The Carbon Reduction Commitment (CRC) is a mandatory cap and trade scheme in the UK that will apply to large non energy-intensive organisations in the public and private sectors. The Carbon Reduction Commitment was announced in the 2007 Energy White Paper.
Your organisation may be included in CRC if it has at least one meter settled on the half-hourly market and its total electricity annual usage is greater than 6,000 MwH. In general, if your organisation spends more than £500,000 a year in the UK on electricity, you are likely to be included in the scheme. Participants will be required to submit annual data statements.
Organisations that meet the qualification threshold must register using the CRC Registry, which is administered by the Environment Agency. Qualifying organisations have to comply legally with the scheme or face financial and other penalties.
The Carbon Reduction Commitment will cover emissions outside of the Climate Change Agreements (CCAs) and outside the direct emissions already covered by the EU Emissions Trading Scheme (EU ETS).
Organisations which participate within the CRC are required to monitor their energy use, and report their energy supplies annually. The Environment Agency’s reporting system applies emissions factors to calculate participants’ carbon dioxide (CO2) emissions on the basis of this information. Participants must purchase and surrender allowances to offset their emissions. Allowances can either be bought at annual fixed-price sales, or traded on the secondary market. One allowance must be surrendered for each tonne of CO2 emitted. The allowance price in Phase 1 has been set at £12 per tonne of CO2.