The Environment Agency has unveiled a carbon-trading scheme that will see the major retailers competing among themselves and other big-brand names to drive down their carbon-dioxide emissions.

It is the first time that large so-called, non-energy-intensive organisations will be bound legally to monitor and report their emissions from energy use in preparation for carbon trading. It also allows for comparison between organisations of their efforts to combat climate change.

The scheme is called the CRC energy efficiency scheme and covers Tesco, Sainsbury’s, Marks & Spencer, as well as a range of large financial institutions, hotel chains, construction companies and manufacturers.

The Environment Agency calculates that some 20,000 organisations fall under the remit of the scheme and must register before the end of September. The businesses will be ranked according to reductions in energy use and improvements in energy efficiency, alongside public sector organisations such as NHS trusts.

The heaviest users of electricity will have to report their emissions and from 2011 they will be obliged to buy allowances for every tonne of carbon dioxide emitted. Allowances will be sold a fixed price of £12 a tonne for the first two years and all monies raised from allowance sale will be recycled to participants, according to their energy performance. After this introductory period, a cap and trade system will be introduced.

The Environment Agency calculates that the scheme could reduce carbon dioxide emissions by up to 11.6 million tonnes a year in 10 years' time, and benefit the economy to the tune of £1 billion.

Tony Grayling, head of climate change and sustainable development at the Environment Agency, said: “The CRC energy efficiency scheme is an opportunity for organisations to do their bit for the planet and save money. The league table is a very public judgement on how seriously you take you environmental responsibilities. If organisations don’t take up the challenge, there is a risk to their reputation and their pockets."

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