The Department of Energy and Climate Change (DECC) has unveiled the final details of the government's scheme to save organisations money on fuel bills and to reduce carbon emissions.
The carbon reduction commitment (CRC) energy efficiency scheme is a new regulatory incentive to improve energy efficiency in large public and private sector organisations. Large energy users in business and the public sector will be required to take part in the scheme from April 1, 2010, DECC said.
DECC has made some improvements to the scheme. Organisations will only have to report emissions in the first year (2010/11). In subsequent years, they will have to buy allowances corresponding to their emissions from energy use, and then surrender them by the end of the year.
In the second year (2011/12), extra weighting will be given to organisations which take action early to improve energy efficiency. Recognition will be given to organisations which use onsite renewable energy like wind turbines or solar panels by publishing the increased carbon savings from such measures.
DECC said that organisations will be given flexibility in how they participate. Subsidiaries who are large enough to qualify in own right (at least 6000MWh) may opt to do so separately from their organisational group. Given the primary focus of the scheme is energy efficiency, the CRC will be known as CRC Energy Efficiency Scheme.
Joan Ruddock, minister for energy and climate change, the UK, said: “The UK is leading the way in tackling climate change and in the move to a low carbon economy. Organisations and the public sector must play a central role including all government departments, regardless of size.
“The CRC Energy Efficiency Scheme will help organisations to become more energy efficient, to save significant sums of money on fuel bills, and to show customers, clients and competitors that their organisation is a leader in tackling climate change.”
According to DECC, the CRC will help ensure that large organisations play their full role in contributing to emissions reductions of at least 34% on 1990 levels by 2020 through improved energy efficiency.
The scheme is mandatory and will save participants around GBP1 billion per year by 2020 through cost effective energy efficiency measures that are not yet being taken up. By 2020, the scheme is expected to have delivered emissions savings of at least 4.4 Mt CO2 per year, said DECC.
The scheme will target organisations whose annual half hourly metered (HHM) electricity use is at least 6,000MWh. The Environment Agency will publish the qualification and registration guidance for potential CRC participants by November.
The three year ‘introductory phase’ starts in April 2010. An unlimited number of allowances will be available at a fixed price of GBP12/tCO2. From the second compliance year onwards, participants will annually have to purchase allowances, monitor energy use, report emissions and surrender allowances. Participants will also receive a revenue recycling payment each year.
From 2013, the government will cap the number of allowances available each year and all allowances will be auctioned. The cap will be set taking into account advice from the Committee on Climate Change which they will provide in 2010.