How do I comply?

Carbon Reduction Commitment compliance will bring about an important new requirement for businesses. Approximately 5,000 of the UK's largest organisations, including supermarkets, banks, property management companies, government departments, hotel groups, food retail chains and local authorities will be required to take part.

Companies that demonstrate CRC compliance will ensure that they avoid potentially significant financial penalties and reputational damage. However, proactive organisations, which fully engage in the process, could generate significant benefits, including cost savings through reduced energy usage, reduced expenditure on CRC allowances and an enhanced "green" reputation, through the published league tables showing performance and renewable energy usage. In order to generate benefits, as opposed to merely avoiding costs, organisations will need to approach Carbon Reduction Commitment compliance in one or more of three ways:

• Reduce emissions through the use of dedicated/on-site renewable energy projects; and/or
   
• Reduce emissions through enhanced energy efficiency measures; and/or
   
• Purchase allowances from the Government, other CRC organizations with surplus allowances and/or the Environment Agency.
   

When considering an organisation's CRC compliance it is important to note that, as a general rule, any emissions across an organisation which are already covered by Climate Change Agreements (or the EU Emission Trading Scheme) do not ultimately need to be included in your Carbon Reduction Commitment emissions.

In order to ensure CRC compliance, participating organisations will be required to:

• register online (if energy consumption is above 6,000 MWh in 2008, equivalent to an annual electricity bill of ~£500,000, register as a full participant for the scheme between 1st April 2010 and 30th September 2010);
   
• measure and record its energy use (ie electricity, gas, fuel oil, coal, liquefied petroleum gas etc);
   
• calculate its carbon emissions annually (excluding transport emissions);
   
• provide annual energy data to the Scheme Administrator;
   
• buy allowances corresponding to its emissions (from the first "compliance year", April 2011- March 2012, onwards);
   
• submit an annual report on its emissions (from the first "reporting year", April 2010 - March 2011, onwards);
   
• surrender allowances equivalent to its emissions; and
   
• trade allowances if it has too many or too few
   

Monitoring of CRC compliance will be carried out by the participating organizations themselves, ie CRC will be "self-certifying". However, up to one-fifth of participants will be subject to external audits each year. This will not be random and will focus disproportionately on organizations that have misreported and/or those which show a significant drop in CRC emissions.