A guide to the CRC Energy Scheme: what is it and how does it work?

The CRC is a mandatory emissions trading scheme administered by the Environment Agency (EA). In operation since 1 April 2010, it applies to large businesses and public sector organisations in the UK. It aims to incentivise both the private and public sectors to increase energy efficiency as part the UK’s wider commitment to reduce emissions at a national and international level.

The rules on participation in the scheme are complex; however, the basis is the energy consumption of an organisation as a whole, rather than at specific sites. Through various reporting and evidence-keeping obligations, participants are required to measure their energy consumption and report on this to the EA before buying sufficient allowances from the EA to cover that consumption. There are significant financial penalties for failing to participate.

The scheme is divided into seven phases and each phase is then divided into annual reporting years (ARYs) that run from 1 April to 31 March the following year. Organisations to which the scheme applies must register as a participant at the start of the relevant phase and there will be two fixed-price sales of allowances for each ARY. Participants are required to keep an evidence pack including all the information used to determine whether they must participate and all the information used to compile each annual report. The EA will publish information about the participants’ energy efficiency after each ARY…

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