Carbon Reduction Commitment (CRC) made simple

09/06/2010

By Sarah Easton, Senior Associate in Commercial Property & Development.

The CRC is coming into full force on 1 April 2010 with the consequent impact on businesses. The CRC is a mandatory 'cap and trade' emissions trading scheme, affecting both the public and private sector and even charities.

There are complicated tests to apply in deciding whether or not the CRC applies to your business. The Environment Agency (EA), who administer the scheme, sent out packs last year to many businesses who they consider might qualify.

Businesses initially included in the CRC will have an administrative burden placed upon them. A business will have to provide information on the energy it has used in 2008. Did your business keep those records?

A business that has to participate in the CRC will have to register online at www.environment-agency.gov.uk/business/topics/pollution/11597.aspx. The registration period is between 1 April and 30 September 2010.

Once a business has submitted an application for registration, it has to go through a 'validation' process which takes a minimum of two weeks. The registration deadline includes that 'validation' time.

Once in the CRC, the obligations continue. A business has to provide reports setting out both projected and actual emissions, buy and sell allowances and receive recycling payments annually. All of these obligations are for the most part an ongoing annual burden.

Even if the CRC does not initially apply to your business, there are many businesses which will still have to provide information to the EA. Whilst there is no cost involved in sending this information to the EA, there is still an intrinsic cost to a business in providing all the relevant information.

The Government has obligations to meet targets for reducing greenhouse gas emissions. Although your business may not be initially caught by the CRC it may be forced to become a participant in the future.