Energy and Utility Management Consultants

British Gas post more profit; 2011/2012 CRC results announced

February 2013


Further discontent is sure to arise following Centrica’s announcement that they have again secured massive profits - £606m in 2012 - through the domestic arm of their British Gas business. The company claims that plans are underway to inject a large portion of the profits back into furthering the exploration of new gas and oil – which is vital to the future of energy security. A large part of the profit has been attributed directly towards the colder weather over 2012 which saw an increase of 12% in gas demand. Much noise was made in the public domain when British Gas increased domestic prices by 6% in November; at a time where profits were on the up - so to see such a large year-end profit won’t be an easy pill to swallow for many.
The energy network is of course in need of expensive upgrades, and businesses must make profit to survive; but the numbers involved are, as always, likely to be used as a beating stick against the Big 6 for some time to come.

In a move mirroring the reduction of subsidies paid through the government’s Feed in Tariff in 2011, it has now been announced that similar cuts are expected in the Renewable Heat Incentive (RHI) programme. For every installation made beyond 50% of the government’s expected targets, RHI payments are to fall by 5%. Although the cuts are to a much lesser extent than the FiT cuts – and are still likely to result in some public debate - as the announcement has been made much further in advance than the FiT cuts announcement, the idea is being put into action to ensure the long-term financial sustainability; which can only be a good thing.
Sustainability requirements for biomass installations using solid fuels are also due to be announced which will carry requirements for these installations to prove they are able to meet greenhouse gas and lifecycle emissions targets before any subsidies are paid out after 2014.

The Environment Agency has finally published the long-awaited final edition of the CRC (Carbon Reduction Commitment) Table which ranks almost 2,100 UK organisations based on their energy efficiency performance for the period 2011/2012.  Topping the table this year was construction firm BAM Group UK Ltd, followed very closely by fellow construction company Skanska, so much credit must go to them.
However, it should be noted that the volatility and controversial nature of the league table rankings is evidence by last years’ top placed firm - Manchester United Ltd (t/as Red Football Ltd) - falling all the way to 488th place. Surprisingly, only around 500 of the companies appearing actually reduced their emissions in real terms last year. The complex metrics used for ranking are drawn from the absolute percentage change in each organisations reported energy use, improvements in energy efficiency determined by the percentage change in reported use per unit of revenue, and any actions taken to curb energy use and CO2 output before the scheme was launched. The metrics do not take into account individual circumstances or the steps taken earlier in the programme to improve efficiency; effectively, if a company was as green as it could possibly be in 2010; the room for improvement is smaller than for a more polluting company in the same year. This is reflected in the annual tables, with those companies who aren’t as green as a whole actually leapfrogging companies with a lower carbon footprint, but with a smaller year-on-year improvement.

Regardless of the foibles though, the results are encouraging; overall 2011/2012 CO2 output was down by almost 8% on the previous year.

The CRC scheme is pivotal to the UK achieving carbon reduction targets and is expected to deliver reductions of around 17 million tonnes of carbon dioxide by 2027, 19 years after its arrival in 2008.

Don’t forget; we are able to assist with your CRC requirements, and if you aren’t already benefitting from our full Utility Bureau Service (UBS) – which includes completely impartial and professional energy procurement and utility consultancy, and invaluable advice on energy management – there couldn’t be a better time to get in touch to see how we could benefit your business energy needs.

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