Carbon Reduction Commitment embraces energy efficiency

Published:  10 November, 2009

The scope of the Carbon Reduction Commitment Energy Efficiency Scheme (formerly the Carbon Reduction Commitment) has been broadened to take into account improvements in energy efficiency and the use of onsite renewable energy such as wind turbines and solar panels. The changes to the scheme follow extensive consultation with businesses and trade bodies. Large energy users in business and the public sector will be required to take part in the scheme from 1 April 2010.

To smooth the introduction of the scheme and help ease upfront costs, organisations will only have to report emissions in the first year (2010/11), not buy allowances. In subsequent years, organisations will have to buy allowances corresponding to their emissions from energy use (at £12/t of CO2) and then surrender them by the end of the year.

In the second year (2011/12) extra weighting will be given to organisations that take action early to improve energy efficiency.

This mandatory scheme is expected to save participants around £1 billion a year by 2020 through cost-effective energy efficiency measures that are not yet being taken up. By 2020, the scheme is expected to have delivered emissions savings of at least 4.4 Mt of CO2 a year.

The updated scheme also includes a provision requiring tenants to co-operate with landlords on energy usage covered by the scheme.

The scheme targets organisations with half-hourly metered electricity use of at least 6000 MWh a year (about £500 000 a year). From 2010 the number of allowances available with be capped, and they will all be auctioned.

Martin Fry, chairman of the Energy Services & Technology Association, comments, ‘We’re delighted that the Government has recognised the need to focus on energy efficiency as the most effective way to reduce emissions. We are also pleased that the Government accepts there are a number of ways to reach the same level of savings.’

Gaynor Hartnell, chief policy office of the Renewable Energy Association, is concerned that business with a renewable installation for which they claim Renewable Obligation Certificates or a feed-in tariff will still have to buy allowances to cover the energy produced — even though renewables have zero emissions.

She says, ‘Companies stand to take a significant financial hit for investing in renewables by having to pay for emissions that they have not in fact emitted. Given the hugely challenging renewable-energy target we face and the examples of exceptional renewable-energy leadership from the commercial sector that need to be built on, this is an astonishing outcome The measure has not been consulted upon properly. Government needs to properly engage with relevant stakeholders on how to resolve these issues.’



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