The Carbon Reduction Commitment (CRC) in a nutshell

As defined by the Environment Agency (EA, 2009), the Carbon Reduction Commitment is a new mandatory trading scheme commencing in April 2010. It targets large public and private sector organisations and is intended to help the UK reduce its greenhouse gas emissions by 2050 by at least 80% compared to the 1990 baseline.

The scheme, first announced in the 2007 Energy White Paper, will directly affect approximately 5,000 UK firms who are required to participate fully in it. About 15,000 additional UK companies will be subject to partial participation in the form of Information Disclosures to the Environment Agency by summer 2010.
 

How does the CRC work?

The CRC Scheme will come into effect on April 2010. During the initial introductory phase (from April 2010 to March 2013), companies will be required to purchase Carbon Allowances from the government to cover their emissions. The Carbon Allowance price during this phase will be fixed at £12 per ton of CO₂ and there will be no limit on the number of Allowances an organisation can buy.

In all subsequent phases however, there will be a cap on the total number of Carbon Allowances available for purchase by CRC Participants. The price and quantity of Allowances will be set using a bid submission and auction process.

As explained by the EA (2009), in each compliance year, CRC participants will need to complete the following steps:

•     "At the beginning and during each compliance year, purchase allowances based on expected energy use, taking into account energy efficiency efforts planned for that year (except in the first year of the scheme, when participants will be able to purchase allowances at the end of the year)."

•      "Monitor energy use during each scheme year and by the end of July, following the end of the scheme year, report CRC emissions to the administrator."

•      "By the end of July, surrender allowances equal to emissions during that year."

•      "Receive a revenue recycling payment from Government, based on relative performance in the scheme as published in a Performance League Table."

The goal of such a revenue recycling scheme is straightforward: If you are a CRC participant and you reduce your carbon emissions, you will be highly ranked in the performance league table, and you will therefore profit from the scheme.

On the other hand, if you are a CRC participant and you increase your carbon emissions, you will receive a low rank on the performance league table and you will therefore lose out.
 

Are you affected by the CRC Scheme?

Click here to see whether you are one of the organisations affected by the CRC.

How can we help you?

Click here for an overview of how EcoConsulting can help your organisation tackle the CRC.

"Carbon Reduction Commitment "

July 7^th, 2009

If you think your organisation might be captured by the CRC scheme, we encourage you to sign up to Defra mailing list.

You could also check the Department of Energy and Climate Change for the most recent updates.

Did you Know?

The Carbon Reduction Scheme will be broadly revenue neutral and all the money used to buy allowances will be recycled back to CRC participants depending on how well they perform in reducing emissions.