The CRC Energy Efficiency Scheme (CRC), formerly the carbon reduction commitment, is a mandatory scheme designed to promote energy efficiency and reduce carbon emissions in the UK. It starts in April 2010.
The scheme will be enforced by your environmental regulator: the Environment Agency in England and Wales, the Department of the Environment in Northern Ireland and SEPA in Scotland.
The Environment Agency is responsible for managing an online registry for the scheme and administering the sale of carbon allowances for the whole of the UK.
Who will the CRC Energy Efficiency Scheme affect?
The CRC will affect mainly large private and public sector organisations.
The CRC targets emissions not already covered by Climate Change Agreements (CCAs) or the EU Emissions Trading System (EU ETS).
You are likely to be covered by the CRC if your organisation’s electricity is metered by at least one half hourly meter (HHM) and you buy on the half hourly market. Your electricity supplier can tell you if you buy electricity on the half hourly market.
The main criteria for an organisation to have to participate in the CRC is if its total supply of half hourly metered electricity in 2008 was at least 6,000 megawatt-hours (MWh).
If your half hourly metered electricity supply was below 6,000MWh in 2008 you will have to make an ‘information disclosure’ about your electricity supplies.
Sole traders and individuals, who are considered to be small emitters, are excluded from the CRC.
Is your business exempt from the CRC Energy Efficiency Scheme?
There will be no overlap with existing schemes. If, for example, your emissions are covered by a climate change agreement (CCA) you may claim exemption from the CRC. You will still need to register with the CRC and then apply for an exemption.
CRC Energy Efficiency Scheme: Climate Change Agreement exemptions
Guidance on the CRC Energy Efficiency Scheme
The government has published the CRC Energy Efficiency Scheme Order 2010 which will come into force on 1 April 2010.
CRC Energy Efficiency Scheme Order 2010
See the CRC Energy Efficiency Scheme guidance on the Environment Agency website.
Environment Agency: CRC guidance
You are responsible for checking if the scheme applies to you. Stay informed about the CRC by signing up to the Environment Agency mailing list. Email: CRChelp@environment-agency.gov.uk.
To get updates on this and other upcoming legislation you can also sign up to NetRegs Updates.
What will you have to do?
Before the CRC starts you will need to assess your electricity use from 1 January 2008 to 31 December 2008. If you do not have records of your electricity supplies, your electricity supplier will be able to help you get this information.
It is your responsibility to check if the CRC applies to you.
If you need to participate fully
If your electricity supply is through half hourly meters and you exceed the 6,000MWh threshold, you will have to comply with the CRC.
You will have to monitor emissions from your energy supplies, report these emissions annually, and buy and surrender allowances that correspond to your emissions. The more carbon dioxide you emit or the more energy you use, the more allowances you will have to buy. This is an incentive for you to lower your energy use. The CRC will cover both electricity use and direct emissions from energy use, including gas and fuel oil.
The Environment Agency is writing to all UK organisations they believe have an obligation under the CRC.
If you receive a letter from the Environment Agency you will need to take action. It is important that the letter reaches the right person in your organisation. The letters will be sent to billing addresses, not head offices. so you may need to ask on-site staff to pass on this information. The letter will provide details of your half hourly meters, and explain what you need to do next.
If you have not received a letter but think you should have you can email CRChelp@environment-agency.gov.uk.
When the CRC Energy Efficiency Scheme starts
You will have to:
- register as a participant in the scheme
- pay the registration fee of £950 - in subsequent years there will be an annual subsistence fee
- measure and record your business’ energy use (ie electricity, gas, fuel oil, coal, liquefied petroleum gas etc) and calculate your carbon dioxide (CO2) emissions annually
- buy allowances corresponding to your emissions from energy use, surrender allowances equivalent to your energy use at the end of the year, and trade allowances with other businesses if you have bought too many or too few allowances
- submit an annual report on your emissions
- submit a footprint report online
- surrender allowances equivalent to your emissions.
If the CRC applies to you fully, and you fail to register between 1 April 2010 and 30 September 2010, you can be fined £5,000 plus a further £500 for each working day you do not register after 30 September 2010.
The Environment Agency will produce a performance league table each year. The better you have performed, the higher you will be listed in the league table. The money raised from the sale of allowances will be recycled back to participants. The size of the repayment will depend on your performance in the scheme.
There will be a three-year introductory phase from April 2010. During 2010/11 you will not need to buy allowances but you will still need to report your emissions. In subsequent years you will need to buy allowances for the year ahead. The first sale of allowances will be in April 2011, with a fixed price of £12/tCO2.
From April 2013, there will be a sale of allowances each year via an auction. The government will cap the total number of allowances available each year to ensure that overall emissions fall.
Making an information disclosure
To make an information disclosure you will have to provide details of your energy use using the online registry between 1 April 2010 and 30 September 2010.
To do this you need to:
- make a list of the meter numbers from your half hourly meters
- add together the electricity supplies from all the half hourly meters you have for the period 1 January 2008 to 31 December 2008
- make sure you did not receive supplies of more than 6,000 MWh through half hourly meters during that period
- use the online CRC registry to submit your information disclosure.
If you are required to make an information disclosure but fail to do so between 1 April 2010 and 30 September 2010 you can be fined £500 for each settled half hourly meter you did not disclose.
Further information on the CRC Energy Efficiency Scheme
CRC Energy Efficiency Scheme Order 2010
The CRC User Guide
DECC: CRC Energy Efficiency Scheme
Environment Agency: CRC Energy Efficiency Scheme - what’s new
Environment Agency: CRC Short guidance notes
Northern Ireland Environment Agency (NIEA): CRC Energy efficiency scheme
SEPA: Carbon reduction
Other relevant NetRegs guidance
Climate change
