Carbon Reduction Commitment Action Plan

In developing a Carbon Reduction Commitment action plan, the first thing that any organisation will need to do is to understand their liability.

The 'Organisation'

The full organisational structure of any company will need to be ascertained to identify whether or not it will be required to enter into the carbon reduction commitment scheme.

Total Half Hourly Electricity Consumption

Organisations will need to assess all the consumption from their half hourly electricity meters during 2008 to calculate whether or not they exceed the 6,000 MWh threshold.

Exemptions

Further investigation will be needed to look at areas of the organisation may be exempt under CCA, EUETS, or 'Significant Subsidiaries' rules, to better identify the organisation's total liability to the Carbon Reduction Commitment scheme.

90% Emissions Rule

The next stage of the process will be to identify a minimum of 90% of the organisation's total emissions covered by any combination of Climate Change Agreements, EU European Trading Scheme and core sources of non-transport energy consumption. Where all of the above do not account for the minimum threshold, non-core sources of energy will need to be accounted for and submitted to reach the required is 90% mark.

Identify Opportunities

organisations will need to investigate had opportunities to reduce energy consumption. A marginal abatement cost curve can help in this process by providing a tool to communicate investment required to reach compliance with the carbon reduction commitment and demonstrate that priorities have been investigated.

Targets

In developing the action plan it is important to identify what you aim to achieve. To this end, you may be simply looking for compliance with the law. However, you may be looking for the potential financial rewards that can be gained from the bonus payments. Additionally, you may be especially interested in the brand and marketing potential of being a leading organisation in the Carbon Reduction Commitment league table.

Early Action Metrics

The early action metrics form 100% of the league table assessment criteria during the first year of the carbon reduction commitments scheme, and a significant percentage of the second and third years. In order to acheive the Early Action Metrics, most CRC participants will need to implement Automatic Meter Reading equipment and obtain the Carbon Trust Standard (CTS)*, or equivalent.

*In addition to the Carbon Trust Standard, participants can use any equivalent energy management scheme. However, as of May 2010, the Carbon Trust Standard is the only scheme that is currently approved by the CRC.

First Year Action Plan

To the first year of the carbon reduction commitment, organisations should carry out a number of actions to make best use of the scheme.

The organisation should forecast its business as usual emissions.
Cost-effective abatement options should be identified and implemented at the first opportunity. During the first few years of the carbon reduction commitment, the fixed price of £12 per tonne of CO2 provides a simple costing of opportunities.
Organisations should also monitor all included sources of emissions, to identify the potential future opportunities and risks.
During the first year, organisations should decide on a strategy for purchasing allowances with consideration for the perceived cost of allowances in future years. Having bought allowances in April 2011 the organisation will then need to report and surrender the year one allowances by the end of July 2011.

Organisations will need to make careful allowance for the cash flow implications of purchasing allowances that are subsequently tied up approximately 6 months before they are returned with either bonus payments or penalty deductions attached.

During the second year of the carbon reduction commitment scheme, organisations will need to carry out similar operations as those outlined above. However, they will also need to make either balancing sales all purchases on the secondary market to adjust their allowances before reporting and surrendering by the end of July 2012.