The Carbon Trust Standard essentially requires an organisation to calculate its carbon footprint (including transport), demonstrate absolute or relative reduction in carbon emissions by more than 2.5 percent per year, and demonstrate good carbon management.

The Carbon Reduction Commitment will typically result in a range of costs for participating organisations. These could include administration and consultancy advice, implementation of new technology, as well as the potential for fines and penalties due to non-compliance or poor performance.

However, in the long term, it is likely that most organisations will enjoy significant financial benefits due to improved efficiency and lower energy costs.

The published CRC league table aims to provide a strong financial and reputational incentive for participants to reduce energy consumption and CO2 emissions. The league table will enable businesses, consumers, clients and the media to identify the annual CO2 reduction performance of all participants in the scheme. Participants will need to ascertain how various league table positions could impact on the organisation’s brand. Several factors should be taken into consideration:

As part of the carbon reduction commitment, the Environment Agency will publish publicly accessible league tables of participants performance at the end of each year.

In addition to the published league table positions for organisations within the carbon reduction commitment, the scheme will also publish the responses to three questions:

1. Does your organisation disclose long-term carbon emission reduction targets?
2. Does your organisation disclose carbon emissions performance against these targets?

In calculating the crc emission factors with regards to electricity consumption within organisations and subject to the carbon reduction commitment, a five-year average emissions factor will be applied to all electricity. To this end, the same factor will be used to measure emissions from all organisations regardless of whether or not they purchased their grid electricity supply from a wind power, nuclear, coal powered or any other form of electricity generation scheme.

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.

The carbon reduction commitment presents a number of benefits to organisations that fall within the scheme.

Financial

The carbon reduction commitment sets out a clear risk to organisations that fail to reduce their carbon emissions. The financial implications could result in penalties of thousands, or even millions, of pounds for large organisations. However, there is also the opportunity for the best performing organisations to receive similarly large bonus payments as reward for their efforts.

Brand and Marketing

The Carbon Reduction Commitment's 90 percent emissions rule, otherwse known as the 'flexible de minimis' rule, requires all particpants to account for at least 90% of their total carbon footprint emissions. The 90% rule aims to focus attention on the largest, and most cost effective, opportunities to reduce carbon emissions.

The 90% emissions rule can include all energy reported through the Climate Change Agreement, European Union Emissions Trading Scheme, as well as all 'Core Sources' of non-transport energy consumption.

The carbon reduction commitment's recycle payments will take place over three stages.

First stage - based payment

During the first year, from April 2010 to March 2011, calculations will be made to identify each organisation's share of the total carbon covered by the scheme. This percentage share will then be used for all subsequent years. The percentage share will then be multiplied by the recycled pot

Second stage - bonus or penalty

During the first year, the organisation at the top of the league table will receive only 10% bonus.

Adjustment factor

The Carbon Reduction Commitment league table will rank all participants in the scheme on the basis of performance in three metrics.

First metric - Absolute Emissions