Special Report


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Special Report: The Carbon Reduction Commitment


Absolute metric: The main metric used to create the league table in all but the first year. It compares an organisation’s CRC emissions in the past year to its average over the five previous years (or as many years as are available at the start of the CRC).

Administrator: The Environment Agency will be the main CRC administrator responsible for: allowance sales, maintaining the registry and drawing up league tables.

Allowance: Authorisation to emit one tonne of CO2. Participants must buy enough allowances to cover their CRC emissions each year. Initially these will be sold at £12 per tonne, but after April 2014 they will be auctioned.

Annual report: A report detailing a participant’s CO2 emissions covered by the CRC over the past financial year.

Automatic meter reading (AMR) meter: A device that sends consumers half-hourly or hourly energy consumption data.

Capped phase: A five-year CRC period for which total emissions caps have been set by government. The first starts in April 2014.

Carbon intensity: The CO2 emissions associated with a particular amount of economic output.

Carbon Trust Standard: An independently audited accreditation scheme for organisations that can prove they have reduced their CO2 emissions. Certification under the standard, its predecessor the Energy Efficiency Accreditation Scheme or equivalent schemes, will earn an organisation points under the CRC’s early action metric.

Certified Emissions Measurement and Reduction Scheme: An alternative to the Carbon Trust Standard.

Climate change agreements (CCA): Targets for reducing emissions or improving energy efficiency negotiated between energy-intensive companies or sectors and the government. Sites covered by CCAs receive an 80% discount from the government’s Climate Change Levy. CO2 emissions covered by CCAs will be exempt from the CRC and a series of exemptions may enable organisations or subsidiaries with 25% or more of their emissions covered by CCAs to be exempted from the scheme entirely.

Core sources: Emissions from key energy supplies that must be included in the CRC unless they are covered by the EU emissions trading scheme (EU ETS) or a CCA. They are: any electricity use measured through half-hourly meters, non-domestic meters or dynamic supply; gas measured through daily or half-hourly meters and gas sources through which more than 73,200 kilowatt hours per year were consumed in the footprint year.

CRC emissions: Emissions from sources listed in a CRC participant’s footprint report and therefore included in the scheme.

Early action metric: One of three metrics used to calculate an organisation’s league table position in the first phase of the CRC. Will be the only metric used for 2010/2011 and phased out from April 2013. An organisation will score highly if it has installed AMRs and obtained the Carbon Trust Standard or an equivalent.

Evidence pack: CRC participants must keep an evidence pack for audit. It should list CRC emissions sources and contain information supporting their energy consumption figures.

Footprint report: A statement setting out emissions sources to be included in the CRC and energy consumption figures for the footprint year. Participants must submit one by 29 July 2011.

Footprint year: Participants must monitor emissions over the year and compile a footprint report at its end. For the introductory phase, the footprint year will run concurrently with the scheme’s first year, from 1 April 2010 to 31 March 2011.

Grid average emissions: The average CO2 emitted for each unit of electricity supplied to the UK grid, used to calculate CRC participants’ emissions arising from their electricity consumption. This will be calculated from a five-year rolling average.

Growth metric: Used with two other metrics to create the CRC league table, it will represent 15% of an organisation’s score for 2011/2012, 20% in 2012/2013 and 25% from April 2013. Based on emissions per unit of turnover as compared to a five-year rolling average, it measures how carbon-efficiently an organisation is growing.

Half-hourly meters (HHM): Meters for heavy electricity consumers that measure electricity consumption on a half-hourly basis and can be settled on the half-hourly market. Sometimes installed voluntarily but there is a legal requirement for HHMs at sites with an average peak electricity demand exceeding 100kW in three out of the previous 12 months. Four types of HHM are included in the CRC: mandatory HHMs, voluntary HHMs, half-hourly light meters and pseudo half-hourly meters. Organisations with one or more of these meters settled on the half-hourly market must submit an information disclosure or register for the CRC.

Information disclosures: Organisations with settled half-hourly meters but electricity consumption through them below the 6,000MWh/yr threshold for inclusion in the CRC must still submit an information disclosure during the registration period. This includes a list of HHMs and, for organisations with consumption over 3,000MWh/yr, their electricity use through these meters.

Introductory phase: The first four-year phase of the CRC from April 2010 to March 2014, with no cap and no allowance auctions.

League table: An annual performance table covering all CRC participants compiled by the Environment Agency using three metrics: early action, absolute and growth.

Participant: An organisation qualifying for the CRC.

Primary member: The part of an organisation or group chosen to act on its behalf in the CRC.

Qualification period: The period before the start of a CRC phase during which electricity consumption from all half-hourly meters is monitored to determine which organisations qualify.

Registry: Purpose-built web-based system run by the Environ­ment Agency through which CRC participants will register, submit reports, buy and trade allowances.

Regulator: Auditing and enforcement will be carried out by the Environment Agency in England and Wales and the Northern Ireland Environment Agency and Scottish Environment Protection Agency in their fiefdoms.

Residual sources: Energy supplies not classified as core sources under the CRC, including gas and electricity consumption through small meters and purchases of oil and LPG. CRC participants do not need to include all residual sources in the scheme but must make sure 90% of their emissions are covered.

Revenue recycling: The revenue raised from the sale of allowances every April was to be returned to participants the following October, with a bonus or a penalty according to the organisation’s position in the league table. It was removed by the government in October 2010 (see pp 4-9).

Safety valve: A mechanism allowing CRC participants to buy any extra allowances they need from the EU ETS through the Environment Agency. It should prevent CRC allowance prices from soaring high above EU ETS prices in the secondary market, but purchasers will incur administration charges.

Sealed bid universal price (SBUP): The mechanism used to arrive at a price during government auctions of CRC allowances. Participants will say how many allowances they would buy at different prices and the government will aggregate submissions into a scheme-wide demand curve to develop a final price.

Secondary market: Trades in allowances between CRC participants and with intermediaries.

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