What is the Carbon Reduction Commitment(CRC) a.k.a Energy Efficiency Scheme?
The CRC Energy Efficiency Scheme (formerly known as the Carbon Reduction Commitment) is the UK's mandatory climate change and energy saving scheme, which started in April 2010.
It 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 in large organisations, especially at senior level, and encourage changes in behaviour and infrastructure.
CRC will affect large organisations in both the public and private sector. Organisations that meet the qualification criteria, which are based on how much electricity they were supplied in 2008, will be obliged to participate in CRC. Participating organisations will have to monitor their emissions and purchase allowances, initially sold by Government, for each tonne of CO2 they emit. The more CO2 an organisation emits, the more allowances it has to purchase. So there is a direct incentive for these organisations to reduce their emissions.
As well as reducing our carbon emissions, by increasing energy efficiency the scheme will help organisations save money by reducing their energy bills. These savings
should be well in excess of the costs of participating in the scheme. In addition, the better an organisation performs in terms of reducing its emissions, the higher
it will appear in the annually published league table, showing the comparative performance of all participants. This in turn provides a further benefit: all the revenue raised from selling allowances is ‘recycled’ back to participants, and the league table position affects how much of the revenue each organisation receives.
Who must participate in CRC?
All UK based organisations that had at least one half hourly meter settled on the half hourly market in 2008 will be required to do something under the CRC. Government estimates indicate that around 20,000 public and private sector organisations will be required to participate in some way.
What happens if an organisation refuses to participate?
CRC is a mandatory scheme and it places legal obligations on organisations to disclose information and – for larger energy users – to report on emissions and purchase allowances from Government. Any organisation that does not comply with its legal obligations under CRC will be subject to financial penalties.
When does CRC start?
CRC starts in April 2010.
How much do allowances cost and how do organisations buy them?
Allowances are sold by Government at the start of the annual reporting year. Participants do not have to purchase allowances for the first annual reporting year of each phase, but they will have to report their emissions. During the introductory phase, allowances will be sold at a fixed price of £12 per tonne of CO2. Following the initial sale period, participant organisations can buy or sell allowances by trading on the secondary market. This enables organisations that have reduced their energy supplies more than they expected to sell some allowances, while those that have higher emissions than anticipated can purchase extra allowances.
What does my organisation need to do now?
The first thing you should do is contact ManageCO2 and we will help you work out if your organisation is impacted by this legislation. Depending on that outcome ManageCo2 will advise you on the next steps and a logical course of action to ensure your organisdation meets the legislative demands, and manages the assocuated carbon liability effectively.
The above information is extracted from the CRC guide book which can be downloaded here: Carbon Reduction Commitment (Energy Efficiency Scheme) Guidebook
