The Carbon Reduction Commitment was recently renamed the CRC Energy Efficiency Scheme & is a mandatory carbon emissions trading scheme to cover all organisations using more than 6,000MWh per year of electricity (equivalent to an annual electricity bill of about £500,000). All energy other than transport fuels will be covered, such as: Electricity Gas Fuel Oil It will cover all emissions not currently included in the EU Emissions Trading Scheme or Climate Change Agreements, from up to 5,000 large organisations.
What does it mean to my business? The UK is committed to a 20% reduction in CO2 emissions by 2020 compared to 1990 levels. The Carbon Reduction Commitment (CRC) has been designed to focus UK business on this goal through a new emissions trading scheme.
How does it work? Each year, the CRC will require participating organisations to purchase and submit sufficient allowances to meet their annual emissions covered by the scheme. The scheme will start with a reporting year from April 2010, with the first sales of allowances held in April 2011.
During the introductory phase, all carbon emission allowances will be sold at a fixed price of £12 per tonne of carbon dioxide. From April 2013, allowances will be auctioned by the government, with fewer available each year.
Revenues from the sale of allowances will be recycled back to organisations within the scheme. Each organisation will be repaid in proportion to their historic emissions with a bonus or penalty depending on the extent to which they have reduced their emissions compared with other organisations within the scheme. In the event of excessive allowance prices within the CRC, a "Safety Valve" mechanism allows EU Emissions Trading Scheme (ETS) allowances to be purchased via the Environment Agency for use in the scheme.
Background The sectors targeted by the Carbon Reduction Commitment scheme generate over 10% of UK Carbon Dioxide (CO2) emissions, around 55 MtCO2. The Carbon Reduction Commitment scheme aims to reduce carbon emissions from these organisations by at least 4 million tonnes of carbon dioxide per year, by 2020.