Carbon Reduction Commitment

The Carbon Reduction Commitment (CRC) is a proposed 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 is anticipated that the scheme will have cut carbon emissions by 1.2 million tonnes of carbon per year by 2020.^[1] The British Government is committed to cutting UK carbon emissions by 60% by 2050, compared to 1990 levels.^[2]

The Carbon Reduction Commitment was announced in the 2007 Energy White Paper, published on May 23, 2007. A consultation in 2006^[3]showed strong support for it to be mandatory, rather than a voluntary. The Commitment is to be introduced under enabling powers planned for inclusion in the Climate Change Bill.^[4] A consultation into the scheme's implementation is to be launched in June 2007.^[1]

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Coverage

The CRC scheme will apply to organisations that have a mandatory half-hourly metered electricity consumption greater than 6,000 MWh per year. This roughly equates to an electricity bill above £500,000 (US$1,000,000), although it would apply to emissions from direct energy use as well as electricity purchased.^[4] 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 Agreements.^[4]

Operating mechanisms

Although mandatory, the Carbon Reduction Commitment will involve self-certification of emissions, backed up by auditing, rather than third-party verification. Emission allowances are to be auctioned, with all the income from the auctions recycled back to participants by the means of an annual payment based on participants' average annual emissions since the start of the scheme, with a bonus or penalty according to the organisation's position in a CRC league table. A consultation into the implementation is to be launched in June 2007.^[1]

Participants in the Carbon Reduction Commitment will also be able to purchase (but not sell) emission allowances from the EU Energy Trading Scheme at a price that is the higher of the EU ETS price or the minimum CRC floor price.

See also

• United Kingdom Climate Change Bill
• Energy policy of the United Kingdom

References