Industry News

• The Carbon Reduction Commitment: Third Consultation Issued

  30 Apr 2009

  The Department of Energy and Climate Change (DECC) has issued its third public consultation on the forthcoming Carbon Reduction Commitment (CRC). The consultation – which will remain open until 4th June 2009 – will enable selected organisations to comment on the Draft Order, which forms the statutory basis of the scheme.
  
  The first two CRC consultations and subsequent responses resulted in the government’s commitment to develop the scheme in summer 2007 and, in March 2008, to establish the way in which the CRC would work. The third consultation, meanwhile, is seeking views on the specifications of the Draft Order and, in particular, whether there are any ‘unintended consequences’ and ‘outstanding policy issues’ which have yet to be addressed by the preliminary legislation. Reactions to the consultation will be examined in depth after the closing date. After that, a response to the consultation will be published and an updated version of the order issued for debate in Parliament.
  
  The consultation has been published alongside a comprehensive draft user guide outlining details of the CRC. The guide sets out the ‘practical steps’ which will need to be undertaken by an individual organisation in order to comply with the scheme. The guide also clarifies number of previously undisclosed elements of the CRC, including:
  
  

  Registration and administration fees: All participants in the CRC will be required to pay a registration fee at the beginning of the scheme, as well as subsequent annual administration charges. A single set of charges will apply throughout the UK, with indicative charges as follows:

  • Registration fee: £950
  • Account set-up fee: £285
  • Annual administration fee: £1,300
  • Annual account maintenance fee: £390

  Fixed financial penalties: Organisations eligible for the CRC which fail to register by the end of the registration period will be faced with a fixed fine of £5,000. An additional penalty will then be enforced of £500 for each subsequent working day where an organisation fails to register. The Draft Order also specifies that further financial penalties will be implemented for failure to provide a Footprint Report at the end of the Footprint Year (2010 – 2011), failure to submit subsequent annual reports, failure to ‘keep adequate records’ and for incorrect reporting of emissions or energy consumption.
  
  

  Transport exemptions: Organisations which use a large majority of their electricity for transport purposes may be exempt from the CRC, even if their total consumption during the qualification period is over 6,000 MWh.
  
  

  To qualify for the transport exemption, an organisation must:

  • Add together the electricity consumed from all half-hourly meters which it is responsible for.
  • Subtract from that the amount of electricity used for transport.

  If the resulting half-hourly electricity consumption across the organisation is less than 1,000 MWh during the qualification period, then the entire organisation will be exempt from the CRC for the duration of the phase.
  
  

  Qualification packs: The CRC qualification pack will now be issued in September 2009 – not, as previously stated, in July 2009. Individual qualification packs will be sent to all billing addresses with half-hourly meters, which is not necessarily an organisation’s head office address.
  
  

  Mandatory inclusion of central Government departments: All central Government departments are to be included in the CRC, regardless of whether they meet the qualification threshold or not.
  
  

  Further information about the Carbon Reduction Commitment can be found at www.defra.gov.uk and www.decc.gov.uk. Organisations which are likely to be included in the CRC are advised to sign up to the CRC mailing list at www.defra.gov.uk/carbonreduction. UPL is currently working with several of the UK’s larger organisations which already know they are going to be captured by the CRC.