DECC makes final CRC changes

Posted on 7 Oct 2009 by The Manufacturer

The Department of Energy and Climate Change (DECC) says UK organisations will collectively save £1bn by 2020 through the Carbon Reduction Commitment – the soon to be mandatory efficiency programme for large energy using businesses and public bodies.

The CRC becomes obligatory for the highest energy users – those that spend roughly half a million pounds on energy per year – on April Fools’ Day 2010. Organisations bound by the scheme will have to purchase carbon emission credits costing £12 per tonne of CO2. In the first three years companies can buy as many credits as they like but from 2013 the number will be capped, based on monitored performance. At this point the price per tonne will also be removed and credits will be sold by auction. The money companies put into the scheme will be fed back into them through fund recycling, however there will be scope to lose or earn slightly based on organisation’s position in an emission performance league table.

Releasing the final details of the scheme, DECC also said organisations can collectively expect to save four million tonnes of CO2 as well as the cash.

The amendments announced today are:

  • 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.

“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,” said Energy and Climate Change Minister Joan Ruddock.

She said the CRC will be a key elelement in helping the UK achieve its target of reducing overall emissions by at least 34% on 1990 levels by 2020.

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