Shadow Carbon Pricing

Organisations that aren't currently shadow carbon pricing are going to have a tough time when the British government introduces the carbon reduction commitment (CRC).

The Defra website has some information on the CRC.

Anyone in business who thinks that it is something that will happen in the future and that they don't need to worry about it now is going to get a fairly large shock.

The timeline:

2008

• Qualification year
  Organisations with half hourly meters will need to calculate their electricity use based on information provided by their suppliers. If their electricity consumption through these meters is greater than 6,000MWh per annum (organisation with a total electricity bill of £500,000 or more are likely to be included), the organisation will be covered by CRC.
• Consultation on draft CRC regulations
  The Climate Change Bill contains enabling powers to introduce new trading schemes, including CRC. Government plans to issue a detailed consultation on the CRC draft regulations in late autumn 2008.
• Raising awareness
  We will be running seminars to help organisations to familiarise themselves with CRC. We will publish a user guide to support potential participants in assessing whether they are in the scheme

2009

• Regulations come into force in October
• Identification of CRC participants
  Early 2009, the Environment Agency – who will administer the CRC – will contact all UK billing addresses with half hourly meters providing them with Registration Packs. If you receive one of these packs, you will need to provide information on your total half-hourly electricity consumption in 2008 together with a list of your half-hourly meters, assisted by your electricity supplier.

2010

• Introductory phase begins
  Allowances will be sold to participants at a fixed price of £12/tCO₂. The first sale will take place in April 2011. Note that this first sale will be unique, in that it will be for both 2010/11 allowances and 2011/12 allowances. All subsequent sales / auctions will only be for allowances for the year ahead.

2013

• First capped phase begins
  Auctioning of carbon allowances begins

Note: this is happening now and by 2010 it will be in full swing.

More information on the CRC at the Defra website

Shadow Pricing now is going to be helpful for any organisation:

"We use the shadow price of carbon to value the increase or decrease in emissions of greenhouse gas emissions resulting from a proposed policy. Put simply, the SPC captures the damage costs of climate change caused by each additional tonne of greenhouse gas emitted, expressed as carbon dioxide equivalent (CO2e) for ease of comparison."
http://www.defra.gov.uk/Environment/climatechange/research/carboncost/index.htm