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We're getting to grips with the new Carbon Reduction Commitment, thought you might want to know more too...

04 Nov 2009

We're just learning about the new Carbon Reduction Commitment (CRC) being introduced next year. Because we're one of the companies accredited with the Carbon Standard, first direct is being used as one of the case studies (see the attached document at the bottom of this article) at a forum being held today, Wednesday 4th November, between the Carbon Trust Standard Company and the Institute of Chartered Accountants in England and Wales (ICAEW) to discuss the Carbon Reduction Commitment and the implications that the legislation, and the recent changes to the scheme, will have for financial directors.

If the CRC it isn't something you're aware of but need to know about the following may help!

About the CRC

From April 2010, the Carbon Reduction Commitment cap and trade scheme will apply to all large non energy-intensive organisations in the UK. The CRC will be a mandatory emissions trading scheme for approximately 5,000 large organisations and will cover all organisations whose electricity consumption through half hourly meters is greater than 6,000MWh/yr - equivalent to an annual electricity bill of more than £500k. 

This scheme will include, for example, supermarket chains, hotel chains, office-based corporations, government departments and large local authorities and all energy other than transport fuels will be covered, such as electricity, gas, fuel and oil. 

During a planned introductory phase, due to start in April 2010, all allowances will be sold at a fixed price. From April 2013, allowances will be allocated through auctions with a diminishing number of credits available over time.

At the end of each year, company performance, mainly based on absolute carbon reductions since the start of the scheme, will be summarised in league tables outlining the best and worst performers in terms of carbon emissions and reduction. In order to avoid creating an additional financial burden, the auction revenues generated through the initial sale of credits will be recycled back to participants, with companies receiving payments back from government in relation to their first year emissions, plus or minus a bonus or penalty dependent on their position in the league table. 

The first year of the CRC league table is based exclusively on early action and efforts made will determine the full bonus or penalty, rewarding organisations that have taken early action to reduce carbon emissions on a voluntary basis before 2010. The Carbon Trust Standard has been recognised as an official early action metric for the CRC and will count towards performance in the CRC league table. 

The cost of carbon allowances under the CRC is expected to range from tens of thousands of pounds to millions per organisation,  and the Carbon Trust and ICAEW are urging financial directors to think now about their game plan and take early action to reduce the cost of compliance and minimise risk.

For more information check out the government's site dedicated to all things CRC:

first direct case study:


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