Are you affected?

CBI warns many businesses are unaware of CRC scheme

Following the launch of the Government’s Carbon Reduction Commitment (CRC) consultation, the CBI warned that many businesses will be unaware and unprepared for the scheme and called on the government to do more to prepare industry for the "shock" of green regulation.  With only one-third of the affected organisations registered three months after the beginning of the scheme in April 2010, it seems these fears may be realised. 

The Carbon Reduction Commitment is designed to tackle CO2 emissions not already covered by Climate Change Agreements and the EU Emissions Trading System. It aims to help reduce the country’s carbon footprint to deliver the ambitious emissions reduction targets set in the Government’s Climate Change Act. It is a domestic cap-and-trade scheme for public and private sector organisations that use more that 6,000MWH of energy per year – equivalent to an energy bill of about £500k – and have half hourly metering. although only around 2,000 organisations will be required to participat in the purchase of carbon allowances, a much greater number will be required to register because they have half-hourly meters installed, even though they don't exceed the energy consumption threshhold. Fines apply to all organisations that don't register.

Under the scheme, companies must purchase allowances depending on how much carbon they intend to emit – initially at a fixed price predicted to be £12 per tonne. Eventually the total number of allowances available to purchase will be capped, to provide a mechanism to drive down energy consumption, and the carbon price will float. Savings of £1bn in energy costs by 2020 are projected for the participants, but those who don’t curb their emissions will be hit by penalties including monetary fines and a poor ranking in the scheme’s league table. Those who top the league tables will receive financial incentives.

The Carbon Reduction Commitment will be phased in between 2010 and 2013 and although capping will not apply until allowance auctioning starts in 2013 it is widely accepted that adapting early to the legislation offers both financial and reputation benefits. A user guide has been published for those organisations who want to learn more.