26 June 2009
Who is covered?
The CRC targets large non-energy intensive users in both the public and private sectors. It is designed to raise awareness in these organisations, especially at senior management level, and generate change in their infrastructure, behaviour and operation. It will cover an estimated 10 per cent of additional emissions not already captured by Climate Change Agreements and the EU Emissions Trading Scheme.
Full participation eligibility will be based on two conditions: organisations, or any of their subsidiaries, having at least one half hourly electricity meter (HHM) settled on the half hourly market; and the total, half hourly electricity consumption exceeding 6,000MWh during the qualification period. Environment Agency (EA) figures indicate there are over 105,000 HHM installed in the UK, of which 46,000 have unique billing addresses. Of these, approximately 5,000 organisations will become full participants in. The EA plan to contact all potential participants in September 2009.
How will it work?
On a rolling, yearly, basis each participant will have four key actions to complete: purchase allowances against their carbon emissions; monitor and formally report on their energy usage; surrender allowances equal to total emissions; and receive a recycling payment.
To ease the establishment of the process, its implementation has been broken down into two phases, introductory and capped.
The introductory phase will run for the first three years of the scheme, through which there will be no market cap set by the government. It is expected that by letting the market purchase unlimited allowances during the sale period, a natural cap will be established. Allowance prices will also be fixed at £12/tCo2 (current proposal). This figure is in the mid-range of that proposed in the initial consultation.
From April 2013 the introductory phase closes and the capped phase will commence. This will see a fixed quantity of allowances, released by the government (the absolute market) at a variable price for auction. The auction will be of a "sealed bid, uniform price" type.
At the end of each year the auction revenue generated will be recycled back to all participants. The payments made will be proportional to the total 2010 CRC emissions reported and be a percentage of the revenue raised. A bonus/penalty will be applied to these payments based on the organisation's performance in a participant league table.
A table will be produced at the end of each year for all participants and have a financial and as well as a reputational significance.
Defining an emissions reduction strategy will be crucial, as it will support the organisation with forecasting and budgeting. It may also allow participants to use the secondary market, generated by the scheme, to maximum effect. FM should be pivotal in this process, the CRC is a significant opportunity to not only demonstrate the operational and tactical role, but also the strategic. For those prepared and ready it will add value to the organisation in every sense of the word.
Greg Davies is head of service development at environmental consultancy Elementus
- January to December 2008 The qualification period for those with half hourly meters installed.
Spring /summer 2009 CRC consultation and awareness campaign roll out.
4 June 2009 Consultation ends
September 2009 EA proposed date to send out registration packs.
April 2010 Scheme begins Start of 1st compliance and "footprint" year.
April to September 2010 Participation registration period.
- April 2011 Start of second compliance year. The first sale takes place. Participants to pay for double allowances to cover 2010(actual) and 2011(forecast) emissions and receive allowances for both years.
July 2011 Participants release first year report and surrender 2010/11 allowances.
October 2011 First recycling repayments made (from 2011 sale) to participants with bonuses/penalties. It covers 2010/11 so will be double payment.
April 2012 Start of third compliance year. The second sale of allowances takes place. Participants pay for and receive allowances for 2012/13 forecast.
- July 2012 Participants release second year report and surrender allowances
- October 2012 Second recycling repayment made (from 2012 sale) to participants with bonuses/penalties.
- April 2013 - Capped phase begins.