Government launches consultation and guide on Carbon Reduction Commitment

All businesses and organisations with energy bills in excess of £500,00 a year are going to be affected by the CRC that launches in April 2010 and for the first time will require businesses, such as hotel groups, retailers and telecoms companies, to purchase annual carbon allowances upfront each year.

The Department of Energy and Climate Change (DECC), which has published the guide and is leading the consultation on the CRC, is hoping to coax businesses to act now to start reducing their carbon emissions, saying the cap and trade scheme could help business save a total of £1 billion by 2020, whilst also helping them play their part in the fight against climate change. The scheme is expected to mobilise 5,000 organisations to save over four million tonnes of CO2 a year – equivalent to taking a million cars off the road.

“Cutting back on energy use and becoming more energy efficient makes economic sense for firms at the best of times, but it’s even more important now given the difficult business environment,” said Energy and Climate Change Minister, Joan Ruddock. “By taking measures to improve energy efficiency, businesses can slash their energy costs.”  

DECC’s new step-by-step CRC guide establishes which companies and organisations are covered by the scheme and guides those affected through what they need to do to take part in the scheme.
 
The CRC consultation will focus on the regulations that will form the basis of the initiative and invites participating organisations to register with the Environment Agency who will administer the scheme.

The Government says it is already providing advice and financial incentives to help businesses improve their energy efficiency through the Carbon Trust and Climate Change Agreements, voluntary agreements to reduce CO2 emissions across sector, ranging from steel to chemicals, aerospace to brewing.
 
The CRC will require organisations to purchase their annual carbon allowance upfront each April. If, at the end of the year, carbon emissions have been reduced, it will be possible to carry over excess allowances to the following year or sell them on; if, on the other hand, emissions exceed the allowances purchased, more will have to be bought from the secondary market, probably at an elevated price.

The revenue raised from the scheme will be recycled back to participants on the basis of a league table – so that those who are making most improvements in energy efficiency will be financially rewarded, and will receive recognition for their achievements.
 
The new CRC User Guide can be found at  www.defra.gov.uk/carbonreduction. 

To take part in the Carbon Reduction Commitment consultation, interest parties need to go to http://decc.gov.uk/en/content/cms/consultations/open/open.aspx.