Introduction
The CRC Energy Efficiency Scheme forms part of the UK Government's drive towards a low-carbon economy. In its simplest form it is a cap-and-trade scheme for carbon emissions, similar to the European Union's ETS scheme, but focusing on smaller, less energy-intensive organisations.
Purpose
The purpose of the scheme is to encourage companies to reduce their greenhouse gas (GHG) emissions by making investments into energy efficient technologies, or to invest in on-site renewable electricity generation.
Scope
All organisations (including the government, schools etc.) that have electricity supplied that is covered by an half hourly meter (HHM) and that consumed more than 6,000MWh of electricity during 2008 (the base year) will be included in the scheme. These organisations should be contacted by the Environment Agency in the near future, to make them aware of their new obligations.
Organisations that did not consume 6,000MWh of electricity, but that are metered on a half-hourly basis will be required to make an information disclosure to the CRC.
Obligations
From 2010, participating organisations will be required to measure and report their energy usage (including electricity, gas, fuel oil and also on-site vehicle consumption) to the scheme each year.
As of April 2011, as well as measuring energy usage and calculating emissions, participants will be required to purchase emissions allowances from the CRC scheme, which will effectively act as permits to emit a certain amount of carbon dioxide.
These allowances will have to be surrendered annually, when organisations report their emissions, to cover the total calculated tonnage of carbon dioxide that they have emitted.
Participants that do not purchase enough allowances to cover all of their emissions during a compliance year will have to purchase top-ups from a secondary market of participating organisations or from the CRC 'safety valve' mechanism.
The League Table
The CRC Scheme is designed to be revenue neutral to the UK Treasury. Participants will pay an administration fee to the scheme, but all finances raised by the sale of emissions allowances will be returned to participants each year, based on their performance relative to all other organisations in the scheme.
This will be represented by a performance league table, which will be published by the CRC online each year
Organisations at the top of the table will receive bonuses to their payments, and those at the bottom will be charged penalties for their poor performance. The adjustments start at +/-10% and will increase over five years to +/-50%.
Measuring Performance
In the introductory phase, organisations' performance in the CRC Scheme will be determined by three metrics:
The Early Action metric represents the steps that an organisation has taken in the years before the CRC Scheme to improve their energy efficiency. The scoring for this metric is based around two criteria;
> The percentage of the organisation that is covered by the Carbon Trust Standard (or an accepted equivalent), and;
> The percentage of the organisation that is covered by non-mandatory AMR electricity meters.
These have been selected as proxies to represent that organisations are taking their responsibility for energy efficiency seriously.
The Absolute metric accounts for carbon emissions reductions made by participants. This metric is scored on the basis of a total reduction in the amount of carbon dioxide reported by a company for a given year, when compared to the rolling average of their (up to) five previous years' emissions.
The Growth metric allows for the fact that organisations' emissions will increase as their physical size and activity increases. This metric is scored based on a relative reduction in carbon emissions, when compared to a metric of activity (turnover or expenditure).
The focus of the CRC is to encourage energy efficiency and lower energy usage, therefore green tariff electricity is not credited, and renewable electricity that is generated onsite will only be credited where it does not receive any kind of financial subsidy.
The CRC Energy Efficiency Scheme is due to come into force in April 2010, and participants will be required to register between April and September 2010 at the same time as measuring their energy consumption data.
Directive Decoder
Gary Nevison, Head of Legislation at 
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