Carbon reduction commitment

Defra is in the process of introducing a new legally binding climate change and energy saving scheme called the Carbon Reduction Commitment (CRC) which will have a major impact on around 6000 UK organisations within sectors such as banking, supermarkets, local authorities (including education), property, transport, manufacturing, health and insurance.

Niall Smiddy and James Patterson from consultancy firm Environ believe that many organisations may be unaware of the potential impact of this legislation on their business and are seeking to raise the profile of this important new regulation.


As a guide, Defra has indicated that if an organisation, including any parent company and its subsidiaries, spends more than £500,000/year in the UK on electricity; it is likely to be covered by the CRC scheme.


It is the Government’s intention that the CRC scheme will help the UK to achieve its energy consumption reduction targets by imposing a ‘cap and trade’ system under which organisations will purchase allowances and then later receive rebates plus either a bonus or a penalty dependent on where they sit in an emissions reduction league table.


In early 2009, the Environment Agency (EA), who will administer the CRC scheme, will contact all UK billing addresses with half hourly meters providing them with Registration Packs to report their 2008 electricity consumption.


Affected organisations will be required to report their annual energy consumption over a financial year (April to March); using data obtained either from meter readings or supplier bills via an online registry operated by the Environment Agency. Total CO2 emissions from all relevant energy sources will be calculated through the registry and a CRC League Table will be created and published from this data.


Those organisations that manage to implement the most significant energy use reductions will enjoy a high position in the published CRC League Table which will deliver financial and PR benefits.

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