RSP Consulting Engineers

The Carbon Reduction Commitment (CRC) is a mandatory carbon emissions trading scheme that will be introduced in April 2010. It designed to cover large business and public sector organisations with at least one half hourly electricity meter and consuming more than 6000MWh of annual half hourly metered electricity in the base year (2008/09).

In general organisations that spend more than £500,000 per year in the UK on electricity will be included. It is anticipated that the scheme will affect more than 5000 companies in the UK including government departments, retailers, banks and local authorities. The CRC only covers emissions outside the EU Energy Trading Scheme (ETS) and Climate Change Agreement (CCA’s).
 
Electricity consumption in year 2008/09 will be used to determine involvement in the CRC scheme however the first full CRC emissions period will run from April 2010 until March 2011. Organisations affected will be contacted at the end of 2009 and required to register in the scheme at the start of 2010. Allowances for carbon emissions in 2010 will be free.  Allowances for 2011 will be purchased in April 2011 but from 2011 onwards allowances will be purchased in advance.

All companies included will be required to report all their UK-based CO2 emissions from all their fixed point energy sources on an annual basis. This includes electricity, gas and other fuel types such as LPG and diesel but excludes transport emissions.

The energy consumption figures provided will be used to construct a league table of participating organisations. All organisations included in the scheme will be rated against one another in league tables of different business types and will receive bonuses or penalties depending on where they appear in the league table. These will be limited to +/- 10% in the first year rising to +/- 50% in year 5.

The three elements that will be used to position participants in the table are:

• An organisations percentage change in emissions from the previous 5 year average
• Participants recognised for early actions (phase 1 only)
• Evidence of becoming more carbon efficient, for example achieving a higher turnover but no increase in emissions.

To qualify for early action a business must have taken the action prior to March 2011. This can be accreditation with the Carbon Trust standard or installation of (AMR) Automatic Meter Reading Equipment.

The above points will be weighted 60:20:20. In the early stages of the CRC there will not be enough data to quantify emissions reductions so more weight will be given to ‘early actions’. In the first year, 2010/11, league table position and redistribution payment are based solely on the Early Action metric.

From 2010 onwards participating organisations will need to ensure that their annual usage falls within the carbon usage allowance purchased. During Phase 1 of the scheme, 2010 until 2013, the carbon allowances will be sold at a fixed rate of £12/t CO2. In phase 2 of the scheme, from 2013, there will be a government imposed cap on the number of allowances and all allowances will be sold via auction.

This scheme is the first of its kind in the world. The initial target for the CRC was to deliver 4.5 MtCO2 reductions however the committee on climate change has been asked to recommend the actual cap and is likely to set a more demanding level.

The monitoring and reporting process will be self-certification with a standard annual report form sent to a central registry. This will be signed by the director of the organisation The information required will be in three categories:

• Structural records; information on the organisations structure, individuals responsible for data collection, details on each energy source and type and meter information

• Data records; HH and AMR readings, manual readings, liquid/solid fuel consumption annual turnover or revenue expenditure

• Special event records; any events that may influence the accuracy of the audit trail such as a change of energy supplier, meter breakdown etc.

On-site electricity and heat generation can be netted off consumption (if it has been metered) however off-site renewable generation can only be taken off consumption figures if ROC’s (Renewable Obligation Certificates) have not been claimed. If ROC’s have been claimed off-site electricity is treated as if it were from the grid. Green tariffs are not taken into account in this scheme as the purpose of the CRC is to encourage organisations to take action on their owns sites and allowing ROC’s to be treated as carbon free would be double counting as energy suppliers already count these as zero carbon.