Carbon Reduction Commitment
The CRC Energy Efficiency Scheme (often referred to as simply ‘the CRC’) is a mandatory scheme aimed at improving energy efficiency and cutting emissions in large public and private sector organisations. These organisations are responsible for around 10% of the UK’s emissions.
How the CRC Works?
The scheme encourages organisations to develop energy management strategies that promote a better understanding of energy usage. It is designed to target CO2 emissions not already covered by Climate Change Agreements (CCAs) and the EU Emissions Trading System.
Organisations are eligible for the CRC if they (and their subsidiaries) have at least 1 half-hourly electricity meter (HHM) settled on the half-hourly market. Organisations that consumed more than 6,000 megawatt-hours (MWh) per year of half-hourly metered electricity during a qualification year are required to participate and must register with the Environment Agency, which administers the scheme.
Qualifying organisations have to comply legally with the scheme or face financial and other penalties. Organisations that do not meet the 6000 MWh threshold will have to make an information disclosure of their half hourly electricity consumption during the qualification year.
The Department of Energy & Climate Change (DECC) has developed the CRC policy in partnership with the Scottish Government, the Welsh Assembly Government and the Department of Environment Northern Ireland.
How CRC Affects Different Organisations?
The CRC affects large public and private sector organisations across the UK. Participants include supermarkets, water companies, banks, local authorities (including state-funded schools) and all central Government Departments. Organisations qualify as a CRC participant based on their half-hourly electricity usage.
You can find specific guidance on qualification and registration in the Environment Agency’s guidance documentAm I in? A guide to qualification and organisational structure.
If you are a subsidiary of an organisation, or part of a group, the group must act as 1 entity. Your highest parent organisation will normally be the ‘primary member’ who must carry out administrative actions on behalf of the group. Other organisations within the group should provide information about their energy use to the primary member. If the highest parent organisation is based outside the UK, your group must nominate a UK subsidiary to represent the whole organisation.
Where an organisation has any subsidiaries that would be eligible to participate in their own right where they not part of a group (known as Significant Group Undertakings –SGUs), it has the choice to disaggregate these large subsidiaries to participate in the CRC separately. As part of the registration process a participant is able to nominate anySGU that it wishes to disaggregate and participate separately in CRC.
In the scheme, energy use is the responsibility of whichever organisation is responsible for the energy supply. For more specific guidance you can consult the Environment Agency’s guidance on Supply Rules.
Qualification for the scheme is based on half-hourly metered electricity usage. Your organisation will qualify if during the qualification year it:
has at least 1 half-hourly electricity meter (HHM) settled on the half-hourly market across the whole organisation.
has a total half-hourly electricity consumption over 6,000 MWh once electricity used for transport and domestic accommodation has been excluded.
A summary of steps to determine whether your organisation qualifies for participation in the CRC can be found on the Environment Agency website.
Your electricity supplier will be able to confirm if you have any half-hourly meters settled on the half-hourly market. In the scheme, half-hourly meters include any:
Mandatory half-hourly meters
Voluntary half-hourly meters
Half-hourly light meters
Pseudo half-hourly meters (commonly used to measure electricity consumption of street furniture – eg street lights, traffic lights, etc)
Remotely read automatic meter reading (AMR) meters that produce half-hourly data (these are not necessarily settled on the half-hourly market and therefore do not count towards the first qualification criterion) More information on metering from the Environment Agency
All organisations that meet the first criterion but consume less than 6,000MWh of half-hourly electricity will not qualify. They will however still need to make an information disclosure to the Environment Agency during the registration period.
To minimise the administrative burden, the scheme will include emissions not covered by CCAs or the EU ETS. In addition, organisations with a CCA may apply for 1 of 3 exemptions: member, group or general. Further details about claiming these exemptions can be found in Environment Agency guidance on how the CRC treats emissions which are already regulated as part of aCCA or the EU ETS.
Official guidance on all aspects of complying with CRC obligations for participants and declarers is available on theEnvironment Agency: CRC Energy Efficiency Scheme
Under the CRC Energy Efficiency Scheme, participants will be obliged to measure the emissions from energy supplies for which they are responsible according to the relevant conversion factors. These amounts will then be converted by the Registry into tonnes of carbon dioxide by the application of standard emissions factors.
You can download the CRC table of conversion factors [PDF, 61.1KB, 1 page] The Environment Agency providesguidance on Conversion and Emissions Factors, which will give you details of how to use conversion and emission factors in meeting your reporting obligations under the CRC.
Statutory guidance on the discretion of penalties in the CRC
DECC, the Scottish Government, the Welsh Assembly Government and the Northern Ireland Department for the Environment have issued statutory guidance to the administrators of the CRC on discretion of penalties in the scheme. This guidance is designed to provide guidance to the Environment Agency, the Scottish Environment Protection Agency and the Chief Inspector (Northern Ireland Environment Agency) as the administrators of the scheme on the imposition of civil penalties under the CRC Energy Efficiency Scheme Order 2010.
DECC, the Scottish Government, the Welsh Assembly Government and the Northern Ireland Department for the Environment have issued guidance on the appeals process under the CRC Energy Efficiency Scheme Order 2010. The guidance details the procedures which both the scheme’s administrators (the Environment Agency, the Scottish Environment Protection Agency and the Chief Inspector (Northern Ireland Environment Agency)) and appellants must follow in respect of a CRC appeal. An appeal form is also included to facilitate the submission of appeal notifications and statements.
CRC Performance League Table
The Environment Agency has now published the 2011/2012 CRC performance league table. This measures the relative performance of all participants in CRC against the three weighted metrics:
early action metric
Simplification of The Sceme
Following the Chancellor’s announcement in his 2011 Autumn Statement of the continuation of a simplified CRC, we published our response to the consultation on a simplified CRC Energy Efficiency Scheme.
The consultation drew a total of 255 responses from both public and private sector participants, with the majority of respondents supportive of DECC’s proposed amendments.
Under the new proposals, participants will benefit from:
Reduced complexity, greater business certainty, and less overlap with other schemes
A 55% reduction in administrative costs, which equates to £272m up to 2030
Clearer rules to incentivise the adoption of cost-cutting energy efficiency measures
The government will now lay an Order before Parliament and the devolved legislatures, with the Order intended to come into force on 1st June 2013. The majority of the proposals set out in the government response will then be introduced at the start of the second phase, in 2014/15.
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