April 2010 sees the start of the Government’s flagship carbon trading scheme called CRC Energy Efficiency Scheme. CRC is a mandatory scheme for large business that aims to improve energy efficiency and reduce the amount of carbon dioxide emitted in the UK. Its vital to the Government’s target to reduce greenhouse gas emissions by 2050 by at least 80% compared to 1990 baseline.
CRC will operate as a ‘cap and trade’ mechanism, providing a financial incentive to reduce energy usage by putting a price on carbon emissions from energy use. Companies will have to purchase allowances initially sold by the Government for £12 per tonne of CO2
Only those companies who used more than 6000 MWh during 2008 will be required to participate, this includes, of course, virtually all water companies. Any company that used the half hourly electricity market in 2008 will have to disclose information on their energy usage.
The CRC introduces a new reality for companies. Although initially the carbon price is set too low to make a significant difference its inevitable the price will ramp up with time. Companies would be well advised to start considering now what the implications are for their business.
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