disclosure Project) and the Global Reporting Initiative. A carbon footprint is also a very useful metric to track for ISO 140001 / environmental management systems. For SMEs, check out our easy to use online carbon calculators



Contact Us to discuss starting your carbon management