Carbon Reduction Commitment

Understanding the Carbon Reduction Commitment (CRC)

What is CRC?
The CRC was announced by the UK Government in their 2007 Energy White Paper.  It is a mandatory carbon reduction scheme that will help deliver the Government’s target to reduce carbon emissions in large non-energy intensive organisations by 1.2m tonnes of carbon per year, by 2020.  The CRC is intended to incentivise organisations to reduce emissions by saving money through energy efficiency.

Organisations will be required to report their annual CO₂ emissions from stationary energy sources.  This will mainly be electricity and gas consumption but, depending on organisation, might also include other stationary fuel uses such as LPG and diesel.  Emissions relating to transport are not included.

Who will it impact?
Any organisation with an electricity consumption above 6,000 MWh/yr (approx. £500k spend) is likely to be included.  This could cover more than 4,500 organisations across the private and public sectors.

How will it work?
There are two parts to the scheme:

1. Cap and Trade: An emissions trading system under which organisations must purchase allowances to cover their annual energy greenhouse gas emissions (expected to be initially priced at £12/tonne of CO₂). 
2. League Table:  An annual league table will be published to highlight those organisations making positive progress to in the reduction of their emissions. The revenue accrued from the sale of allowances will be redistributed back to the CRC organisations based on their ranking in the league table – best performers will receive a bonus and worst performers a penalty. 

What will organisations have to do?

• Measure and track their organisation’s emissions.
• Report annually and maintain auditable information.
• Increase energy efficiency and undertake emission reduction activities.
• Forecast their organisation’s future emissions - to determine how many allowances need to be bought for the coming year.
• Purchase allowances from the Government auction each year, and be ready to trade carbon allowances through the secondary trading market if required.

When is it going to happen?
The scheme is expected to start in 2010. All organisations with half-hourly metering systems will be required to register or submit an exemption in 2010. This will entail providing information on their 2008 half-hourly electricity consumption.

How do organisations get ready?
The key is to start early and ensure that the tools and processes to collect the required data are in place with the necessary rigour to meet compliance requirements.

A proactive, well planned and informed approach to CRC will help an organisation to minimise the risk and maximise the business opportunities presented by CRC.

How can Greenstone help?
Greenstone’s Carbon Consultants will work with your organisation to understand the requirements of the CRC and undertake a high level assessment to see if your organisation will need to register with the scheme administrators (The Environment Agency), calculate a baseline measurement using our Acco₂unt solution and develop an ongoing CRC strategy.

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