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Introduction to the Carbon Reduction Commitment

The UK government introduced the Carbon Reduction Commitment Energy Efficiency Scheme as part of the Climate Change Act in November 2008. It is a mandatory emissions ‘Cap and Trade’ scheme for the largest 5,000 public and private sector organisations. From April 2011 these organisations must purchase allowances for the year ahead initially at a fixed price of £12 per tonne of CO2 emitted. Two years later, the number of allowances will be reduced, and publically auctioned. Each year a league table will be published rating the energy performances of all the participants. Organisations will therefore have to reduce their electricity, oil and gas consumption, year on year. This trading scheme will create substantial costs and reputational risks, both of which will require careful management.

Any organisation with one of the 175,000 half hourly electricity meters must report their energy consumption to the Environment Agency each year. Anyone using more than 6000MWh of electricity in 2008 (around the top 5,000 organisations) must join the trading part of the scheme to buy and sell emission allowances.

 

For a complete explanation of this complex legislation please contact us.

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