About 50 % of greenhouse gas emissions in the UK come from buildings. As the UK has set an objective of reducing greenhouse gas emissions by 80% by 2050, any mechanisms which can reduce the emissions from buildings will go a long way to helping the UK achieve its ambitious targets.
Hot on the heels of the EPC and the “green lease” is the Carbon Reduction Commitment (CRC). Even if your organisation is not large enough to be affected by the CRC at this stage, it is important that property owners are aware of the scheme as it is likely that more properties will be caught within the CRC net in the future.
What is CRC?
CRC is a mandatory emission trading scheme where affected organisations (called “CRC participants”) are required to purchase allowances to cover their CO2 emissions, priced in £ per tonne. CRC participants will need to predict their CO2 emissions in order to purchase the amount of allowances they are likely to need. Organisations will be expected to purchase sufficient allowances to enable them to continue with their current carbon emissions.
During the year, the participants will need to monitor their emissions with the aim of reducing them. At the end of the year, the total emissions will be calculated and sufficient allowances surrendered to cover the CO2 output. The balance of any allowances purchased, but not used, can be put towards the next year’s allowances. The shortfall will need to be purchased again. However, participants who have reduced the energy use will also be rewarded by receiving a “recycling payment” based on their position in the scheme league table.
Who will be affected the CRC?
Initially the CRC will only apply to large public sector and commercial bodies whose total annual half hourly metered electricity used in 2008 was above 6,000 MWh. In monetary terms this will include businesses with a total annual electricity spend of at least £500,000. For leasehold properties, the party responsible for complying with the scheme will be the party who is responsible for the energy supply contracts for a building. Therefore, in a multi-let building the landlord is likely to be the CRC participant and, in a sole occupancy, the tenant. All participants must complete their registration process between now and September 2010. The first compulsory sale of allowances will be in April 2011 for the 2011/2012 scheme year.
The scheme will be audited by the Environment Agency who will carry out a risk based audit on 20% of the participants in each year. The penalties for non-compliance vary depending on whether the offence is civil (e.g. fines) or criminal (e.g. imprisonment).
This article only sets out a very simplified explanation of how the scheme will work as the scheme itself is very complex. More information can be obtained from CRCHELP@environment-agency.gov.uk .
