Carbon Reduction Commitment Energy Efficiency Scheme

Carbon Reduction Commitment (CRC) - another piece of environmental legislation to affect UK businesses.

What is the Carbon Reduction Commitment?

The Carbon Reduction Commitment (CRC) has been introduced as part of the UK’s commitment to reduce greenhouse gas emissions by 80% by 2050 from a baseline set at 1990. The CRC is a new mandatory emissions trading scheme for operations not currently covered by Climate Change Agreements (CCA’s) or European Emissions Trading Schemes (EU ETS). The scheme aims to improve energy efficiency and reduce the levels of carbon dioxide (CO2) emitted in the UK.

Who is affected by the Carbon Reduction Commitment?

There are an estimated 20,000 organisations affected by this latest scheme who as a minimum have to declare their annual emissions. Organisations are either affected individually or as a member of a parent group, with over 5,000 required to participate directly within the ‘cap and trade’ mechanism. The qualification criteria will determine if you are affected so even if you class your business as a ‘small’ energy user you may still be required to report your emissions.

How could the scheme affect your business?

If your organisation consumes more than 6 million kWh during the qualification period of 2008 you will be required to monitor, review and report your emissions. In addition by 2011 you will be required to purchase allowances sold by the Government for each tonne of CO2 emitted.

How do you register your business?

In May 2009 the Environment Agency (administers of the scheme) sent out information packs to the accounts/invoicing address of those businesses that fall within the criteria. Subsequently the qualification packs have been sent out and should have been passed to your Finance, Energy, or Operations Manager for completion.

Guidance on the scheme indicates that the UK parent company must register all subsidiary groups (even if only one half hour supply qualifies) and as such will need to collate information for each and every subsidiary. This requirement has recently been relaxed to allow ‘Significant Group Undertakings’ for larger subsidiaries to operate independently to their parent company.

Key Dates:

• April 2010- The Carbon Reduction Commitment scheme will be official. This date will be used as both the start of the first compliance year and the start of the 'Footprint Year'
• April - September 2010 - The official 'Registration Period'
• April 2011- The first sale of allowances will be in place and will cover the following year’s forecasted emissions
• July 2011- Deadline for organisations to submit their Footprint Report
• October 2011- The first Recycling Payment will be made with companies receiving their allowances, bonuses or penalty payments depending on their performance in the league table

Future CRC Guidance:

Although the implementation of CRC is now underway and much of the groundwork has been completed, there are still a number of areas where the requirements have still to be published. Specific guidance on the following topics will become available in early 2010:

• Information required and best practise for the submission of evidence packs
• Explanation and guidance for the ‘Footprint Reports’
• Explanation and guidance for the Annual Reports
• Recommended techniques for estimating fuel consumption
• How CRC and the Carbon Standard are linked
• Information on the CRC Registration Audits

How PROjEN can help:

PROjEN can help you understand the CRC and how it affects your business. We can also assist you in meeting the requirements of this legislation and formulate a robust and coherent action plan to ensure compliance, minimise the impact on your resources and avoid exposure to non-registration fines.