CRC Energy Saving Scheme (CRC)
Mandatory in UK from April 2010
The CRC Energy Saving Scheme (previously known as the Carbon Reduction Commitment is a UK-wide scheme to encourage organisations to reduce their carbon emissions. It starts in April 2010.
The regulations to implement the CRC are being revised by the Department of Energy and Climate Change (DECC) following a consultation that closed on 4 June.
Who will the carbon reduction commitment affect?
The CRC will mainly affect large private and public sector organisations. An organisation can be made up of many businesses.
You are likely to be covered by the CRC if your organisation’s electricity is metered by at least one half hour meter (HHM) and you buy on the half hour market. Your electricity supplier can tell you if you buy electricity on the half hour market.
If your organisation’s half hourly metered electricity use was above 6,000 megawatt-hours (MWh) in 2008 you will have to participate fully in the CRC. If your half hourly metered electricity use was below 6,000MWh in 2008 you will have to make an ‘information disclosure’ of your electricity consumption to the CRC registry.
Landlords and tenants will need to co-operate together to work out their combined footprints. How Landlords recover CRC charges from tenants or share gained allowances with them are not part of the scheme except landlords are not under any obligation to pass savings onto tenants and tenants are not obliged to save energy. The CRC should therefore encourage more positive dialogue between landlords and tenants.
A useful document has been produced by the Green Property Alliance which sets out some clear guidance on tenant and landlord issues. For a free PDF copy please email info@paschali.co.uk
State-funded schools in England, Scotland and Wales will be covered by the CRC. However, they will be included as part of their local authority, not as individual organisations.
What will you have to do?
If the CRC applies to you, you will have to trade carbon allowances and cut carbon emissions. The CRC will cover both electricity use and direct emissions from energy use, including gas and fuel oil.
There will be no overlap with existing schemes. The CRC will not cover:
- emissions that climate change agreements (CCAs) already cover
- direct emissions that are included in the European Union emissions trading scheme (EU ETS)
- organisations that have more than 25% of their energy use emissions in CCAs.
Before the scheme starts
If your electricity supply comes through half-hourly meters, or 70kVA meters in Northern Ireland, and you exceed the 6,000MWh limit, you will have to comply with the CRC.
In June to July 2009 the Environment Agency should have written to all UK billing addresses with half hourly meters. The Environment Agency is the Scheme Administrator for the whole of the UK.
If you receive a letter you will need to take action under the CRC. It is important that the letter reaches the right person in your organisation. The letters will be sent to billing addresses, not head offices. Therefore you should ask on-site staff to pass on this information as necessary. The letter will provide details of your half-hourly meters, and explain what you need to do next.
You will need to provide evidence to the Scheme Administrator of your electricity consumption from 1 January 2008 to 31 December 2008. If you do not have records of your electricity consumption, your electricity supplier will be able to help you get this information.
When the scheme starts
If your business falls within the CRC, you will have to:
register online
measure and record your business’ energy use (ie electricity, gas, fuel oil, coal, liquefied petroleum gas etc)
calculate your carbon dioxide (CO2) emissions annually (excluding transport emissions)
provide annual energy data to the Scheme Administrator, via an online registry
buy allowances, corresponding to your emissions from energy use
submit an annual report on your emissions to your environmental regulator, ie the Environment Agency in England and Wales, the Northern Ireland Environment Agency (NIEA) and SEPA in Scotland
surrender allowances equivalent to your emissions to the Scheme Administrator at the end of the year
trade allowances with other businesses if you have bought too many or too few allowances.
The Scheme Administrator will produce a performance league table each year. The money raised from the sale of allowances will be redistributed when you surrender your allowances at the end of the year. Each organisation will receive a different amount than they originally paid for their allowances, according to their performance during the year. There will be a three-year introductory phase from April 2010, with fixed price sales of allowances. The first sale of allowances will be in April 2011, with a fixed price of £12/tCO2. You will be able to buy allowances from this time every year. From April 2013, there will be a sale of allowances each year via an auction. The government will limit (cap) the total number of allowances available each year to ensure that overall emissions fall.
Further information on the carbon reduction commitment