Carbon Reduction Commitment (CRC)

The Carbon Reduction Commitment (CRC) is a proposed mandatory cap and trade carbon reduction and energy saving scheme in the United Kingdom, applicable to large non energy-intensive organisations in the public and private sectors.

Large organisations which annually consume more than 6,000 MWh of half hourly metered electricity are targeted by this scheme - this translates to an electricity bill of approximately £500,000. It is expected that around 20,000 organisations may be affected by the scheme.

The scheme places a financial incentive to reduce emissions by putting a price on carbon emissions. CRC participants are required to purchase allowances equivalent to their emissions each year. The overall emissions reduction target is achieved through placing a cap on the total number of allowances available to the group of participants (though they are free to determine the most cost-effective way to reduce their emissions). The scheme aims to achieve emissions reductions of at least 4 MtCO2 (megatonnes of carbon-dioxide) per year by 2020.

The energy efficiency savings encouraged by the scheme are expected to benefit participants around £1 billion by 2020. Revenue recycled back to participants from the sale of allowances will also include a bonus for the best performers. This financial incentive also includes a reputational incentive since participants will be ranked according to their annual performance in a publically available league table.

The CRC objectives are to:

  1. Mandatory carbon reduction and energy efficiency scheme to change behaviour and infrastructure
  2. Auction based emissions trading mechanism
    1. Targeting UK energy use emissions from business + public sector organisations
    2. Large organisations: HHM electricity > 6,000 MWh in 2008
  3. Revenue neutral to the Exchequer
    1. Auction revenue recycled to participants
  4. Avoid overlap
    1. Target energy use emissions outside EU ETS (The European Union Emission Trading System) and CCA (Climate Change Agreement)

More Information

Carbon Reduction Commitment (CRC) Carbon Reduction Commitment (CRC) Guide

For more information on the Carbon Reduction Commitment (CRC) please visit the Defra, UK website (link opens in new window).