The Carbon Reduction Commitment Energy Efficiency Scheme (CRC), which started in April 2010, is a mandatory carbon emissions scheme that aims to increase energy efficiency in the UK. It has financial and legal implications for local authorities and schools in the UK, so gives an additional incentive for schools to reduce their energy use. 

In order to comply with CRC reporting rules, schools (all local authority maintained schools as well as voluntary aided, voluntary controlled, foundation schools and Academies) have a statutory duty to provide us with information on their annual energy use, including renewable energy. 

From 2012, schools will also have to purchase carbon allowances to cover their 'CRC emissions' - known as Energy Tax. The price of the carbon allowances will be set by Government every year and the price is likely increase to year on year. In summer 2012, we will purchase allowances to cover the energy consumed in the 2011/12 financial year.

Schools account for almost 60% of the council's energy consumption, so the Schools' Forum has agreed that the council can charge schools' budgets to cover the Energy Tax attributable to their energy use. 

A number of schools in Oxfordshire have already reduced their energy use, which is great news as they have therefore already reduced the amount of Energy Tax they will have to pay. 

Frequently asked questions

Why are schools being charged this Energy Tax?

Oxfordshire County Council, as a large energy consuming organisation, qualifies for the CRC scheme. However, almost 60% of our energy consumption is from our schools (the remainder is from our other property, such as offices, and from street lighting). Under this scheme organisations must pay an additional charge on the amount of energy they consume – in effect a tax on our energy use.

Schools will be directly accountable for their own energy use. In schools' accounts 2011/12 closedown for the first time a centrally generated accrual will be made in respect of schools' Carbon Reduction Commitment Energy Tax levy. This latter accrual will be based on 2010-11 actual energy usage multiplied by the per tonne rate of £12.

Those schools which reduce their energy use will save money by reducing both their energy bill and reducing the amount of Energy Tax they pay, but schools which take no energy reduction action will incur the full financial impact of that inaction, through rising energy bills and rising Energy Tax liability. 

Therefore, it makes sense to act quickly and take full advantage of all of the support offered to you by OCC. See our advice on how to save energy in schools for more information.

What is the Carbon Reduction Commitment Tax Levy?

The Carbon Reduction Commitment Levy is another term for the Energy Tax. They are the same charge. Energy tax is just a simpler term to use when communicating this charge as it is easier to understand the charge's link to energy use. Schools which reduce their energy use also reduce their Energy Tax liability.

Finance documents, such as the Budget Planning Workbook 2011-12 to 2013-14 do however, refer to the Carbon Reduction Commitment Tax Levy.

How will my school’s Energy Tax charge be calculated?

In schools' accounts 2011/12 closedown for the first time a centrally generated accrual will be made in respect of schools' Carbon Reduction Commitment Energy Tax levy. This latter accrual will be based on 2010/11 actual energy usage for an individual school. From the energy your school has used, the amount of carbon dioxide that was produced as a result is calculated. The Energy Tax rate has been set at £12 per tonne of carbon dioxide emitted from energy use.

The amount of carbon dioxide produced is different depending on your fuel type. A school's energy consumption in the 2011/12 financial year will be calculated (from automatic meter readers, manual meter readings, dates and amounts of LPG/Kerosene/Burning oil deliveries). This energy use is then converted to the equivalent carbon dioxide emissions. The difference between the 2010/11 and 2011/12 emissions for each school will then calculated and will be settled in the 2012/13 accounts.

Under CRC, the Government attaches a financial rate for each tonne of carbon dioxide emitted from energy use. For energy used in 2011/12, and its resulting carbon dioxide emissions, the rate has been set at £12 per tonne of carbon dioxide emitted. The Government is likely to increase this financial rate each year - please see tables two and three for some forecasted average costs for schools.

Tonnes of carbon dioxide emitted by a school's energy use x £12 = CRC Energy Tax

For further details on how to calculate your energy tax, please see the attached document: 

• How will my school's energy tax be calculated? (.pdf format, 12Kb)

How much will my school’s Energy Tax be?

The amount of Energy Tax a school will be charged is estimated to be an additional three to nine per cent of your school's energy bill total. Tables 2 and 3 below provide further estimates of the costs of the Energy Tax for different sizes and types of schools.

By taking action to reduce your school's energy consumption now you will save money on your energy bill and on the amount of Energy Tax you pay. See our advice on how to save energy in schools for step by step guidance on reducing your school’s energy use.

How will my school’s Energy Tax be taken from my budget share?

In schools' accounts 2011/12 closedownfor the first time a centrally generated  accrual will be made in respect of schools Carbon Reduction Commitment Energy Tax levy. This latter accrual will be based on 2010/11 actual energy usage for an individual school.The difference between the 2010/11 and 2011/12 emissions for each school will be calculated (when the 2011/12 energy usage is known) and will be settled in the 2012/13 accounts.

