CRC Energy Efficiency Scheme

The CRC Energy Efficiency Scheme (formerly known as the Carbon Reduction Commitment) is the UK's mandatory climate change and energy saving scheme, due to start in April 2010. It is central to the UK’s strategy for improving energy efficiency and reducing carbon dioxide (CO2) emissions, as set out in the Climate Change Act 2008. It has been designed to raise awareness in large organisations, especially at senior level, and encourage changes in behaviour and infrastructure. The schemes amended title serves to better reflect the CRC’s focus on increasing energy efficiency.

CRC is designed to improve energy efficiency in large organisations. It will operate as a 'cap and trade' mechanism, providing a financial incentive to reduce energy use by putting a price on carbon emissions from energy use. In CRC, organisations buy allowances equal to their annual emissions. The overall emissions reduction target is achieved by placing a ‘cap’ on the total allowances available to each group of CRC participants. Within that overall limit, individual organisations can determine the most cost-effective way to reduce their emissions. This could be through buying extra allowances or investing in ways to decrease the number of allowances they need to buy.

All the money raised through the allowances will be recycled back to participants, according to how well they perform. The scheme features an annual performance league table that ranks participants on energy efficiency performance. Together with the financial and reputational considerations, the scheme encourages organisations to develop energy management strategies that promote a better understanding of energy consumption.

The scheme is designed to tackle CO2 emissions not already covered by Climate Change Agreements and the EU Emissions Trading Scheme. The scheme will cover large public and private sector organisations, which are responsible for about 10 percent of the UK’s emissions. This will affect around 20,000 organisations.

Organisations are eligible for CRC if they (and their subsidiaries) have at least one half-hourly electricity meter (HHM) settled on the half-hourly market. They also qualify if their total half-hourly electricity consumption exceeded 6,000 megawatt-hours (MWh) during 2008. Initially, it is estimated around 5,000 organisations will qualify, including supermarkets, water companies, banks, local authorities and all central Government Departments. Qualifying organisations will have to comply legally with the scheme or face financial and other penalties.

The Department of Energy and Climate Change has developed the CRC policy in partnership with the Scottish Government, the Welsh Assembly Government and the Department of Environment Northern Ireland.

For more information please download the below user guide, and if you have any questions please contact us.

• The Carbon Reduction Commitment User Guide (pdf 4.82mb)