CARBON REDUCTION
COMMITMENT
Tessa Bowering
Senior Environment Officer
What is the Carbon Reduction
Commitment Scheme?
New statutory CO2 emissions trading scheme for
the UK
Starts in April 2010 and introduces new legal duties
on any organisation supplied by an electricity meter
settled on the half hourly market
Scheme designed to help public and private
organisations improve energy efficiency, save
money and reduce the amount of CO2 emitted in
the UK
Participation in CRC helps the UK achieve its
overall targets of reducing greenhouse gas
emissions by at least 80% by 2050
CRC
CRC targets large public and private sector
organisations such as retail chains, universities,
supermarkets, banks and central government
If your organisation meets the CRC qualification
criteria you are obliged to participate in CRC.
Anyone participating in this scheme must monitor
energy use and report on their equivalent CO2
emissions and then purchase allowances, sold by
Government, to cover these emissions each year.
CRC
Each year organisations affected will have to
surrender allowances covering the total
tonnage of CO2 they emitted over the previous
financial year
One allowance covers one tonne of CO2
CRC - allowances
Organisations will buy most of their allowances
from the government in advance of producing
emissions
Initially they will cost £12/tonne but from 2013 they
will be sold through auction
For the largest organisations this cost will run into
tens of millions of pounds per year.
6 months after buying their allowances this money
will be given back but with a bonus added or
penalty deducted depending on how much energy
they saved in the previous financial year
CRC
A league table will be published each year to
rank participating organisations by
performance
An organisation’s league table position, and its
bonus or penalty, will depend mainly on how
much it cuts its emissions by compared with
others, with adjustments for changes in
turnover and , initially, for some kinds of early
energy-saving actions
CRC
In April 2013 the CRC will become a fully
fledged cap-and-trade scheme
The total quantity of CRC allowances sold to
participating organisations will be ‘capped’ at a
maximum which falls from year to year
The size of the cap and the rate of decline
have yet to be decided but will reflect the UK’s
new carbon budgets
CRC
Under the trading scheme, an organisation
finding itself with insufficient allowances to
cover its emissions will have to buy extra ones
from CRC organisations that have surplus
allowances
CRC – Who is affected?
The CRC will affect organisations who consumed at least
6,000 megawatt hours of electricity through half-hourly
electricity meters during calendar year 2008
Every organisation that had at least one such meter in
2008 is legally obliged to make an ‘information disclosure’
by the end of September 2010
Failure to comply could mean a £1,000 fixed penalty
Organisations have to provide the EA with a list of their half
hourly meters. If they use more than 3,000 MWh through
these meters they must disclose how much.
CRC
Organisations over the 6,000 MWh threshold must
register for full CRC participation by the end of
September 2010
Firms that use most of the electricity they buy for
transport may be exempt
CRC organisations must work out their annual CO2
emissions based on non-transport use of electricity,
gas and other fossil fuels for April 2010 to March
2011.
Gas and electricity suppliers are now legally
obliged to provide data for all meters within
specified time periods
CRC
Organisations covered by CRC must compile
and update an evidence pack detailing their
energy use
They also need to produce annual reports
declaring their April to March emissions
covered by the CRC
The first is due by the end of July 2011
CRC
The first sale of allowances takes place in April
2011 by which time organisations should know
how many they need to buy
Organisations must buy allowances covering
their emissions for the 2010/2011 financial
year and anticipated emissions for 2011/2012.
This is the only time there will be a double
‘forwards and backwards’ sale
CRC
In subsequent years organisations will buy
allowances in advance of their emissions
They will have to report their annual emissions
by the last working day in July , 4 months after
the end of the compliance year
The deadline also applies to the surrendering
of allowances needed to cover their emissions
Further Information
www.environment-agency.gov.uk
www.defra.gov.uk
www.endsreport.com
Thank You
Tessa.bowering@environment-agency.gov.uk