Carbon Reduction scheme

The CRC represents a carbon reduction scheme designed to ensure that less energy intensive organisations contribute to UK efforts to meet its multiple greenhouse gas emission reduction targets by reducing emissions from such organisations by 1.2 million tonnes of carbon per year by 2020.

The need to create a carbon reduction scheme in this sector was originally highlighted by the Carbon Trust in its publication: "The UK Climate Change Programme: Potential evolution for business and the public sector". This examined a range of possible new measures, including this new emissions trading scheme.

The CRC is a carbon reduction scheme with 5 key characteristics:

• It is based on mandatory emissions trading and is a carbon reduction scheme designed to capture emissions that currently fall outside existing initiatives like the EU Emissions Trading Scheme (ETS) and Climate Change Agreements (CCA)
   
• Early adopters and those that make the biggest carbon emission reductions stand to benefit from (relative) financial benefits and reputational enhancement, since the publication of a performance league table, revised annually, is an inherent element of the carbon reduction scheme
   
• The provision of revenue recycling, where monies raised through the purchase of allowances will be recycled to reflect relative performance as determined by the league table; the CRC is a carbon reduction scheme with a "carrot and stick" approach!
   
• It is a carbon reduction scheme designed to provide flexibility and it avoids being prescriptive on how participating organisations should meet their own, specific performance commitment. Organisations are free to choose the best solution(s) for their circumstances, using one or more of energy efficiency (eg. high efficiency lighting) and/or buying additional allowances (eg. from organisations that have surplus allowances) and/or on-site renewable energy generation (eg. a wind turbine)
   
• Penalties will apply to organisations that break the rules of CRC and there will be annual, published performance league tables showing the relative performance of participating organisations in respect of CRC compliance but also the extent to which such organisations use renewable energy