Carbon Reduction Commitment
Encyclopedia
The CRC Energy Efficiency Scheme (the CRC, formerly the Carbon Reduction Commitment) is a mandatory cap and trade
scheme in the United Kingdom
that will apply to large non energy-intensive
organisations in the public and private sectors. It has been estimated that the scheme will reduce carbon emissions by 1.2 million tonnes of carbon per year by 2020. Toward avoiding dangerous climate change
, the British Government first committed to cutting UK carbon emissions by 60% by 2050 (compared to 1990 levels), and in October 2008 upped the 2050 commitment to 80%.
The CRC was announced in the 2007 Energy White Paper, published on May 23, 2007. A consultation in 2006 showed strong support for it to be mandatory, rather than voluntary. The Commitment has been introduced under enabling powers in Part 3 of the Climate Change Act 2008. A consultation into the scheme's implementation was launched in June 2007. The Scheme is being introduced under the CRC Energy Efficiency Scheme Order 2010.
(37), Morrisons
(56), Tesco
(93), and Sainsburys (164). In all 22 organisations shared first position, news stories focused on the fact that Manchester United Football Club was one of those at the top of the table.
per year. Organisations qualifying for CRC would have all their energy use covered by the scheme, including emissions from direct energy use as well as electricity purchased. Such organisations - including hotel chains, supermarkets, banks, central government and large Local Authorities
- mostly fall below the threshold for the European Union Emissions Trading Scheme, but account for around 10% of the UK carbon emissions. Emissions covered by the EU Energy Trading Scheme and by a Climate Change Agreement would be exempt from the CRC, as would organisations with more than 25% of their emissions covered by Climate Change Agreement
s.
Half-hourly meters (HHM) record electricity consumption for every half hour of every day, and generally provide this data to the supplier automatically via a telephone connection. Some organisations with high annual energy consumption do not use HHM, as their supplies are mainly on unrestricted or Economy 7
(day/night or 'evening and weekend') tariffs. However, they may nevertheless have to provide 'footprint reports'.
(as was the case in the initial stages of the EU Emissions Trading Scheme). The original proposal envisaged a revenue recycling mechanism, however this was removed to support the public finances after the comprehensive spending review. The Government announced in the budget the allowance price of £12/tCO2 for the first sale. They have also suggested there should be two fixed price sales in the first year of the scheme.
Participants in the CRC Energy Efficiency Scheme will also be able to purchase (but not sell) emission allowances from the EU Emissions Trading Scheme at a price that is the higher of the EU ETS price or the minimum CRC floor price.
; other entities covered by the ETS are then able to use these allowances for their own emissions. It has been suggested that allowances should be removed from the ETS in accordance with electricity reductions made under the CRC.
Emissions trading
Emissions trading is a market-based approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants....
scheme in the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
that will apply to large non energy-intensive
Energy intensity
]Energy intensity is a measure of the energy efficiency of a nation's economy. It is calculated as units of energy per unit of GDP.* High energy intensities indicate a high price or cost of converting energy into GDP....
organisations in the public and private sectors. It has been estimated that the scheme will reduce carbon emissions by 1.2 million tonnes of carbon per year by 2020. Toward avoiding dangerous climate change
Avoiding Dangerous Climate Change
The related terms "avoiding dangerous climate change" and "preventing dangerous anthropogenic interference with the climate system" date to 1995 and earlier, in the Second Assesment Report of the International Panel on Climate Change and previous science it cites.In 2002, the United Nations...
, the British Government first committed to cutting UK carbon emissions by 60% by 2050 (compared to 1990 levels), and in October 2008 upped the 2050 commitment to 80%.
The CRC was announced in the 2007 Energy White Paper, published on May 23, 2007. A consultation in 2006 showed strong support for it to be mandatory, rather than voluntary. The Commitment has been introduced under enabling powers in Part 3 of the Climate Change Act 2008. A consultation into the scheme's implementation was launched in June 2007. The Scheme is being introduced under the CRC Energy Efficiency Scheme Order 2010.
Performance League Table
The first performance league table was published on the 8th of November 2011. It was based on the scheme's early action metric, which is a measure of good energy management prior to the establishment of an energy baseline. In the future the table will use a growth and an absolute metrics from this baseline. The table is expected to be of particularly use to ethical and green investors. Many notable brands are listed in the League table including the big 4 supermarkets AsdaAsda
Asda Stores Ltd is a British supermarket chain which retails food, clothing, general merchandise, toys and financial services. It also has a mobile telephone network, , Asda Mobile...
(37), Morrisons
Morrisons
Wm Morrison Supermarkets plc is the fourth largest chain of supermarkets in the United Kingdom, headquartered in Bradford, West Yorkshire, England. The company is usually referred to and is branded as Morrisons formerly Morrison's, and it is part of the FTSE 100 Index of companies...
