What did the Romans ever do for us?
June 21st 2009

So apart from roads, irrigation, entertainment, jobs, education, the foundations of industry ultimately leading to the industrial revolution, strong UK economic growth, the British Empire and a significant increase in carbon emissions what did the Romans ever do for us? As the Peoples Democratic, Republic of British Industry we need to stop following the large proportion of the market and start taking action with regards to the Carbon Reduction Commitment. First things first all those in favour for a meeting to discuss a meeting to discuss the Carbon Reduction Commitment speak now...

As the old Monty Python adage suggests when we get to talking about the Carbon Reduction Commitment that’s all we do. With CRC, as with many things in the Energy industry, there is far too much talk and no action. Lots of us now know what it is, lots of us now know what it means and some of us (Gladiators) even have a good idea of what we are going to do about it.

This article outlines some of the key CRC challenges in the ‘Coliseum’ of UK industry and some of the ways that CRC Gladiators are addressing these issues.

CRC challenges typically fall into three core areas that deal with the major aspects of the Legality, Strategy and Risk Management that lead to the commercial management and optimisation of CRC.

Challenge number one is of a Legal nature. Effective participation in the CRC is a statutory requirement; failure to demonstrate adequate corporate governance and prepare proper processes can incur significant fines and possibly custodial sentences. This process needs to be both flexible enough to change with the Organisation but also rigid enough to protect against compliance and manage accountability under the scheme and most importantly you need to start it now, not in 9 months when the scheme starts.

CRC’s second major challenge is focused around an Organisations CRC strategy. CRC’s first major impact on an Organisation will be the April 2011 Cash Outflow,and for most Organisations this is a significant amount of money that will need to leave the business. The worst case scenario in the first year is that 90% of the cash outlay comes back to the business six months later in October 2011.Strategically managing this cash impact on the business is the second CRC challenge.

Challenge number three is focused around risk management of the commercial exposure related to the CRC which can see your exposure under the scheme increase by 50% or decrease by 50% dependent upon your performance.

So what does your organisation need to understand to

become CRC Gladiators?

• Non participation and poor processes will leave you open to legislative risk

• A poor strategy could leave you with severe cash flow, CRC management & legislative issues

• A high place in the league table could mitigate over 50% of the CRC cost and give you a significant marketing opportunity

• A mid table ranking will leave your costs relatively unchanged and possibly result in competitive pressure from more ‘environmentally friendly’ competitors

• A low place ranking could see your costs increase by over 50% including additional PR costs to mitigate pressure on the order book

The challenge for a gladiator is to ensure that there is a compliant and robust process in place and that the money spent on improving the CRC position in the league table is worth the benefit. This is not just the benefit under the scheme but also the additional costs or benefits associated with the publication of the position within the scheme and the external commercial benefits in core energy reduction. In order to take action and fight like a Gladiator an Organisation will need to:

1 Develop a best practice process to understand the full extent of CRC’s impact on the organisation

2 Develop a robust process to protect against compliance

3 Intelligently manage CRC’s impact including all direct and indirect factors that will affect the commercial position.

For more information on how you can protect your Empire – Go to www.encore-international.net

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