The Carbon Reduction Commitment (CRC) is a complex and curious scheme that is projected to cut UK carbon dioxide emissions by about one third of 1% by 2015.
Thousands of big private and public sector organisations, many of them household names, will soon be compelled to spend serious money – it could run into tens of millions of pounds a year –buying carbon allowances. They then get more or less of this money back, depending on how much energy they save compared with other organisations covered by the CRC.
This may seem an awful lot of fuss for such a small carbon reduction. But Government says the CRC will soon be saving far more money than it costs to run by encouraging such organisations to make serious new energy savings.
These organisations, evidence shows, persistently fail to make sensible, cost-effective improvements in energy efficiency. Consequently, hundreds of millions of pounds are wasted each year, accompanied by millions of tonnes of climate-warping CO2. Employees, managers and boards cannot be bothered to nail down these savings; they are too small, the hassle too great.
The CRC will compel organisations to monitor their energy use carefully then count up their resulting CO2 emissions and hand over significant sums of money based on those emissions. It exposes their energy-saving performance by ranking them in a league table. It should surely make them get serious about saving energy and cutting carbon. That, at least, is the plan.
The scheme starts in April 2010. As we go to press the government is still consulting on the details. The regulation is still in draft form and many pages of further guidance still have to be issued.
But it will come. Joan Ruddock, the energy and climate change minister responsible for the CRC, told ENDS there was no question of its implementation being delayed. It is quite likely that a Conservative government will be in charge around the time the CRC starts. But Greg Barker, the shadow energy and climate secretary, has also told ENDS he strongly supports the scheme, although he may try to find ways to recycle revenue back to participants faster.
In preparing this guide ENDS spent hours talking to officials who devised the CRC and those who will administer and regulate it. We’ve spent as much time talking to people in the public and private sector organisations who will be covered by the scheme. It is clear that a huge amount of preparatory work still has to be done on both sides of the fence if the scheme is to succeed.
Some parts, such as the performance metrics, the treatment of subsidiaries and parent companies, and the calculation of relevant emissions, can become quite complex. This guide should help, but organisations who could be affected need to download and carefully read the government’s own guide (see pp 4-9), which is still in draft form.
Here we set out the basics, examine the uncertainties, controversies and confusions and discuss how prepared organisations are and what they need to do. The ENDS Report has covered this pioneering scheme from its beginnings and we will track its progress in future issues and special reports like this one. We hope the CRC succeeds in radically raising carbon consciousness and goes on to achieve much larger reductions in UK emissions.