Are you ready for the Carbon Reduction Commitment (CRC)?

Who will be caught by the scheme?

Any organisation which is a counter signatory to an electricity bill and:

• purchases their electricity through half hourly meters (HHM); and
• between 1st January 2008 and 31st December 2008 (the ‘qualification period’) used more than 6,000 MWh per annum (full participation in the scheme); or
  
• used between 1,000 and 6,000 MWh (partial participation in the scheme); or
• less that 1,000 MWh (an information disclosure)

Once an organisation has qualified for inclusion in CRC, it will be covered for all its energy use emissions from all sources except transport.

Exemptions

There are a limited number of exemptions from the scheme and they relate to organisations that are already participating in other emissions trading schemes such as Climate Change Agreements and the EU Emissions Trading System.

Registration

During the period 1 April 2010 to 30 September 2010 all qualifying organisations must:

• register via the online CRC registry and provide all required information;
• pay a registration fee together with an annual fee for administration of their account;

Failure to do so will result in a £5,000 fixed fine and a further fine of £500 for each subsequent working day it fails to register.

What will happen in practice?

The CRC begins with a three year introductory phase from April 2010 to April 2013. Each participant in the CRC will have a set amount of allowances allocated to it (the “cap”) and will then depending on its emissions have to either purchase further allowances or be able to sell excess allowances to other participants (“trade”).
Organisations that meet the criteria to participate will:

• be obliged to monitor emissions from energy use;
• report these emissions annually and purchase and surrender a corresponding number of carbon emission allowances on a cap and trade basis;
• have their performance published in the form of a league table available publicly;
• be subject to a number of different fines and penalties for failure to provide information, failure to update the information and/or failure to buy sufficient allowances; and
• be entitled to a bonus payment dependent on ranking in the league table.

What should organisations be doing now?

Organisations should be:

• reviewing their existing contractual arrangements across all sites to ascertain who is the counter signatory to the electricity bills;
• collating all relevant information;
• establishing who has ownership of the process, reporting responsibilities, audit requirements and the authorisation to purchase allowances or implement efficiencies
• training and disseminating information to staff;
• obtaining the support at managerial level and from their financial department to implement the CRC; and
• ensure there is allocation in the relevant budgets to meet the cost of buying allowances and/or energy saving and carbon reduction initiatives.