The carbon reduction commitment (CRC) will be exempt from organisations that have more than 25% of their energy and emissions covered by a climate change agreement (CCA). However, these organisations will still be required to register under the CRC in order to set out their legal position.

The government has proposed that state-funded schools (including academies) within Great Britain, will participate within the carbon reduction commitment scheme under the umbrella of their local authority. In doing so, it is the carbon footprint of the local authority that will be legally and financially responsible for participation in the carbon reduction commitment scheme, rather than the individual schools.

It is also the local authority that will be positioned within the carbon reduction commitment, rather than the individual schools.

As the Carbon Reduction Commitment continues to develop, it is clear that organisations involved in the scheme will need to set aside significant resources if they are to maximise the benefits of the CRC.

Even where the desire is only to obtain legal compliance, businesses will still need to invest time in ensuring that they have identified the entire organisational structure and accounted for a minimum of 90% of all emissions.

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:

The Carbon Reduction Commiment will operate on the basis of participiants recording and reporting their own emissions to the scheme. As such, their level of emissions will not necessarily be subject to any verification. However, 20% of all particpants will be audited annually; via a rolling programme of desk-based audits that will be carried out throughout the year.

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?

The environment agency has overall responsibility to enforce the carbon reduction commitment in its capacity as the scheme administrator. Regional regulators will be tasked with carrying out the necessary audit of 20% of participants each year.