CARBON REDUCTION COMMITMENT

Tessa Bowering

Senior Environment Officer

What is the Carbon Reduction Commitment Scheme?

New statutory CO2 emissions trading scheme for the UKStarts in April 2010 and introduces new legal duties on any organisation supplied by an electricity meter settled on the half hourly marketScheme designed to help public and private organisations improve energy efficiency, save money and reduce the amount of CO2 emitted in the UKParticipation in CRC helps the UK achieve its overall targets of reducing greenhouse gas emissions by at least 80% by 2050

CRC

CRC targets large public and private sector organisations such as retail chains, universities, supermarkets, banks and central government

If your organisation meets the CRC qualification criteria you are obliged to participate in CRC.

Anyone participating in this scheme must monitor energy use and report on their equivalent CO2 emissions and then purchase allowances, sold by Government, to cover these emissions each year.

CRC

Each year organisations affected will have to surrender allowances covering the total tonnage of CO2 they emitted over the previous financial year

One allowance covers one tonne of CO2

CRC - allowances

Organisations will buy most of their allowances from the government in advance of producing emissionsInitially they will cost £12/tonne but from 2013 they will be sold through auctionFor the largest organisations this cost will run into tens of millions of pounds per year.6 months after buying their allowances this money will be given back but with a bonus added or penalty deducted depending on how much energy they saved in the previous financial year

CRC

A league table will be published each year to rank participating organisations by performance

An organisation’s league table position, and its bonus or penalty, will depend mainly on how much it cuts its emissions by compared with others, with adjustments for changes in turnover and , initially, for some kinds of early energy-saving actions

CRC

In April 2013 the CRC will become a fully fledged cap-and-trade scheme

The total quantity of CRC allowances sold to participating organisations will be ‘capped’ at a maximum which falls from year to year

The size of the cap and the rate of decline have yet to be decided but will reflect the UK’s new carbon budgets

CRC

Under the trading scheme, an organisation finding itself with insufficient allowances to cover its emissions will have to buy extra ones from CRC organisations that have surplus allowances

CRC – Who is affected?

The CRC will affect organisations who consumed at least 6,000 megawatt hours of electricity through half-hourly electricity meters during calendar year 2008Every organisation that had at least one such meter in 2008 is legally obliged to make an ‘information disclosure’ by the end of September 2010Failure to comply could mean a £1,000 fixed penaltyOrganisations have to provide the EA with a list of their half hourly meters. If they use more than 3,000 MWh through these meters they must disclose how much.

CRC

Organisations over the 6,000 MWh threshold must register for full CRC participation by the end of September 2010Firms that use most of the electricity they buy for transport may be exemptCRC organisations must work out their annual CO2 emissions based on non-transport use of electricity, gas and other fossil fuels for April 2010 to March 2011.Gas and electricity suppliers are now legally obliged to provide data for all meters within specified time periods

CRC

Organisations covered by CRC must compile and update an evidence pack detailing their energy use

They also need to produce annual reports declaring their April to March emissions covered by the CRC

The first is due by the end of July 2011

CRC

The first sale of allowances takes place in April 2011 by which time organisations should know how many they need to buy

Organisations must buy allowances covering their emissions for the 2010/2011 financial year and anticipated emissions for 2011/2012.

This is the only time there will be a double ‘forwards and backwards’ sale

CRC

In subsequent years organisations will buy allowances in advance of their emissions

They will have to report their annual emissions by the last working day in July , 4 months after the end of the compliance year

The deadline also applies to the surrendering of allowances needed to cover their emissions

Further Information

www.environment-agency.gov.uk

www.defra.gov.uk

www.endsreport.com

Thank YouTessa.bowering@environment-agency.gov.uk