Tuesday, 10 December 2013

The Carbon Reduction Commitment Energy Efficiency Scheme

Written by Julia Butterworth
CBRE Energy & Sustainability 

The Carbon Reduction Commitment Energy Efficiency Scheme (CRC) came into force in April 2010, with the aim of encouraging the uptake of carbon reduction measures in large public and private sector organisations through financial, organisational, and reputational drivers.

The scheme currently mandates over 2,000 companies to purchase “allowances” equivalent to their CRC energy use, with significant financial and reputational penalties for non-compliance.

The CRC runs in five year phases, with Phase 2 of the scheme kicking off in April 2014. Registration for Phase 2 is now open and participants have until 31st January 2014 to complete the registration process. If an organisation required to participate in Phase 2 fails to register, it may be subject to financial penalties up to £50,000, as well as publication of non-compliance.

Whilst the requirement to report emissions and purchase allowances remains, Phase 2 brings with it a significant new challenge for participants in their ability to be able to forecast emissions at the start of a compliance year at a lower price than at the end of the year.

Two fixed price sales will be introduced for 2014/15 reporting, one lower price forecast sale at the start of the compliance year at £15.60/tCO2 and a buy to comply sale after the end of the year at £16.40/tCO2.
Qualifying organisations should consider developing a cost-effective strategy to manage the allowance sales, and ensure budgeting and governance processes meet the changing requirements. Participants that wish to forecast allowances will need to determine their forecast consumption and associated carbon allowances costs by April 2014.

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