Overview

Here, K&L Gates takes a closer look at The Carbon Reduction Commitment (CRC) Regulations and what they will mean in practice.

• The Carbon Reduction Commitment (CRC) is a mandatory auction-based emissions trading scheme for energy users which applies to both public authorities and private sector companies. It forms part of the Climate Change Act 2008, which comes into force in April 2010.

• It is not a new building regulation as such as it targets energy use in buildings, rather than their construction. The CRC incorporates incentives and challenges to encourage business and the public sector to reduce energy use by taking steps to become more energy efficient.

• According to Nicholas Stern's report on climate change, 50% of the total CO2 emissions in the UK come from its existing buildings. This percentage is likely to increase by 140% by 2050 if nothing is done to curb the CO2 emissions by buildings by improving their energy efficiency.

• The CRC focuses on businesses that have not previously been directly targeted by climate change legislation such as the European Emissions Trading Scheme (EU ETS) and a Climate Change Agreement.

• The CRC scheme is revenue neutral to the Government. Revenue raised from the auctioning of allowances will be "recycled" to the entities responsible for compliance with the scheme in proportion to their average annual emissions (i.e. their "performance") since the start of the scheme. CRC Organisations will receive a bonus or penalty depending on the their position in the league table published by the Government each year.

Click to read more about the regulations.