CRC – What You Need to Know
The Carbon Reduction Commitment is a compulsory emissions trading scheme introduced by the Government in April 2010. The scheme is aimed at large business and public sector organisations such as; government departments, retailers, banks, universities, hotel chains, water companies and local authorities.
Based on the ‘Polluter Pays Principle’, CRC covers organisations whose annual half-hourly metered (HHM) electricity import/use is above 6,000 MWh (or in Northern Ireland organisations whose metered usage is above 70kVA).
Participants are required to purchase allowances corresponding to their emissions and the revenues from the allowance sales will be used to support the public finances, including spending on the environment.
- CRC Timetable
- Who Must Comply with the CRC?
- What is Covered by the CRC?
- How do we Comply with the CRC?
- What Emissions Will You Have to Report on?
- CRC Management Packages
2008 – Qualification Year
Organisations with half hourly meters had to calculate their electricity use for the 2008 calendar year based on information provided by their suppliers. If their electricity consumption through these meters was greater than 6,000 MWh per annum, the organisations were covered by CRC.
2009 – Consultation on Draft CRC Regulations
The Climate Change Act contained enabling powers to introduce new trading schemes, including CRC. The Government issued a detailed consultation on the CRC draft regulations in February 2009.
Identification of CRC Participants
In Summer 2009, the Environment Agency, who administer the CRC, contacted all UK billing addresses with half hourly meters providing them with Registration Packs. In 2010, all organisations with an HHM had to provide information on their total electricity consumption for 2008 together with a list of their half-hourly meters, assisted by their electricity supplier.
2010 – CRC Registration
Those participants identified as being part of the CRC scheme were required to register by the 30th September 2010.
2011 – First Reporting Year
Participants were required to document energy consumptions for the 2010/2011 financial year.
2012 – First Compliance Year
Allowances for the year 2011/12 were sold to participants at a fixed price of £12/tCO2.
2014 – Second phase began
Participants within the scheme continued into the second phase and organisations that did not qualify in the first phase had to determine if they met the qualification criteria.
Who Must Comply with the CRC?
CRC covers organisations whose annual half-hourly metered electricity import/use is above 6,000 MWh (or in Northern Ireland organisations whose metered usage above 70kVA).
In general, organisations spending more than £500,000 a year in the UK on electricity are likely to be included in the scheme. The scheme targets the UK energy use emissions of the highest parent organisation, including any subsidiaries of that organisation.
What is Covered by the CRC?
The CRC covers energy use emissions outside the European Union Emissions Trading Scheme (EU ETS) and Climate Change Agreements (CCAs) including both ‘direct’ and ‘indirect’ emissions.
What Emissions Will You Have to Report on?
On an annual basis, organisations will be required to report all their UK-based CO2 emissions from all their fixed point energy sources. This includes only electricity and gas and organisations will not be required to report on their transport emissions or emissions from the onward transmission of energy.
Organisations that import renewable/green electricity via the grid will still have to report within CRC at the grid emission factor; irrespective of whether Renewables Obligation Certificates (ROCs) are claimed.
How do we Comply with the Carbon Reduction Commitment?
The scheme started in April 2010. For administrative purposes, the scheme is divided into set time periods known as phases.
The first phase was the Introductory Phase and ran for four years.
Each subsequent phase will last for six years; this includes a preparatory year which will overlap with the previous phase. Each phase is comprised of a number of consecutive compliance years which run from April to March.
Prior to the start of each phase there is:
- A qualification period in which organisations must determine whether they meet the qualification criteria for disclosure to the administrator.
- A registration period in which organisations must register as a participant in the scheme or submit an information disclosure.
- A footprint year in which participants must calculate their emissions under the CRC Scheme.
Each compliance year consists of two stages:
- Participants monitor their energy use during each year and by the end of July of the following year, they report their emissions to the administrator.
- They must also, by the end of July, have purchased (buy-to-comply) allowances equal to their emissions during that year.
The information that participants provide to the administrator will be audited. Participants must therefore bring together all records and evidence that supports the data they report in an Evidence Pack. This must be kept up to date throughout the scheme.
2EA® offer three main CRC packages, CRC Management, CRC Reporting and CRC Audit Compliance to help you meet the requirements of the scheme. Quotations for individual packages are available on request: CRC Packages
If you require any further information about CRC or any of the other services 2EA® provide, please feel free to get in touch.