energy news

Carbon Reduction Commitment (CRC) Regulations Explained


12th December, 2009

In 2007 the UK government announced a carbon reduction program which comes into force in 2010. Here are the regulations explained in more detail.

The carbon reduction program is a mandatory program for businesses in the UK that fall under the terms of the program. It’s designed to help reduce the UK’s overall carbon emissions by 80% by 2050.

What is the CRC program?

The CRC program or carbon reduction commitment legislation comes into force in 2010 where for companies that have a single half hourly electricity metre installed they need to register for the scheme between April and September 2010.

Additionally if your company uses more that 6,000 mwh of electricity per year not only will you need to register and assessed but you will need to report back on how much energy you are using. Those companies that have at least one half hourly metre but use under 6,000 mwh of electricity in 2008 must make the information disclosure but won’t be involved in the rest of the reporting.

What will it mean for your business?

And it gets worse because not only will you need to appoint someone in your company to measure and report all of this information but you will then need to pay a carbon offset figure back to the government at £12 per tonne of C02 which is estimated to cost around 10% of the total energy bill. If you have purchased too many allowances you can’t give them back and your only option is to sell them to other companies. Scarily after 2013 these allowances will be sold at auction and there will be no cap on the pricing so maybe you could purchase more in the preceding years to hedge the cost ?.

And there is even more bad news. In the first year you will be paying to offset carbon from the first and second years so double the cost. Then the government will publish league tables on companies performances and if they are at the top they will pay less but the bad organisations at the bottom will have to pay a penalty so it could actually cost them 50% more.

Is your business ready for CRC?

All businesses that have half hourly metres installed have already been sent information packs to the named person for the energy supply. These should have been sent by the CRC scheme administrators so if you don’t have a pack then get one quick.

Recent research from SAP the computing organisation found that of 400 businesses surveyed that come under this new legislation only one third are prepared and know what to do. Disturbing in the findings is that companies have suggested they would not invest further in areas of their business that had high carbon emissions because of the additional costs associated with it.

What happens if my company doesn’t register in time?

With the current government you should already know the answer and of course it’s a fine. If your organisation fails to register between April and September 2010 then an automatic fine of a massive £5,000 will be set and for each and every day your business is not registered another £500 will be added. Also don’t expect to receive a reminder each day you miss this if it’s like HMRC you’ll receive a letter some six months later with 6 months of fines added to it.

What should I do now?

If you run a business that has a half hourly metre installed then you need to get this information pack we discussed and get someone nominated in your business to read up and get going with the registration process. More information on the carbon Reduction Commitment Energy Efficiency Scheme (CRC) will be posted when we have it available.



<< back to news