What is Streamlined Energy & Carbon Reporting (SECR)?
Streamlined Energy & Carbon Reporting (SECR) is industry legislation that was introduced in April 2019, replacing the Carbon Reduction Commitment (CRC) scheme.
The scheme changes the requirements for energy and carbon emissions reporting, putting more responsibility on organisations to choose how they measure and report their emissions.
Who needs to comply?
Over 11,900 UK organisations need to comply with SECR regulations, many of which are large unquoted companies that haven’t previously reported on energy and carbon.
Companies are exempt if they are:
- Not registered in the UK
- UK subsidiaries that qualify for SECR but are already covered by a parent’s group report (unless the parent company is not registered in the UK)
- Public sector organisations, charities and private sector organisations that don’t file reports to Companies House
- Companies that use less than 40,000 kWh of energy in the reporting year
How to comply?
SECR requires businesses to include their energy use (including electricity, gas and transport) emissions and an intensity metric in their annual Directors’ report for financial years beginning on or after 1 April 2019.
The government won’t specify the exact procedures that should be used for energy and carbon reporting, nor will they specify which intensity metrics to use. They will however create guidance on good practice.
All SECR participants must provide a narrative commentary on energy efficiency action taken in the financial year.
Quoted companies must continue to report on scope 1 and 2 greenhouse gas emissions (direct greenhouse gas emissions from owned or controlled sources and indirect emissions generated by purchased energy). Additionally, they’ll be required to report on global energy use, where appropriate. Unquoted companies will now also be required to report scope 1 and 2 emissions. Reporting of scope 3 emissions (all indirect emissions not included in scope 2) will remain voluntary for both quoted and unquoted companies.
SECR has been designed to make energy and carbon reporting simpler, aligning with existing reporting mechanisms to reduce the burden of compliance requirements on organisations. It will also contribute to the government’s Clean Growth Strategy ambition of enabling business and industry to improve their energy productivity by at least 20% by 2030.
SECR has replaced the CRC scheme that ended on 31 March 2019. The CRC scheme required all qualifying organisations to purchase carbon allowances to cover their carbon emissions. As a result, CRC charges were added to the Climate Change Levy (CCL) increasing the CCL on electricity to 0.847p/kWh, and the CCL on natural gas to 0.339p/kWh in 2019/20. Increases of 45% and 67% respectively.
As a result, Climate Change Agreements (CCAs) have become a lot more important to businesses as they aim to ease the impact of CCL costs on manufacturing and industry, giving CCL relief in exchange for a commitment to improve energy efficiency.