June 24

How to meet the aims of the climate change act while streamlining regulation


With the Climate Change Act being constantly updated, energy vendors, producers, and distributors have to adjust their business operations to meet the new requirements in the Act. 

The Climate Change Act aims to reduce GHG emissions by 80% while expanding renewable energy use, forcing organisations to change company operations. However, most organisations may not completely understand what must be done to meet these targets. 

Moreover, the Climate Change Act mandates far more changes than just adjusting internal operations, and if organisations are not aware of these changes, they will find themselves dealing with fines for compliance violations. Furthermore, the Act is subject to updates and adjustments, and the most recent update arrived in 2021.

However, adapting to the Climate Change Act need not be a complex, time-consuming process, provided the right approach is used to meet these new requirements. In this blog, we explain how organisations can meet the aims set out in the expansive act while streamlining regulatory costs. 

Meeting the challenges set out in the act

Incorporate carbon pricing into business operations

Carbon pricing was implemented to penalise emissions from burning fossil fuels through an array of price support mechanisms and the Fuel Duty tax. Carbon pricing raises operating costs, not only from an operational aspect but also from an administrative aspect for organisations. 

Incorporating carbon pricing into regular business operations incurs a higher expense and could call into question the efficiency of administrative processes. However, instead of seeing carbon pricing as an increase in business operation costs, it is an opportunity to switch to renewable or alternative energy sources, phasing out carbon-based energy over the next few years. 

Moreover, organisations can also streamline the cost of administrating compliance management surrounding the governing of carbon pricing schemes. Automated compliance management platforms, powered by AI and NLP, can streamline the management and implementation of carbon pricing schemes, turning complaints into a costly, time-efficient operation. 

Reduce dependence on carbon emissions

While reducing the cost of complying with carbon emissions systems, measures should be taken to increase renewable energy consumption. 

With the government looking to increase renewable energy consumption and achieve a net-zero emissions target, organisations have a unique opportunity to transition from carbon-based operations to renewable energy, thanks to the government’s several incentive programs. 

The government replaced the Renewable Obligations scheme with the Contracts for Difference scheme (CFD) to give organisations stability and revenue for electricity generation while protecting consumers from high prices in a bid to encourage organisations to use low-carbon energy. 

Meanwhile, the Smart Export Guarantee (SEG) was introduced in January 2020, mandating that electricity contributed to the National Grid from small-scale, low-carbon generators should be compensated. The purpose behind this scheme is to provide consumers and households with an incentive to shift over to small-time low-carbon generators and encourage organisations to adopt renewable energy. 

However, it should be noted that these programs could make significant changes to compliance operations, and organisations will be expected to adjust their internal operations to meet these new regulatory requirements. A compliance management platform can help organisations map their internal operations to external regulatory updates, making it easier to incorporate tariff requirements into internal processes.

Devise energy efficiency initiatives 

Organisations should be making plans to increase energy efficiency to encourage consumers and businesses to boost energy efficiency. For example, businesses must now pay a Climate Change Levy per unity of energy consumption. Furthermore, the Energy Company Obligation (ECO) scheme requires large energy firms to boost efficiency.

Accounting for these regulations requires organisations to make significant adjustments to their internal operations to improve energy efficiency and invest in processes that simplify compliance management. For example, energy organisations must now ensure that they are following the Climate Change Levy and Energy Company Obligation (ECO) scheme without seeing a massive increase in administrative costs.

Compliance regulation platforms can help organisations streamline their internal operations to streamline costs and ensure that regulatory teams can ensure that these requirements can be met while also spearheading energy efficiency initiatives.

What is the best way to embrace the act?

The Climate Change Act was designed to spearhead the UK’s renewable energy initiatives and reduce its dependence on carbon-based energy sources and reach zero carbon emissions by 2050. This means organisations have to make significant changes to their internal operations to ensure they can meet these new requirements. 

Of course, this could mean organisations risk violating compliance procedures because there are several mechanisms in place that can be difficult to follow. Hence, why the digitisation of compliance management will be critical. Regulatory compliance analytics would help organisations meet compliance requirements while streamlining operations and reducing costs. In the future, we can expect automation and digitisation to play a significant role in compliance management as organisations look to adapt to a changing industry while also meeting short-term challenges.


Climate Change Act, Regulatory Costs

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