CRC Energy Efficiency Scheme

What is the CRC Energy Efficiency Scheme?

The CRC Energy Efficiency Scheme is central to the UK’s strategy for improving energy efficiency and reducing carbon dioxide (CO2) emissions, as set out in theClimate Change Act 2008. It has been designed to raise awareness in large organisations, especially at senior level, and encourage changes in behaviour and infrastructure.

The Carbon Reduction Commitment, recently renamed the CRC Energy Efficiency Scheme, is a mandatory carbon emissions trading scheme to cover all organisations using more than 6,000MWh per year of electricity; equivalent to an annual electricity bill of about £500,000.

Who does CRC affect?

The CRC will affect large, organisations in both the private and public sector ranging from retailers to leisure operators and public sector buildings such as council buildings, hospitals and schools.The scheme is compulsory and the onus is on participants to have to monitor their emissions and purchase allowances, sold by Government, for each tonne of CO2 they emit. Approximately 20,000 commercial and public sector organisations will be required to participate in CRC. Of this 20,000, 5,000 organisations will be required to take part fully, meaning that not only must they record and monitor their CO2 emissions, but also purchase allowances.

Purchasing Carbon Credits

During the introductory stage Carbon will be able to be purchased at £12 per tonne however a secondary market will develop. It has been suggested that at the threshold of 6,000MWh annual electricity consumption allowances would cost £38,000. The secondary market will allow companies that have a Carbon allowance surplus to sell units and those that require additional units to buy. Where total demand for allowances exceeds supply, the CRC administrator will have powers to purchase additional allowances from the EU Emissions Trading Scheme.