The Carbon Reduction Commitment (which was recently renamed the CRC Energy Efficiency Scheme) is a mandatory carbon emissions trading scheme to cover all organisations using more than 6,000MWh per year of electricity (equivalent to an annual electricity bill of about £500,000). All energy other than transport fuels is covered, such as, electricity, gas, fuel and oil.
It will cover all emissions not currently included in the EU Emissions Trading Scheme or Climate Change Agreements, from up to 5,000 large organisations.
How it works
Each year, the CRC will require participating organisations to purchase and submit sufficient allowances to meet their annual emissions covered by the scheme. The scheme will start with a reporting year from April 2010, with the first sales of allowances held in April 2011. During the introductory phase, all carbon emission allowances will be sold at a fixed price of £12 per tonne of carbon dioxide. From April 2013, allowances will be auctioned by the government, with fewer available each year.
Revenues from the sale of allowances will be recycled back to organisations within the scheme. Each organisation will be repaid in proportion to their historic emissions with a bonus or penalty depending on the extent to which they have reduced their emissions compared with other organisations within the scheme.
In the event of excessive allowance prices within the CRC, a "Safety Valve" mechanism allows EU Emissions Trading Scheme (ETS) allowances to be purchased via the Environment Agency for use in the scheme.
Background
The sectors targeted by the Carbon Reduction Commitment scheme generate over 10% of UK Carbon Dioxide (CO2) emissions, around 55 MtCO2. The Carbon Reduction Commitment scheme aims to reduce carbon emissions from these organisations by at least 4 million tonnes of carbon dioxide per year, by 2020. The Carbon Reduction Commitment scheme was announced by the Government in the Energy White Paper (May 2007). T
Practical advice
For guidance on how the CRC affects your organisation see their guide to Managing the Carbon Reduction Commitment (CRC) as a business opportunity. (insert link)
The EU Emissions Trading Scheme (EU ETS) puts a cap on the carbon dioxide (CO2) emitted by business and creates a market and price for carbon allowances. It covers 45% of EU emissions, including energy intensive sectors and approximately 12,000 installations.
How it works currently
The scheme is now in Phase II, which runs from 2008-2012 (the commitment period of the Kyoto Protocol). During this phase, every EU member state:
Developed a National Allocation Plan (NAP)
Member State proposed a limit ('cap') on total emissions from relevant installations The plans were approved by the European Commission, in many cases after some revision. Distributes Allowances
How it will work in the future - Phase III
Phase III will start in 2013 and run until 2020. The biggest changes in Phase III will be:
Background
The scheme started in 2005 in order to help the EU meet its targets under the Kyoto Protocol (8% reduction in greenhouse gas emissions from 1990 levels). The scheme is the world's largest carbon-trading scheme. It provides an incentive for installations to reduce their carbon emissions, because they can then sell their surplus allowances.
Installations are included in the scheme on the basis of their Carbon Dioxide (CO2) emitting activities. Industries that are covered include:
The latest on the draft National Allocation Plan (NAP) and the EU ETS can be found on the DEFRA website.
Other EU market instruments
For information on mandatory product labelling and voluntary sector agreements, visit the EU website.
Climate Change Levy & Agreements
The Climate Change Levy (CCL) is a charge on energy usage for business and the public sector introduced to encourage energy efficiency. Climate Change Agreements (CCAs) allow energy intensive organisations a discount on the levy if they acheive energy efficiency targets.
Climate Change Levy
The Climate Change Levy (CCL) came into effect in 2001 to encourage improved energy efficiency and reduced greenhouse gas emissions. The levy does not apply to the domestic, transport or energy sectors or to selected energy sources such as renewable electricity.
Climate Change Agreements
To help energy-intensive organisations, the Government has negotiated Climate Change Agreements (CCAs) in some sectors. These agreements give organisations an 80% discount from the Climate Change Levy, as long as they reach additional Carbon Dioxide (CO2) reduction targets. There are currently ten major energy intensive sectors and over thirty smaller sectors with agreements. The major sectors are:
Levy Exemption Certificate
Only renewable electricity with a Levy Exemption Certificate (LEC) is exempt from the levy. When an organisation buys renewable electricity with a Levy Exemption Certificate, they should provide the Certificate to HM Customs and Excise. Ofgem issues Certificates on a monthly basis to accredited generating stations. A single certificate represents the generation of 1 Megawatthour (MWh) of renewable electricity.
