EU Emissions Trading Scheme

The Carbon Reduction Commitment will typically result in a range of costs for participating organisations. These could include administration and consultancy advice, implementation of new technology, as well as the potential for fines and penalties due to non-compliance or poor performance.

However, in the long term, it is likely that most organisations will enjoy significant financial benefits due to improved efficiency and lower energy costs.

To the first year of the carbon reduction commitment, organisations should carry out a number of actions to make best use of the scheme.

The organisation should forecast its business as usual emissions.
Cost-effective abatement options should be identified and implemented at the first opportunity. During the first few years of the carbon reduction commitment, the fixed price of £12 per tonne of CO2 provides a simple costing of opportunities.
Organisations should also monitor all included sources of emissions, to identify the potential future opportunities and risks.

The Carbon Reduction Commitment's 90 percent emissions rule, otherwse known as the 'flexible de minimis' rule, requires all particpants to account for at least 90% of their total carbon footprint emissions. The 90% rule aims to focus attention on the largest, and most cost effective, opportunities to reduce carbon emissions.

The 90% emissions rule can include all energy reported through the Climate Change Agreement, European Union Emissions Trading Scheme, as well as all 'Core Sources' of non-transport energy consumption.

In developing a Carbon Reduction Commitment action plan, the first thing that any organisation will need to do is to understand their liability.

The 'Organisation'

The full organisational structure of any company will need to be ascertained to identify whether or not it will be required to enter into the carbon reduction commitment scheme.

Total Half Hourly Electricity Consumption

Organisations will need to assess all the consumption from their half hourly electricity meters during 2008 to calculate whether or not they exceed the 6,000 MWh threshold.

Exemptions

whilst the carbon reduction commitments does not officially start until April 2010, there is still a large amount of work that many organisations may have to do prior to that date.

Identify organisational structure

The carbon reduction commitment's recycle payments will take place over three stages.

First stage - based payment

During the first year, from April 2010 to March 2011, calculations will be made to identify each organisation's share of the total carbon covered by the scheme. This percentage share will then be used for all subsequent years. The percentage share will then be multiplied by the recycled pot

Second stage - bonus or penalty

During the first year, the organisation at the top of the league table will receive only 10% bonus.

Adjustment factor

The Carbon Reduction Commitment league table will rank all participants in the scheme on the basis of performance in three metrics.

First metric - Absolute Emissions

Annual reporting for the Carbon Reduction Scheme will fall in line with the financial year compliance cycle, from April to March, as opposed to the original reporting that was based on calendar year reports from Januaury to December.

Organisation within the Carbon Reduction Commitment will be required to maintain an evidence pack, and a source list of all emissions included in the CRC.

Additional rules will apply to the reporting on the generation of renewable energy, exporting power from your own energy generation and the use of combined heat and power.