Carbon Reduction Commitment

The Carbon Reduction Commitment (CRC) is an obligatory emissions trading scheme covering larger businesses and the public sector. According to the Government, the aim of the CRC is to provide a financial incentive on an organisation to reduce their carbon emissions. It will commence in April 2010.

All organisations whose annual half-hourly metered electricity use in the UK is above 6,000 mega watt hours per year will be covered. As a guide, this will include organisations spending more than £500,000 a year on electricity in the UK, although with energy costs dramatically rising this figure needs to be kept under constant review! Organisations include any UK-based parent company and the UK subsidiaries of those organisations.

From April 2010, any organisation included in the scheme will have to calculate all their energy use and surrender carbon allowances to cover the emissions that they generate. They will need to buy these allowances at a fixed price for the first three years and after that purchase them through an auction.

Proceeds from the sale and the auction will be returned to participants in proportion to their performance in reducing their emissions from their energy use. This will be determined by their position in a league table. The intention is that as well as a financial benefit there will reputation benefits from good performance in the league table which will be publicly available.

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For more information on this or other environmental law issues, email us at environmentinfo@bllaw.co.uk.