Climate change policy and legislation drives the transition to a low carbon economy, creating opportunities and risks to which businesses must respond to succeed. This section presents the key policy drivers by sector and summarise the international policy shaping UK legislation. Insight studies provide in depth analysis of key issues to inform businesses and policy makers on how to address climate change and harness the economic benefits it presents.
A range of legislation is in place across light industry, the commercial and the public sectors, in particular, the Carbon Reduction Commitment, Building Regulations and the Climate Change Levy.
Buildings Policy
The buildings sector accounts for 40% of the EU's energy usage and offers the largest single potential for energy efficiency. The main UK regulations of interest are:
In addition, the UK government has announced targets for all new housing to be "zero carbon" by 2016 and new commercial buildings by 2019.
Energy certificates
Energy certificates allow a building's energy performance to be measured consistently and objectively. This should help better performing buildings to attract a premium, thereby increasing the business case for energy efficient buildings. Certificates grade a building's energy performance on a scale from A - G. There are two types for commercial buildings:
Building Regulations Part L 2006 (Part J in Scotland and Part F in Northern Ireland)
Government is currently consulting on 2010 Building Regulations, which will be announced in 2010. Current Building Regulations were revised in 2006 to comply with the EU Directive on the energy performance of buildings (EU EPBD).
The revisions to Part L set maximum carbon dioxide emissions for whole buildings. The regulations apply both to the construction of new buildings and renovation of existing buildings (with a total surface area over 1,000m²). For new buildings, Part L reduces carbon emissions by 25% from 2002 standards, which already reduced emissions by 15%. The net reduction of 40% from pre-2002 is often used as an indicator of improvement.
The Department for Communities and Local Government (DCLG) believes that the revised regulations will produce additional benefits such as:
Future revisions to Part L will be one of the mechanisms enabling the UK to meet its targets for "zero carbon" new housing and commercial buildings by 2016 and 2019 respectively. DCLG will be updating Part L in 2010.
Components of Part L
Part L is divided into L1A and L1B for domestic dwellings and parts L2A and L2B for non-domestic buildings. The Carbon Trust focuses on L2A and L2B.
In theory, one of the strengths of Part L over previous versions is that it is less prescriptive. Targets are set, but the building designers have an element of flexibility in how they achieve the target emissions rate, by the use of more thermally efficient fabric, efficient plant and even renewable micro-generation.
L2A is for new buildings and lays out the following:
L2B is for refurbishments in buildings with over 1000m2 of useful floor area and includes:
Energy intensive industries
Large energy intensive businesses are responsible for 45% of the UK's business and public sector emissions. Key legislation driving emissions reduction in this sector include the EU Emissions Trading Scheme and the UK's Climate Change Agreements.
EU Emissions Trading Scheme
The EU Emissions Trading Scheme (EU ETS) puts a cap on the carbon dioxide (CO2) emitted by business and creates a market and price for carbon allowances. It covers 45% of EU emissions, including energy intensive sectors and approximately 12,000 installations.
How it works currently
The scheme is now in Phase II, which runs from 2008-2012 (the commitment period of the Kyoto Protocol). During this phase, every EU member state:
Distributes Allowances
Operates the Scheme
How it will work in the future - Phase III
Phase III will start in 2013 and run until 2020. The biggest changes in Phase III will be:
Background
The scheme started in 2005 in order to help the EU meet its targets under the Kyoto Protocol (8% reduction in greenhouse gas emissions from 1990 levels).
The scheme is the world's largest carbon-trading scheme. It provides an incentive for installations to reduce their carbon emissions, because they can then sell their surplus allowances.
Installations are included in the scheme on the basis of their Carbon Dioxide (CO2) emitting activities. Industries that are covered include:
Environmental policy
The Carbon Trust are committed to continuously improve our environmental performance.
Mission
The mission of the Carbon Trust is to accelerate the move to a low carbon economy.
Impacts
Their most significant impact is to help businesses and public sector organisations reduce their greenhouse gas emissions and to act as a catalyst to accelerate the move to a low carbon economy. They recognise that in pursuing these objectives they can impact the environment. Their most significant adverse environmental impacts are:
Commitments
They are committed to continuously improve our environmental performance and prevent pollution by:
"Using de Poel’s expertise and unique contingent workforce management solution has enabled Allied Bakeries to make measurable improvements in both our expenditure and supplier service."
