Emissions

07-06-08

Organisations like supermarkets and retail chains, large local authorities and hotels are likely to have obligations to limit their emissions under the Carbon Reduction Commitment

Starting from January 2010, this Commitment will consist of a mandatory cap-and-trade scheme covering energy use emissions from approximately 4,000-5,000 large, non-energy-intensive organisations and their subsidiaries.

The Commitment includes both direct energy use emissions and electricity use, and takes account of emissions outside both the EU ETS system and existing Climate Change Agreements.

In essence, organisations spending more than £500,000 a year on electricity in the UK are likely to be included within the Carbon Reduction Commitment. Covering about 10% of emissions from the UK economy, this should save around 4 million tonnes of carbon dioxide emissions per year by 2020 according to Defra.

The system relies on self-certification of emissions (backed up by a risk based audit regime) rather than third party verification.

In the first three-year introductory phase, allowances will be sold at a simple fixed-price cost of £12 per tonne of carbon dioxide. From 2013, there will be a government-set cap on the total number of allowances available, and they will be sold by auction.

At the end of each year, organisations will then be required to report all their UK carbon dioxide emissions from all fixed point energy sources - transport emissions will not be included - as they surrender their obtained allowances.

The government has said revenues raised from allowance sales will be returned to participants in proportion to their performance within a national league table of the Carbon Reduction Commitment.