SECR (Streamlined Energy and Carbon Reporting)

SECR is part of a package of changes announced by the Government which aims to reduce the burden of the current suite of reporting requirements while further incentivising energy efficiency and reducing carbon emissions.

SECR replaced CRC with a simpler reporting framework that builds on the existing mandatory reporting of greenhouse gas emissions by UK quoted companies and the Energy Savings Opportunity Scheme (ESOS). Annual energy use will now have to be included in the annual Director’s Report and be subject to the same external auditing as the company’s financial statement.

All quoted and large unquoted UK companies qualify for SECR. The definition of a ‘large’ company is similar to that for ESOS. It is companies with:

• More than 250 employees
• Annual turnover greater than £36m or an annual balance sheet greater than £18m

Approximately, 11,900 companies were impacted by these new reporting requirements.

The major difference between CRC and SECR is that both Scope 1 and 2 emissions are reported. In addition to gas and electricity consumption, emissions arising from fleet fuel, generator fuel and refrigerants will be included.

Companies will also have to report on energy efficiency actions taken over the past year. This will encourage companies to take measures to reduce energy consumption. Any reduction in energy consumption comes straight off the bottom line and will increase profitability rather than having to chase more sales.

Historically a substantial amount of revenue has been generated by CRC – between 7% and 10% of a company’s energy spend. From 1st April 2019 the Climate Change Levy (CCL) applied to all business electricity, gas and solid fuel use is increasing significantly. This is primarily to offset the loss in revenue that the government will suffer as the CRC scheme comes to an end next year. CCL (Climate Change Levy) dramatically increased by 45% for electricity and 67% for gas. 

Source: https://www.gov.uk/guidance/climate-change-levy-application-rates-and-exemptions#main-rates

CCL is charged on kWh consumption rather than carbon emissions (which was the case with CRC). With the decarbonisation of the grid, this will bring the focus back to raw kWh energy savings.

SECR does present compliance risk. However, that can easily be turned into an opportunity that will lead to reduced energy costs, carbon emissions and financial gain.