Carbon Reduction Commitment

The Carbon Reduction Commitment (CRC) is a mandatory emissions trading scheme which aims to improve energy efficiency and reduce the amount of CO₂ emitted in the UK. The legally-binding CRC – which forms part of a wider European initiative to cut carbon emissions – was initiated in the 2007 Energy White Paper. The scheme is administered by the Environment Agency.

The CRC affects large organisations in both the public and private sectors. Participants will need to monitor their emissions and purchase allowances, sold by the government, for each tonne of CO₂ they emit. The more CO₂ an organisation emits, the more allowances it has to purchase – so there is a direct incentive for organisations to reduce their carbon emissions. As well as lowering emissions, the CRC will help organisations save money by improving energy efficiency and decreasing energy bills. The better an organisation performs in terms of reducing its emissions, the higher it will appear in the annual performance league table, which will be published by the government. The league table will show the comparative performance of all participants, which in turn provides a further benefit: all the revenue raised from selling allowances is ‘recycled’ back to participants, with league table positioning affecting how much of the revenue each organisation receives.

Qualification for the CRC is based on half-hourly electricity consumption during the qualification period. For the introductory phase, this was the 2008 calendar year. An organisation qualifies as a full participant in the CRC if, during the qualification period, it had at least one half-hourly meter settled on the half-hourly market, and its annual electricity consumption through all half-hourly meters was at least 6,000 MWh. As a general rule, the CRC will only affect organisations (including any parent company or subsidiaries) which consume in excess of £500,000 worth of electricity a year in the UK via half-hourly meters. Organisations which have at least one half-hourly meter settled on the half-hourly market, but whose annual energy consumption is less than 6,000 MWh, do not have to participate fully in the CRC. However, these organisations do have to make an information disclosure which notifies the administrator of their electricity consumption.

How can you benefit from the CRC?

The best way to benefit from participation in the CRC is to deliver reductions in CO₂ emissions. By acting early, implementing energy efficiency measures and minimising carbon emissions, an organisation has the best chance of capitalising on the significant financial and reputational benefits.

UPL can help you meet your CRC obligations by:

• Evaluating whether you will be affected by the CRC
• Developing a CRC compliance strategy appropriate to your organisation
• Calculating your carbon footprint
• Assessing compliance costs
• Helping you to achieve the early action measures necessary for optimum league table performance – including installation of smart metering, achieving the Carbon Trust Standard and producing an ongoing energy management plan.