The CRC Energy Efficiency Scheme is a UK mandatory climate change and energy saving scheme. It is central to the UK’s strategy for improving energy efficiency and reducing carbon dioxide (CO2) emissions, and has been designed to raise awareness in large organisations and encourage changes in behaviour and infrastructure.
CRC 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.
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.
DECC has developed the CRC policy in partnership with the Scottish Government, the Welsh Government and the Department of Environment Northern Ireland.
This scheme is designed to tackle CO2 emissions not already covered by Climate Change Agreements and the EU Emissions Trading Scheme. It covers large public and private sector organisations, and has been designed to raise awareness in large organisations, especially at senior level, and encourage changes in behaviour and infrastructure.
Any part of an organisation with more than 25% of their energy use emissions covered by a CCA will be exempt from the scheme. Only the specific subsidiary with the CCA will be exempt, rather than the entire organisational group.
Emissions for which participants do not have to purchase allowances include the following:
- Domestic accommodation.
- Transport emissions.
- Emissions from activities covered by a Climate Change Agreement or the EU Emissions Trading System.
- Emissions from consumption outside the UK.
Where the organisation supplies energy to another organisation or person (except tenants) they do not count this in their CRC emissions.
Organisations (and their subsidiaries) that have at least one half-hourly electricity meter (HHM) settled on the half-hourly market. Organisations also qualify if their total half-hourly electricity consumption exceeded 6,000 megawatt-hours (MWh) during 2008.
It is estimated that, initially, 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.
There are rules covering what emissions count towards CRC emissions that organisations must report to Government. This ensures that organisations do not have to buy allowances for activities or emissions covered by other Government policies.
There are two rules that determine CRC emissions as follows:
- All emissions from core sources (see below) of energy must be included in the organisation's CRC emissions, unless they are covered by the EU Emissions Trading System (EU ETS) or CCAs.
- At least 90% of the organisation's total footprint emissions must be regulated either by CRC or by EU ETS or CCAs. The remaining 10% of emissions may be omitted, primarily because the administrative burden of accounting for some very small sources of energy every year would be disproportionately large.
Core sources are all emissions from the following sources:
Core electricity supplies:
- all settled HHMs (half-hourly meters);
- all non-settled HHMs;
- all non-domestic meters; and
- all dynamic supply.
Core gas supplies:
- all daily meters;
- all half hourly meters; and
- all large gas point meters.
Supplies through meters with any ancillary devices that allows the meter to be read remotely will count towards core gas supplies.
If, having included all core sources, the organisation has not yet reached the point where 90% of its total footprint emissions are regulated, then it must include some of its residual supplies until the organisation’s combined EU ETS, CCAs and CRC coverage level is above the 90% threshold. (This assessment applies only for the parts of the organisation remaining after the exclusion of any subsidiaries under the 25% CCA rule.)
Residual sources are any energy supply other than the core sources. A fuel list can be found in the CRC Order to help to identify residual supplies that may need to be included.
Once the organisation has achieved the 90% threshold, it can choose to opt in residual sources, if desired, until anything up to 100% of the total footprint emissions is covered.
Link to guidelines: