Will you be affected?
Around 5,000 organizations across the UK will have to take action in the coming months under the new Carbon Reduction Commitment (CRC) scheme. In a letter due shortly from the Environment Agency, organizations will be told that if they qualify, they will be required to report annual energy consumption and to buy and sell Carbon Credits equivalent to their annual carbon emissions. The Government is expected to implement an extensive audit program and a wide range of penalties for non-compliance. For example, a late submission of the footprint report will result in a fine of £5,000 plus £0.05 per day for each tonne of carbon in the CRC report.
Does my organization qualify?
Qualifying organizations will have an aggregated annual UK electricity demand of over 6 GWHrs and at least one half hourly electricity meter settled on the half hourly market during the 2008 qualification period. It can be assumed that you will fall within the scheme if your aggregated annual UK electricity bill is above £500K per annum. The scheme is based on the aggregated consumption of an organization’s UK businesses, i.e. the consumption of UK parent, sister and subsidiary companies must all be added together for the purposes of qualification, management and reporting. Some exemptions exist for those facilities which operate within the European Emissions Trading Scheme (EUETS) or the Climate Change Agreement (CCA).
Financial & reputational incentives
At the end of each year, the energy performance of all affected organizations will be published in national league tables ranked from best to worst. Performance will be based on reductions in annual energy consumption and progress in implementing management and technology measures.
Each year, money collected through the annual sale of carbon credits will be recycled back to scheme participants. The best performers will receive their money back, plus 10% to 50%, based on their position in the league table. The worst performers will not get all of their money back. The benefit to participants is estimated at around £1 billion by 2020 as a result of energy efficiency measures encouraged by the scheme.
Help with your carbon reduction program
The CRC scheme will be the world’s most complex and extensive carbon trading scheme ever implemented. For more information about the scheme or advice and support in designing or implementing your CRC energy and carbon reduction program please feel free to contact a member of our Energy & Environmental Sustainability team, led by Ernie Shelton.