"With the initial allowance costs of carbon set at £12 per tonne, this could add up to between 7% and 10% of energy costs."
David Rees, head of local government services at PA Consulting Group
Councils are under pressure to meet carbon reduction targets but it's costing them more than they expected.
With the results from the government's Carbon Reduction Commitment scheme submissions expected imminently, eyes are likely to focus on the performance league table and how authorities compare, both with each other and with the private sector.
In a recent survey of sustainability officers participating in the Carbon Trust's public sector carbon network, 61% reported that the carbon reduction commitment has helped get energy consumption recognised at a senior level within local authorities. The majority of these (39% of 61%) suggested that the scheme's financial imperatives have been the direct cause of the closer focus.
Encouragingly, 70% of respondents report to senior officers or elected members on carbon matters regularly. This is significant progress, since some energy managers have struggled to get carbon issues discussed at a senior level. This is an important audience, particularly as planning for 2013-14 budgets is now under way.
While the scheme and its financial implications have helped increase awareness, its success in reducing energy costs has been less pronounced. Although it contributed savings between 7% and 11% of total energy costs for some, only 30% of councils experienced any reduction in cost at all. The scheme is, in effect, a direct tax on the energy used by the authority.
Compliance with the scheme can also come at an additional cost: 39% of respondents suggested that it has diverted effort and resources away from carbon-reduction plans that would have been in place anyway. While 38% have seen compliance costs reduce since the first year of the scheme, one respondent suggested that compliance had cost as much as £300,000 during 2011-12.
Under the scheme, participants pay "carbon allowances" for the previous year. With the initial allowance costs of carbon set at £12 per tonne, this could add up to between 7% and 10% of energy costs. Councils can also face further costs from non-compliance and data errors, including a £5,000 fine for failing to register and a £40 charge per tonne of CO₂ incorrectly reported (over 5%).
While this could potentially add tens, if not hundreds of thousands to already stretched budgets, the financial implications have made a significant difference to lead officers' efforts to raise awareness of energy consumption among senior colleagues.
While a local authority's performance in the league will have a potential impact on its reputation, its senior officers and elected members need to be aware of the financial implications so that they can make effective decisions on the future of carbon reduction and energy efficiency.
David Rees is head of local government services at PA Consulting Group