Introduction to Carbon Reduction Commitment (CRC) requirements

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Courtesy of Verisae

Environmental managers from thousands of UK commercial enterprises will take on a much more important role within their respective organizations when the Carbon Reduction Commitment, or CRC, comes into effect in 2010. The initiative of the British government's Department for Energy and Climate Change has been rather hurriedly introduced and its scope is not fully understood by many of the very enterprises that it will directly affect.

The Carbon Reduction Commitment's guidance document runs to some 84 pages with an accompanying consultation document which is over 200 pages long. Many experts are scrambling to decipher the contents and to deliver the information in rather more easily understood form to those who may be affected.

In recent years we have come to hear much more about the carbon footprint reduction. Each and every one of us has such a footprint, as do commercial entities. The carbon footprint is essentially the impact that you make on the environment due to your consumption and/or production of energy which can result in the release of potentially harmful greenhouse gases. On a global scale, the carbon footprint is directly related to global warming and, it is feared, has already had a significant impact on climate change. Failure to initiate carbon footprint reduction could have potentially devastating consequences in the future.

Whilst we have a ready definition for carbon footprint reduction and can quite easily understand it and its implications, it seems that the definition for commercial entities is not so clear-cut. When is a carbon footprint not a carbon footprint? The answer, according to the terms of the CRC, appears to be rooted in a difficulty to determine exactly whose footprint we are talking about.

The CRC requires the reporting of only a subset of the total organizational carbon footprint reduction. Other greenhouse gas protocol agreements decipher an organization's total footprint as one that includes supplier and customer emissions, as well as emissions from transport vehicles and those related to the onward supply of energy to other businesses. The emissions listed in the previous sentence are specifically excluded from the CRC, and there is also no need to report emissions fully or partially covered under alternative climate change agreements.

Major financial implications await those companies that do not understand, are not ready, or who fail to conform with the requirements of the edict. The legislation focuses on a “cap and trade” system, requiring companies to buy credits from the government, at the initial rate of £12 per ton of CO2. Whilst the “cap” phase will not begin until April 2013, market forces will dictate an auction-based emissions trading scheme until that time.

Significant penalties await any organization that does not comply and the environmental manager must rise to his new role and make sure that the company executes properly. However, due to the fact that the plan will recycle funds back to those entities who use less than their allotment, the CRC could turn out to represent a clear revenue stream for the most efficient, so that a carbon footprint reduction more than pays for itself.

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