Detailed proposals for the implementation of the UK’s emissions trading scheme for large organisations in business and the public sector were set out last week by then climate change and environment minister Ian Pearson.

The Carbon Reduction Commitment, announced in the Energy White Paper in May, is a mandatory cap and trade scheme that will cap emissions from up to 5000 large business and public sector organisations, which are collectively responsible for around 14 million tonnes of carbon each year.

“We are committed to ambitious targets to reduce the UK’s CO2 emissions and this will require contributions from all sectors of the economy and from across all parts of the UK,” Pearson said. “Our aim is to reduce absolute carbon emissions while growing the economy - and the Carbon Reduction Commitment is geared accordingly to help organisations save money through improved energy efficiency.”

The Carbon Reduction Commitment is a mandatory, auction-based emissions trading scheme for organisations using more than 6000 MegaWatts per year from mandatory half-hour meters, equivalent to an electricity bill of around £500,000 a year at current prices. It is designed to drive emissions-reductions by giving organisations a financial incentive to do so through emissions trading, combined with corporate social responsibility incentives through publishing companies’ performance in a league table. All allowances will be auctioned, with the revenue from the auction recycled to participants based on their performance.

Alongside the implementation of the Energy Performance of Buildings Directive will deliver emissions reductions of 1.2 million tonnes of carbon (MtC) a year by 2020 from organisations such as large retailers, supermarkets, hotel chains, universities and central government departments.

The government is consulting on the detailed implementation of the policy, including the type of auction and league table design; definition of an organisation; rules to exempt small sources of emissions; the approach to monitoring, reporting and auditing results; and scheme penalties.

The consultation will run until October 9.

Topics