CRC Carbon Reduction Targets

Please note: The content of this article is in the process of being updated to reflect the latest CRC scheme design. Updated content will be posted shortly. The Department of Energy and Climate Change (DECC) website contains complete details on program requirements and design.

How UK Organizations can work to meet carbon reductions

The Climate Reduction Commitment (CRC) legislation represents significant opportunities for those entities that are proactive and are able to meet or exceed their carbon reduction targets.

Heavy fines await UK companies that fail to conform or to report (should they be required to do so) under the new Climate Reduction Commitment (CRC) legislation. Much confusion exists within the country, even though the Energy and Climate Change Minister, Ms. Joan Ruddock, maintains that the government has conducted a thorough announcement of the pending legislation.

CRC Reduction Targets
As it is expected that up to 20,000 firms in the UK will have to submit a CRC information disclosure by the summer of 2010, more education is called for in short order. The government further estimates that 5,000 entities will have to participate in the full scheme.

No one disputes that we must all address the issue of global warming and climate change and that a concerted effort to encourage the reduction of greenhouse gas emissions is in everyone's best interests. Governments around the world are moving fairly swiftly to address this issue and the UK is one of the first to bring in legislation such as the CRC.

Whilst it is often not realistic to expect corporations to act from a purely humanitarian point of view, the government has taken a two-pronged approach to the problem. In what is effectively a “carrot and stick” scheme, the Department for Energy and Climate Change expects that those who are proactive and effective when it comes to their carbon reduction targets will gain, whilst those who get it wrong will incur significant penalties.

The Department for Energy and Climate Change (DECC) Estimates

The DECC has said that it expects corporate energy bills to be lowered by as much as £1b by the year 2020. With this saving will come improved corporate profitability and a stronger economy, in addition to the positive effects on the environment.

The CRC has a recycling mechanism as part of the overall “cap and trade” approach. Companies will have to buy allocations from the government which can be exchanged for emissions produced as part of their carbon footprint.

There would be a set price allocation per ton of emissions. Should the company meet their carbon reduction targets and end up with more allowances than their requirements, then they can sell them back into the market and, potentially, make a profit. But companies who end up using more than their initial anticipation will have to purchase additional units and therefore be penalized accordingly.

Participate in the CRC Carbon Reduction Program is Mandatory

The government has a fairly large stick to apply to get companies in line initially. Those entities who fail to submit an important information disclosure on time will receive a one-off fine of £1000. If the company is required to fully participate in the CRC it will face a fine of £5000 when failing to register, with an additional £500 pounds for each subsequent day of delay.

When it comes to reporting, companies will be expected to anticipate carbon reduction targets and provide a carbon footprint report detailing their requirements by a deadline, with a resulting fine of £5000 if they fail to comply and a further fine of £.05 per tonne of CO2 per day, rising to £.10 per tonne of CO2 after 40 days. Similar fines will result if they fail to provide an annual report each year.

Avoid Hefty Fines by Taking Early Action

Fines can be increased substantially if emissions are incorrectly reported, with a fine of £40 per tonne to start off with. If insufficient allowances are purchased from the beginning, a £40 per tonne fine will also be levied. Outright falsification can be punished with a fine of up to £50,000 and a prison term of up to three years.

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