Carbon Reduction Commitment

The Department of Energy and Climate Change (DECC) has published a user guide on the Carbon Reduction Commitment.

The Carbon Reduction Commitment (CRC) is a mandatory emissions trading scheme covering large non-energy intensive businesses which will start in April 2010. Inclusion in the CRC will be measured on electricity consumption. If an organisation in Great Britain has at least one meter settled on the half-hourly market or in Northern Ireland, at least one 70 kilo Volt-Ampere, and it exceeds 6,000 MwH it will qualify for the scheme. In general, organisations including any parent company and its subsidiaries spending more than £500,000 a year in the UK on electricity is likely to be included in the CRC. Although companies that have half-hourly meters but use less than 6,000 MwH, will still be required to disclose information on their electricity consumption to rule out inclusion. Failure to do so will result in a fine of up to £1,000.

The CRC is likely to cover large business and public sector organisations including local authorities, retailers, water companies and logistic companies providing warehousing and cross docking services.

Companies covered by the CRC will be required to purchase carbon allowances equivalent to the level of carbon they expect to emit from fixed energy points including electricity, gas, gas oil, petroleum and heat. Transport emissions are not included. A carbon price will be initially set for allowances in 2010 and then allowances can be bought and sold by auction from 2013 in a cap and trade scheme.

In September 2009, the Environment Agency - who will administer the CRC - will contact all UK billing addresses with half-hourly meters providing them with registration packs. Organisations receiving one of these packs will need to provide information on total half-hourly electricity consumption together with a list of half-hourly meters. Failure to do so will result in a financial penalty.

To read the user guide, please click here