m&e sustainability

The Carbon Reduction Commitment Energy Efficiency Scheme (CRC) is a new mandatory emissions trading scheme for medium non-energy intensive commercial and public sector organisations writes Megan Williams.

The CRC is due to start in April 2010 with the objective to help combat climate change by reducing carbon emissions, and is one of a package of measures to be introduced under the Climate Change Act. It aims to cover medium to large sized organisations such as manufacturers, hotels, banks, local authorities, supermarkets, larger chain shops and schools, and is designed to further shift awareness in organisations especially at senior level, and drive changes in behaviour and infrastructure.

There is a cut off limit for full compliance with the CRC, and it is estimated that around 20,000 organisations could partly be affected by the CRC through information disclosures. However 4000 organisations could be directly affected if their total half hourly electricity consumption exceeds 6,000MWh during the qualification period, leading to full participation in carbon credit purchasing. This could result in savings of more than four million tonnes of carbon dioxide per year, and as organisations will have to monitor their emissions it will also lead to improved understanding of both energy consumption and opportunities for energy reductions or efficiency. 

The Government also aims to publish annual performance league tables to judge how well all the organisations in the CRC scheme are doing (i.e. what advances have they made in energy efficiency measures). The higher up an organisation in the table the more financial ‘reward’ they are set to receive from the funds collected from all the organisations for purchasing carbon credits in the first place. On top of this are the reputational rewards of being higher in the league table.  Furthermore, the Government has responded to the last consultation, announcing that they will publish data to show the carbon savings from increased onsite renewable energy generation alongside the performance league table.  This could drive the microgeneration industry as well as energy efficiency measures forward. 

Implementation of the CRC scheme:

• The qualification period is calendar year 2008, where organisations find out if they must achieve part compliance through information disclosers or full compliance with CRC.

• The registration period is April – September 2010, where organisations must either submit their details with the administrator (the Environment Agency) for information discloser or register as a participant of the CRC scheme. 

• First compliance and footprint year, is April 2010-March 2011, CRC scheme begins: start of the monitoring period and start of the footprint year, which will be the baseline against which future performance will be measured.

• Second compliance year, is April 2011-March 2012, first sale of allowances. Organisations will be expected to buy allowances to cover their expected energy use for April 2011-March 2012.

There is a legal obligation to comply with CRC, and if organisations do not they will be subject to financial penalties, through the regulators which for England and Wales is the Environment Agency. If an organisation is partly involved and is required to submit an information discloser but fails to do so in the registration process there is a penalty fee of £1000. Failure to submit a carbon footprint within the time period will result in a fixed fine of £5000 and each day following subsequent failure will result in £0.05 p per tonne of CO2 used.

Allowances are set to be sold by Government at the beginning of each compliance year, at an initial fixed price of £12 per tonne of CO2. Following this initial sale, participating organisations can then buy and sell their allowances based on the more or less energy they actually end up using, creating a secondary market. 

There are rules on what emissions qualify under the CRC, i.e. there is not a cross over onto other policy measures. Exemptions are:

·         Transport emissions

·         Emissions covered by the EU ETS scheme (carbon trading)

·         Emissions covered by the Climate Change Agreements

·         Credits purchased through the RO scheme (Renewable Obligation)