SMMT and RMI enter partnership to provide clarity on new government energy efficiency scheme
SMMT and RMI to work together to provide greater clarity on new government energy efficiency scheme
Government’s Carbon Reduction Commitment, designed to improve the energy efficiency of UK businesses, went live on 1 April, impacting many automotive dealerships across the country. The Environment Agency has published a case study providing more detail on how the CRC will impact dealerships within the automotive sector.
The mandatory legislation effectively introduces a credit trading scheme, benefiting companies that reduce their energy consumption and financially penalising companies that don’t. The scheme applies to any business that uses over £500,000 of electricity each year, but the criteria defining how franchised businesses are dealt with is complex.
The Society of Motor Manufacturers and Traders (SMMT) and the Retail Motor Industry Federation (RMI) are now working together to ensure the retail network is fully aware of and fulfils its responsibilities under the scheme before charges are enforced next year.
Some of the largest dealerships will qualify directly for the CRC, regardless of any relationships with vehicle manufacturers. Other franchised dealerships could be affected by CRC if:
- An agreement exists between the dealership and the vehicle manufacturer for the sale or distribution of the vehicle, or the provision of services.
- The dealer carries out business using the name provided by the vehicle manufacturer in the agreement – this means a trading name provided or mandated by the manufacturer and not the trading name of the dealer/franchise holder.
- The premises where the dealer carries out the franchise business are used exclusively for that business, or the vehicle manufacturer is receiving a direct financial benefit from the dealer carrying out those other business activities. Those other activities would include vehicle sales of other makes, MOTs, service and repairs of other makes and bodyshops or filling station business.
- The presentation of those premises must have an internal or external appearance agreed by the vehicle manufacturer and it must be similar to that of other premises operating a franchise business under an agreement with the vehicle manufacturer.
Paul Everitt, SMMT chief executive, commented, “While initially complicated, the Carbon Reduction Commitment incentivises dealerships to reduce their energy use and effectively cut their costs. Vehicle manufacturers and franchised dealers will have to work closely over the next 12 months to improve their energy efficiency and this can only result in better working relationships within the industry.”
Sue Robinson, RMI director, added, “Industry is still to establish how many dealers will be included in the scheme to identify the full impact the Carbon Reduction Commitment could have on the retail network. Cutting energy consumption will reduce costs and improve the environmental footprint of dealerships but it is important that we take this opportunity to ensure both the franchised network and vehicle manufacturers are aware of their responsibilities under the scheme.”
The CRC is central to the UK’s strategy for improving energy efficiency and reducing carbon dioxide (CO2) emissions, as set out in the Climate Change Act 2008. It has been designed to
raise awareness of energy use in large organisations, especially at senior level, and encourage changes in behaviour and infrastructure.
The overall emissions reduction target is achieved by placing a ‘cap’ on the total allowances available to each group of CRC participants, this cap will influence the price of allowances after the introductory phase of the scheme. Within that overall limit, individual organisations can determine the most cost-effective way to reduce their emissions. This could be through investing in energy efficiency measures to decrease the number of allowances they need to buy. All the money raised by the government through the sale of allowances will be returned to participants, according to how well they perform.
The Environment Agency automotive case study is available here.
To find out more about the CRC go to http://www.decc.gov.uk/en/content/cms/what_we_do/lc_uk/crc/crc.aspx.
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