From April 2019, Streamlined Energy & Carbon Reporting – known as SECR for short – comes into effect, and is likely to affect all large organisations in the UK.
It’s new legislation that changes your obligations to report energy use and carbon emissions, with particular significance for:
- Energy use in buildings.
- Carbon emissions from transport.
- Recent energy efficiency improvements.
The new rules come into effect to coincide with the end of the Carbon Reduction Commitment (CRC), also in April 2019, which will lose the government nearly £800 million in tax revenues.
Also at that time, the Climate Change Levy is due to increase to recoup those ‘missing’ tax revenues from the end of CRC, so it’s important to know how the changes to CRC, CCL and SECR will affect you in combination.
Does SECR apply to me?
SECR reporting will continue to apply to all quoted companies but from April 2019 will also apply to large UK incorporated unquoted companies and LLPs that meet at least two of the following three criteria in a financial year:
- At least 250 employees.
- Annual turnover greater than £36m.
- Annual balance sheet total greater than £18m.
The only exclusions for organisations meeting these criteria, are for those with very low energy consumption of less than 40,000 kWh per annum. There are no exemptions or exclusions for companies holding Climate Change Agreements (CCA) or participating in EU ETS.
Naturally those companies already affected by ESOS and/or CRC can expect to be directly affected by SECR too, but the total number of qualifying firms is predicted to almost triple from 4,000 under CRC, to nearly 12,000 under SECR.
What are the SECR reporting requirements?
If you are familiar with MGHG (Mandatory Greenhouse Gas Reporting Legislation) as it applies to quoted UK companies, then that forms a good starting point to understand what the SECR reporting requirements are too.
There are a few important differences to note though:
- MGHG-compliant quoted companies must still disclose global Scope 1 and 2 emissions and include an intensity metric in annual reports, but should also report global energy use. Scope 3 of MGHG remains voluntary.
- Unquoted companies must (where practical) report UK energy use, Scope 1 and 2 emissions and an intensity metric. Scope 3 remains voluntary. Energy reports should include electricity and gas, as well as all transport activities from road and rail, to air and shipping.
- Quoted and unquoted companies should comment on their energy efficiency measures from the previous financial year. This means all qualifying companies under SECR must have an energy efficiency action plan in place and ready to be shared.
How to prepare for SECR
We are rapidly approaching the final six-month countdown to the April 2019 introduction of SECR, and it takes time to collect and report data as well as to ensure compliance with the various rules and mandatory disclosures.
If you have not yet started to prepare for SECR – or you still don’t even know if it applies to you – it’s crucial to make swift progress on this as soon as possible.
To get our help, call us on 0800 054 2577 to find out more about how our energy and emissions quantification services can help you to comply with SECR in time for its April 2019 introduction.
“Please note that this information is the result of a Government consultation and final legislation is yet to be published. Envantage Ltd is passing the current information and is therefore unable to take any responsibility for subsequent changes that may arise as a result of new or amended legislation being passed and published.”