In the run-up to the Copenhagen summit, the Government has published a few revisions to the Carbon Reduction Commitment, which is due to come into effect in April 2010.  Thousands of companies will be affected in some way by the new rules, and many of those will be directly liable for hefty energy consumption bills, as well as compliance with strict new reporting requirements.

Your company could be directly affected by the new rules if it has a large energy bill (as a rule of thumb, at least £500,000 per year).  Group companies will be considered in aggregate.  Smaller commercial tenants could also be affected if their landlord is part of the scheme.

The latest Order was published in October 2009 following a recent consultation.  It incorporates a few concessions that might help your company to take some of the heat out of the new rules; most importantly, affected companies will not be required to buy any allowances in the first year, and there will be more generous refunds for “early action” measures, taken in the first three years of the scheme.  The most generous refunds will be in Year One, so you will need to act quickly to mitigate the costs.

But don’t be fooled – the latest CRC Order is in substantially the same form as previously published, and companies need to act now to get to grips with the changes.

If you are directly affected, then you should think about drawing-up a CRC “coping strategy” as soon as possible.  There are civil (and sometimes criminal) penalties for non-compliance and inaccurate reporting.  If you are a landlord you should start talking to your tenants about compliance.  The Government hopes that landlords will put pressure on tenants to reduce their energy use, and some landlords may seek to vary leases to incorporate the mechanics of the new scheme – so the sooner you agree an approach with your tenants, the better.

If you are a tenant, you should check whether your landlord will be subject to the new regime.  If it is, it might try to pass compliance costs on to you and a review of your lease may indicate whether it will be entitled to do so. 

Start discussions now to avoid unpleasant surprises. And if you are in the throes of negotiating, or are about to negotiate, a new lease, make sure that you bear the CRC in mind and that responsibilities are clearly drawn, to avoid arguments, and expenses, in the future.