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Inaccurate Carbon Reporting Could Lead To Massive Fines

Construction firms may be set for massive hikes in their energy bills by inaccurately submitting Carbon Reduction Commitment reports.

Research by PwC has revealed that firms may face additional costs of up to 11 per cent by filling out their reports inaccurately.

The first reports under the CRC Energy Efficiency Scheme are due back on 31 July, after which companies will be ranked in a public league table and forced to pay for allowances depending on their carbon emissions.

Carbon reporting specialist at PwC, Henry Le Fleming, said: “Many companies won’t have stress tested their processes, systems and controls for gathering the data. If they have large numbers of sites with shared responsibility for energy bills it could be more difficult than expected.”

More than 3,000 UK firms organisations are expected to generate around £1bn in revenue – to be retained by government – annually within three years after changes to the scheme saw the reward incentive removed for those who were best-performing.

As well as paying the carbon tax, failure to submit reports on time could earn firms a £5,000 fine for each report, plus £500 a day every day the report is outstanding. Inaccuracies in reporting can attract fines of £40 a tonne for under- or over-reporting.

PwC state that for an organisation spending £20 million on energy, a 20 per cent mistake would result in fines of £1m, while a company with a £1m energy bill which was 20 days late in submitting reports, and made a 20 per cent error in the numbers in its annual report, would face fines of just over £80,000.

The CRC scheme will see construction firms among companies who are expected to gather data on their electricity, gas, diesel and coal use across all of their sites in a CRC Footprint Report and a CRC Annual Report.

Mr Le Fleming said: “The regulatory powers are wide, and while it’s not certain how strictly they will be enforced, with late reporting or incorrect data both attracting fines, the clock is ticking for companies to get this right over the coming weeks before the deadline.”

However he added that accurate reporting of figures now could lead to longer-term savings as the CRC Footprint report will define the sources reported annually for the next three years.

PwC say that using this effectively will enable some companies to reduce exposure by 10 per cent, as the sources cannot be changed for the next 3 years.

Construction News, 27 April 2011