The Carbon Reduction Commitment (CRC) recently was renamed as “The CRC Energy Efficiency Scheme”. This article will look at why energy efficiency should be central to any organisation’s response to the CRC legislation.

It is not always appreciated that, in the short term, the financial implications of the CRC are relatively small. The table below illustrates that for an organisation consuming £1m of gas and electricity in equal measure, the cost of the emissions allowances under the CRC is around £87,000.

Table 1: Illustration of the relative cost of energy and CO2 allowances in the CRC

CRC Impact

Electricity

Gas

Total

kWh

10,000,000

10,000,000

 

CRC Conversion Factor

0.5410

0.1836

 

kg CO2

5,410,000

1,836,000

 

t CO2

5,410

1,836

7,246

Allowances Cost @ £12/t £

 £ 64,920

 £ 22,032

 £ 86,952

Energy price (£/kWh)

0.070

0.030

 

Approx Energy Cost £

 £ 700,000

 £ 300,000

 £ 1,000,000

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