The Carbon Reduction
Commitment
MAY 2009
The Carbon Reduction Commitment (“CRC”) is a new compulsory emissions trading
scheme for:
- large non-energy intensive businesses (e.g. major retailers, hotel chains and supermarkets) and
- public sector organisations in UK
In keeping with prevailing concerns about climate change, the CRC is designed to
reduce energy consumption. It is expected to come in to operation in April 2010.
In the business sector, it will apply to businesses whose mandatory half-hourly
metered electricity consumption is greater than 6,000 mega-watt hours a year
(roughly an annual electricity bill of £500,000). Parent companies of businesses
caught by the CRC must register with the scheme, even if they are based overseas.
In buildings that are let, it is the counterparty to the energy supply agreement that
will be responsible for participating in the CRC.
The CRC will not apply to emissions already covered by EU Emissions Trading
Scheme or climate change agreements, nor will it apply to transport emissions.
The Government will set a cap on the total amount of carbon dioxide that relevant
organisations/businesses can emit in any one year. Allowances will then be
auctioned (initially sold at £12 per tonne), and the relevant organisations or
businesses will have to show that they have sufficient number of allowances to
cover the carbon dioxide they emit. In the first year, the number of allowances an
organisation receives will depend on early action - essentially it will be a case of
first come first served!
In due course an annual league table will be prepared showing how relevant
organisations and businesses have performed under the scheme. Again, early action
will be a large factor in the position achieved on the table in the first year.
The British Council of Shopping Centres, the British Property Federation and the
British Retail Consortium have published guidance on the subject and have started
an awareness campaign. They have warned that those who do not implement
strategies to manage emissions could face significant financial and reputational
consequences. This is a nettle that needs to be grasped sooner rather than later
in order to prevent adverse commercial consequences.
If you would like further information on the content of this newsletter please
contact James Daglish on 0207 404 0606 or jdaglish@gdlaw.co.uk.
This is a guide for general information and interest and should not be relied upon as providing specific legal advice. |
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