Carbon Reduction Commitment (CRC EES)
Carbon Reduction Commitment Energy Efficiency Scheme (CRC EES)
The Carbon Reduction Commitment Energy Efficiency Scheme (CRC EES) started in April 2010 and will run indefinitely.
The scheme is a new regulatory incentive to improve energy efficiency in large public and private sector organisations. It is a mandatory scheme that aims to improve energy efficiency and reduce the amount of carbon dioxide (CO2) emitted in the UK.
This is vital to achieving our overall targets of reducing greenhouse gas emissions by 2050 by at least 80% compared to the 1990 baseline. CRC EES will affect large organisations in both the public and private sector.
Organisations that meet the qualification criteria, which are based on how much electricity they were supplied in 2008, with the second phase dealing with electricity use in the second year 2011/12, will be obliged to participate in CRC EES.
Participating organisations will have to monitor their emissions and purchase allowances, initially sold by government, for each tonne of CO2 they emit. The more CO2 an organisation emits, the more allowances it has to purchase. So there is a direct incentive for these organisations to reduce their emissions.
As well as reducing our carbon emissions, by increasing energy efficiency the scheme will help organisations save money by reducing their energy bills. These savings should be well in excess of the costs of participating in the scheme.
In addition, the better an organisation performs in terms of reducing its emissions, the higher it will appear in the annually published league table, showing the comparative performance of all participants.
Carbon Reduction Commitment Energy Efficiency Scheme change announced
As part of the Comprehensive Spending Review the government announced a number of changes to the CRC EES.
The CRC Energy Efficiency Scheme will be simplified and the first purchase of allowances will now take place in 2012 with the revenues from the sales being used to support the public finances, spend for the environment and the renewable agenda, rather than recycling back to participants as previously outlined. However, the scheme remains one focused on carbon reduction.
With the recycling payment no longer being returned to participants, costs will be considerably higher per annum and continue to increase year on year. Currently our customers are looking at spending £12 per tonne but now this potentially may rise to £16 per tonne by 2014.
The scheme continues as a ‘ carbon reduction scheme’ with customers having the responsibility to continue to reduce their carbon as quickly as possible. The outcome being a managed and maintained reduction ensuring carbon percentages are at a level which ensures the financial impact of allowances can be managed cost effectively.
Our suppliers and other organisations such as London Energy Project offer a range of services and information to aid customers in continuing to reduce their carbon usage. We will continue to keep you appraised of these services as well as ongoing consultations and any further changes to the scheme that may take place.
The changes in summary are:
- There will be no sale of allowances in April 2011
- The first sale will be in 2012 for emissions from April 2010 to March 2011
- The league table will be published as planned – October 2011 but will only have reputational impact
- Changes to the scheme will be made to remove the recycling payment mechanism and consultation with DECC and the Environment Agency continue.
- There will be no recycling payments, revenue from the scheme will be retained by the Government in support of public finances.
- It is still a legal obligation for participants and information disclosers to register.
Useful Sites:
DECC - Department of Energy and Climate Change http://www.decc.gov.uk
Her Majesty’s Treasury http://www.hm-treasury.gov.uk
Environment Agency http://www.environment-agency.gov.uk
EDF Energy www.energyexperts@edfenergy.com
Corona Energy http:/www.coronaenergy.co.uk
LEP – London Energy Project: www.capitalambition.gov.uk/londonenergy