Having identified their total annual CO2 emissions, participating organisations will have to purchase carbon allowances at a fixed price of £12 per tonne during the first three years. The initial three-year introductory phase of the CRC will run from the beginning of April 2010 to the end of March 2013. However, allowances will not be sold until the end of the first year, at which point all organisations within the scheme can purchase allowances for both the previous and forthcoming years. If a participant does not purchase enough allowances during April, it can purchase additional allowances through the secondary market and safety valve, which will have a minimum price of £14 per tonne.

When purchasing allowances, organisations will be allowed to purchase unlimited quantity and bank these allowances for future years, but only within each phase of the carbon reduction commitment scheme. To this end, participants may purchase several years allowances in 2011, but cannot be banked beyond the end of March 2013.

There are no free allowances in the scheme. All allowances must be bought and sold, and cannot be borrowed between organisations for any period. The revenue raised from the sale of Carbon Reduction Commitment allowances will be recycled into the scheme. The income received in April will be issued back to participants, with bonus or penalty adjustments, in October of the same year. As a result, there will be cash flow implications during the period from April to October while all organisations in the scheme wait for the revenues to be recycled.

In April 2013 the carbon reduction commitment will adopt an auction trading mechanism for allowances, using sealed bids.