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.

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:

All participants in the Carbon Reduction Commitment will be required to produce evidence packs in case of an audit. The evidence pack must include:

Structural Records - with clear definitions for the structure of the organisation. Information on implmentin early action metrics and growth metric across all subsidiaries.

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 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