(56), Tesco
Tesco
Tesco plc is a global grocery and general merchandise retailer headquartered in Cheshunt, United Kingdom. It is the third-largest retailer in the world measured by revenues and the second-largest measured by profits...
(93), and Sainsburys (164). In all 22 organisations shared first position, news stories focused on the fact that Manchester United Football Club was one of those at the top of the table.
Coverage
The CRC scheme will apply to organisations that have a half-hourly metered electricity consumption greater than 6,000 MWhMWH
MWH may stand for:* International Air Transport Association airport code for Grant County International Airport* MWH Global, an international water engineering consultancy* Men Without Hats, a Canadian New Wave band...
per year. Organisations qualifying for CRC would have all their energy use covered by the scheme, including emissions from direct energy use as well as electricity purchased. Such organisations - including hotel chains, supermarkets, banks, central government and large Local Authorities
Local government in the United Kingdom
The pattern of local government in England is complex, with the distribution of functions varying according to the local arrangements. Legislation concerning local government in England is decided by the Parliament and Government of the United Kingdom, because England does not have a devolved...
- mostly fall below the threshold for the European Union Emissions Trading Scheme, but account for around 10% of the UK carbon emissions. Emissions covered by the EU Energy Trading Scheme and by a Climate Change Agreement would be exempt from the CRC, as would organisations with more than 25% of their emissions covered by Climate Change Agreement
Climate Change Agreement
When climate change levy was introduced in the UK the position of energy intensive industries was considered, given their energy usage, the requirements of the Integrated Pollution Prevention and Control regime and their exposure to international competition...
s.
Half-hourly meters (HHM) record electricity consumption for every half hour of every day, and generally provide this data to the supplier automatically via a telephone connection. Some organisations with high annual energy consumption do not use HHM, as their supplies are mainly on unrestricted or Economy 7
Economy 7
Economy 7 is the name of a differential tariff provided by United Kingdom electricity suppliers that uses base load generation to provide cheap off-peak electricity during the night....
(day/night or 'evening and weekend') tariffs. However, they may nevertheless have to provide 'footprint reports'.
Operating mechanisms
Although mandatory, the CRC will involve self-certification of emissions, backed up by spot audits, as opposed to third-party verification. Emission allowances are to be auctioned rather than grandfatheredGrandfather clause
Grandfather clause is a legal term used to describe a situation in which an old rule continues to apply to some existing situations, while a new rule will apply to all future situations. It is often used as a verb: to grandfather means to grant such an exemption...
(as was the case in the initial stages of the EU Emissions Trading Scheme). The original proposal envisaged a revenue recycling mechanism, however this was removed to support the public finances after the comprehensive spending review. The Government announced in the budget the allowance price of £12/tCO2 for the first sale. They have also suggested there should be two fixed price sales in the first year of the scheme.
Participants in the CRC Energy Efficiency Scheme will also be able to purchase (but not sell) emission allowances from the EU Emissions Trading Scheme at a price that is the higher of the EU ETS price or the minimum CRC floor price.
Simplification
On the 30th of June 2011 the Government announced its initial proposals on simplifying the scheme. This came from the dialogue process the Department of Energy and Climate Change had been running from January, which was in response to the concerns of those organisations participating in the scheme that it was overly complex and this made compliance difficult and costly. The draft legislative proposals will published in early 2012 for formal public consultation which will amend the existing CRC scheme. Among these proposals will be, continuing the fixed price sale (rather than auctions of allowances in a capped system) into the second phase, as recommended by the Committee on Climate Change, provide business with greater flexibility by allowing organisations to participate as natural business units, reducing the number of the fuels which are subject to the scheme from 30 to 4, removing the complex 90% rule and CCA exemption rules, whilst achieving broadly the same outcomes) and reducing overlap with other government schemes such as EU Emission Trading Scheme and Climate Change Agreements.Criticism
It has been suggested that the effectiveness of the CRC is limited by its overlap with the EU ETS. Critics argue that as companies reduce their electricity consumption, power stations produce less electricity and so require less EU AllowancesEU Allowances
EU Allowances are Climate credits used in the European Union Emissions Trading Scheme . EU Allowances are issued by the EU Member States into Member State Registry accounts. By April 30 of each year, operators of installations covered by the EU ETS must surrender an EU Allowance for each ton of...
; other entities covered by the ETS are then able to use these allowances for their own emissions. It has been suggested that allowances should be removed from the ETS in accordance with electricity reductions made under the CRC.
External links
- DECC: CRC Energy Efficiency Scheme
- http://crc.environment-agency.gov.uk/pplt/web/plt/public/2010-11/CRCPerformanceLeagueTable20102011
- 2007 Energy White Paper
- EA: CRC Energy Efficiency Scheme
- Carbon Reduction Commitment Working Group on 2degrees
- The CRC Network: a free, independent forum on CRC best practice
- CRC User Guide and Guidance Documents - Department of Energy and Climate Change
- The CRC Energy Efficiency Scheme Order 2010