How much Energy Tax is OCC paying through its non-schools estate and street lighting?

Oxfordshire County Council’s Energy Tax liability is shown below in Table 1. The authority’s energy use in the 2010/11 financial year (including schools) emitted 671,244 tonnes of carbon dioxide, of which almost 60 per cent was from schools. The Government is likely to increase the Energy Tax rate by levels similar to those in Table 1. This is a rising budget pressure for OCC and schools alike.

Table 1: OCC Energy Tax Liability (based on 2009/10 energy use)

Will this Energy Tax be charged each year? 

Yes, it is very likely that this Energy Tax charge will continue. However, the Government is undertaking a simplification review of the CRC at the moment so payment details for after 2012 have not been confirmed. The Energy Tax may continue to be paid retrospectively (after the energy which the tax relates to has been consumed, as will happen for 2011/12 energy use) or the Energy Tax may need to be paid at the beginning of a financial year based on predicated energy use in the year. 

Even with this uncertainty, schools must continue to set aside three to nine per cent of your school's energy costs in each year's budget to pay for your Energy Tax. We will notify schools when the Government confirms any changes to the CRC and its impact on the Energy Tax payment procedures.

When and where can I find out my school's energy use for 2011/12?

OCC and our energy contractors Mouchel are currently receiving the 2011/12 energy data and are undertaking data validation and verification on it. This period of verification includes ensuring the recent energy meter reads, which have been taken at a number of schools, are accepted by the energy companies which will ensure the continuation of accurate billing and energy usage data. Your energy data is available from Mouchel, our property consultants: 01235 467 100 or energyteam@mouchel.com

Is the cost of energy rising? 

Yes. Please be aware of the rising cost of energy when planning and managing your school's budgets. The Government predicts at least a four per cent rise in energy prices each year, while the energy industry forecasts much larger increases in energy prices of around 15%. This means along with the Energy Tax charge the amount of money we spend on energy is going to increase - creating a rising budget pressure for all of us.

What can my school do to reduce this financial pressure?

In these difficult financial times we encourage all schools to take action to reduce their energy use now, to save money on their energy bills and Energy Tax. The first step is managing your energy use. A 10 per cent reduction in energy use would be expected from behavioural change alone (i.e. switching off lights when not in use). Achieving this energy reduction will help mitigate the costs of the Energy Tax and reduce your overall energy bill.

We are already taking steps to reduce our corporate energy spend, such as installing energy saving equipment in streetlights during repairs and installing more energy efficient lighting in our offices, among other projects. Through our Energy Strategy we will continue to take action to reduce our energy usage and cut costs.

How should my school account and budget for the Energy Tax?

The Energy Tax and rising energy prices need to be budgeted for. The Energy Tax is forecasted to be between three and nine per cent of schools' 2009/10 energy bill. A separate line in the Budget Planning Workbook 2011/12 to 2013/14 has been included specifically for this.

Your school must budget for this additional increase in their energy costs (due to the Energy Tax) in their 2011/12 to 2013/14 budgets. The Energy Tax charge will be in addition to the expected rises in the cost of energy, which is conservatively estimated at least 4 per cent each year. Both of these financial pressures need to be accounted for in your budgets.

The Government has indicated the financial rate for the Energy Tax, which is currently £12 per tonne of carbon dioxide emitted through energy use in 2011/12, will rise. It is likely this Energy Tax rate will rise year on year, potentially following the trajectory forecasted in Table 1: £14 per tonne carbon dioxide emitted through energy use in 2012/13 and £17 per tonne carbon dioxide emitted through energy use in 2013/14. Thus, your school must budget for a rising Energy Tax charge in 2012/13 and 2013/14. We will notify schools when the Government confirms any changes to the CRC and its impact on the Energy Tax payment procedures.

Tables 2 and 3 below show how the projected 'business as usual' costs, which take account of rising energy prices. Reducing your energy consumption will help mitigate these costs. 

Table 2: Average energy costs, including energy tax, for schools

Table 3: Average Energy Tax liability in primary schools

Further information 

If you have a query which is not covered by the information on these web pages, please contact the relevant person below: 

• Your school’s Energy Tax liability: Sarah Steere-Smith, Carbon Compliance Officer, 01865 815 654 or Sarah.steere-smith@oxfordshire.gov.uk
• What you can do to reduce your school’s energy consumption; Questions about your energy survey and Energy Management System for Schools Roadmap: Helen Ramsey, Schools' Carbon Project Officer, 01865 815 861 or Schools.carbon@oxfordshire.gov.uk
• Budget planning workbook or accounting for this energy tax: Schools' Support Section Finance Officer, Helpline telephone number 01865 797 500
• Your school's Energy use: Mouchel (our property consultants) 01235 467 100 or energyteam@mouchel.com