CRC Energy Efficiency Scheme -- The Final Draft

The UK Carbon Reduction Commitment is a British based initiative, which is anticipated to provide a model for the rest of the world. The US Environmental Protection Agency announced shortly after introduction by the UK Department that they plan to introduce a similar scheme. The new laws set out to ensure that the greenhouse gas reduction targets established by the Climate Change Act are adhered to. The Commitment establishes an auction-based emissions trading scheme and its reach is mandatory.

The British government has taken significant steps to get feedback surrounding the proposed CRC Energy Efficiency Scheme, as the project gets ready to officially start in April of 2010. Legislation has been under discussion for quite some time, yet during recent surveys a number of affected organizations still appear to be uncertain about what to do.5000 or so companies in Britain are estimated to use more than 6000 MWh of electricity per year and for those companies, participation in the CRC Energy Efficiency Scheme is mandatory. These businesses already spend about £0.5m per year in annual energy bills and are adjudged to be significant emitters of carbon to the atmosphere. Qualification for the scheme was based on 2008 consumption tallies and during 2009, preparations must have been taken to prepare for engagement.When the CRC Energy Efficiency Scheme rolls out in April of 2010, this will be the start of three key phases, but still just a harbinger of what is to come. Eventually, the scheme will operate on a capped, auction driven markets basis and active trading of carbon emission allowances will be required for all contenders.The CRC Energy Efficiency Scheme was originally known as the Carbon Reduction Commitment and the name change is one of a small number of alterations made by the government during final consultations. In addition, companies will no longer have to purchase a double quota in April of 2011 as originally proposed. At that time, a significant cash commitment had been mooted, with companies paying for the 2010 and 2011 emissions at the same time.While the CRC Energy Efficiency Scheme is not intended to raise funds for the government or for the taxpayer, organizations are still considering its implications warily. The scheme calls for companies to buy allowances and receive the funds back, essentially, but through reference to a computed league table, those who over performed will receive a bonus, while those who did not will be penalized.An early survey showed that as many as 60% of businesses affected by the CRC Energy efficiency Scheme were still unaware of its full implications. Some thought that they could leave any actions to reduce carbon emissions until the scheme got underway properly in 2011. However, the government has installed "early action" metrics and those who register with the Carbon Trust Standard or go out of their way to install automatic meters in advance, will figure more highly on the league table and attract bonuses. Organizations that are ill-prepared or who fail to take clear action face considerable financial implications as compared to those who are optimally efficient. Energy savings can only represent additional financial savings to the balance sheet anyway.The CRC Energy Efficiency Scheme seems ready to be rolled out by the British government in April 2010. This will be the time to register participation and the period then commencing will also be known as the "footprint year," during which time energy used will form the basis for determining the company's subsequent position.

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