Carbon Reduction Commitment micro-guide

What is its purpose?

Incentivise large non-energy-intensive organisations and public bodies to reduce their energy consumption.

Does it affect me?

Yes if:

You consumed over 6000 megawatt-hours (MWh) of electricity from 1 April 2012 to 31 March 2013 (the qualifying period for this phase – phase 2) and have at least one half-hourly meter settled on the half-hourly electricity market.


You are a UK central government department or devolved administration

Are there any exemptions? Yes, any energy that is covered by Climate Change Agreements (CCAs) or the European Emissions Trading Scheme (EuETS) is exempt.

What do you need to do to comply?

First step is to register, if you are affected by the CRC you should have registered on the CRC registry by 31 January 2014. You only need to do this once for each phase at a cost of £950.

You then need to monitor your qualifying gas and electricity usage and report your consumption annually to the Environment Agency (EA).  The EA will input your data into their carbon calculations system which will translate your kWhs energy consumption into tonnes of CO2 and they will inform you how much you have emitted.  There is a cost to each tonne of carbon you have emitted.  

Each year you will need to purchase allowances for your tonnes of CO2 emissions, these are calculated automatically by the EA’s system and are priced per tonne of CO2 – thus, the less you consume, the lower the cost. You can also purchase tonnes of CO2 in advance (forecast sales price) at a discounted price. The price of the allowances and other information about CRC and the registration process can be found at the EA’s CRC web pages.

If you qualify and hadn’t registered before 31 January 2014 you would be fined £5000, with an additional £500 for every working day after the deadline up to a maximum of £40,000.

What are the consequences for not complying?

If you qualify and hadn’t registered before 31 January 2014 you would be fined £5000, with an additional £500 for every working day after the deadline up to a maximum of £40,000. 

What can you do to minimise the impact?

Look at how you can reduce energy consumption, an energy survey or an audit would be a good place to start then look at practices and procedures that will reduce your consumption or at technology that can improve efficiencies.

ISO50001 would be the best route if your business is serious about energy management it’ll ensure you’re compliant, ensure you are looking at energy consumption from a perspective of continuous improvement in terms of reducing energy costs and usage; and even mean you are compliant with some pieces of legislation.

How can EEF help?

For help and guidance on carbon and energy legislation, call 0808 168 5874.

 See the rest of our microguides and other advice on carbon and energy compliance issues.

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