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CRC: the facts

The CRC Energy Efficiency Scheme came into force on 1 April. What will its impact be on business and rac firms in particular, asks James Boley

The introduction of the CRC Energy Efficiency Scheme could be seen as another expense for industries fighting their way through a bleak market. Nonetheless, it’s worth bearing in mind some important facts.

Firstly, it won’t require direct compliance from most rac firms as only organisations with electricity usage of more than 6,000 kWh during 2008 are required to comply
with the scheme fully. “If you’ve a bill that high, you’re talking about electricity bills that are more than £500,000 a year. This is not designed for small organisations,”
says Environment Agency head of climate change and sustainabledevelopment Tom Grayling. But naturally, this will include large energy-using customers, notably
the supermarkets - and they will be looking to their supply partners for help in meeting the targets (see overleaf).

Under the scheme, any company which meets the eligibility criteria is required to record carbon emissions from their operations. This includes carbon from electricity usage and also encompasses carbon from sources such as gas or oil heating in buildings.

All organisations are required to record and report their carbon emissions for the April 2010-2011 period. The purpose of this is twofold: it gives the EnvironmentAgency a baseline on which to measure carbon emission reductions, and it enables companies to acquire data to forecast their carbon emissions in the future.

This is vital as from April 2011 onwards, carbon emissions from CRC participants will need to be covered by allowances - simply put, every tonne of CO2 emitted will have to be paid for. Essentially, it is a cap-and-trade system similar to other carbon initiatives, such as the European Union Emission Trading Scheme, which is for more energy-intensive activities such as power generation.

During the first two years of the scheme, an unlimited number of allowances priced at £12 per tonne of CO2 will be available for companies to purchase. Mr Grayling confirms this is to give participants the time to familiarise themselves with the process of buying and selling allowances. But from 2013, the system will change. There will then be a fixed number of allowances - the number being set by the Government - and these allowances will be auctioned.

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