Carbon Zone

Carbon Reduction Commitment CRC

Energy efficiency scheme will save cash and carbon

Reducing energy use will save organisations a total of £1billion and more than 4MtCO2 each year by 2020

The final details of the Government’s scheme to save organisations money on fuel bills and to reduce carbon emissions have been unveiled today by the Department of Energy and Climate Change.

The Carbon Reduction Commitment Energy Efficiency Scheme is a new regulatory incentive to improve energy efficiency in large public and private sector organisations. Large energy users in business and the public sector will be required to take part in the scheme from 1st April 2010.

Following extensive consultation with businesses and trade bodies, DECC has made some improvements to the scheme:

  • To smooth the introduction of the scheme and to help ease the upfront costs, organisations will only have to report emissions in the first year (2010/11). In subsequent years organisations will have to buy allowances corresponding to their emissions from energy use, and then surrender them by the end of the year.
  • In the second year (2011/12) extra weighting will be given to organisations which take action early to improve energy efficiency.
  • Recognition will be given to organisations which use onsite renewable energy like wind turbines or solar panels by publishing the increased carbon savings from such measures.
  • Organisations will be given greater flexibility in how they participate. Subsidiaries who are large enough to qualify in own right (at least 6000MWh) may opt to do so separately from their organisational group.
  • Given the primary focus of the scheme is energy efficiency, the CRC will now be known as CRC Energy Efficiency Scheme. 

Energy and Climate Change Minister Joan Ruddock said:

“The UK is leading the way in tackling climate change and in the move to a low carbon economy. Organisations and the public sector must play a central role including all government departments, regardless of size.

“Large organisations have huge potential to achieve cost-effective energy efficiency savings. There are clear benefits from positive, immediate action to tackle climate change. Investment that takes place in the next few decades will have a profound effect on the climate in the second half of this century and in the next.

“The CRC Energy Efficiency Scheme will help organisations to become more energy efficient, to save significant sums of money on fuel bills, and to show customers, clients and competitors that their organisation is a leader in tackling climate change.”

The CRC will help to ensure that large organisations play their full role in contributing to our emissions reductions of at least 34% on 1990 levels by 2020 through improved energy efficiency.

The scheme is mandatory and will save participants around £1billion per year by 2020 through cost effective energy efficiency measures that are not yet being taken up.

By 2020 the scheme is expected to have delivered emissions savings of at least 4.4 Mt CO2 per year.

The scheme will target organisations whose annual half hourly metered (HHM) electricity use is at least 6,000 Megawatt hours (MWh) will qualify for the scheme – typically those that spend £0.5 million a year on electricity. The Environment Agency will publish the qualification and registration guidance for potential CRC participants by November.

The basic timeline for CRC remains;

First phase – The three year ‘Introductory Phase’ starts in April 2010. An unlimited number of allowances will be available at a fixed price of £12/tCO2. From the second compliance year onwards, participants will annually have to purchase allowances, monitor energy use, report emissions and surrender allowances. Participants will also receive a revenue recycling payment each year.

Phase 2 –From 2013 Government will cap the number of allowances available each year and all allowances will be auctioned. The cap will be set taking into account advice from the Committee on Climate Change which they will provide in 2010.


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