UK: The CRC Energy Efficiency Scheme (CRC) Became Law Yesterday: What Does This Mean for You?

Last Updated: 23 March 2010
Article by Michael Hutchinson

Originally published 18 March 2010

Keywords: CRC Energy Efficiency Scheme, CRC, mandatory carbon trading scheme, electricity bill, registration for CRC

The CRC, a new mandatory carbon trading scheme which will affect most businesses with electricity bills of over £500,000 in 2008, became law on 17 March.

The CRC requires qualifying organisations to buy, on an annual basis, carbon credits (or allowances) equivalent to 90% of their total UK energy use. The money raised by the scheme will then be 'recycled' back to the participants in varying amounts depending (largely) on their emission reduction performance, as reflected in an annually published league table.

Failure to comply with the CRC may lead to hefty fines, "naming and shaming" and even potential director liability.

Registration for the CRC will begin on 1 April 2010 and organisations will need to consider a number of issues, some of which are outlined below.


  • Organisations (see below) qualify for the CRC if their aggregate UK electricity consumption in 2008 exceeded 6000MWh from so-called 'half-hourly meters'.
  • Qualifying organisations must register online via the CRC Registry from 1 April 2010 and must have done so by 30 September 2010.
  • Applications for 'disaggregation' (which we will explain below) must be made by 30 June 2010. Disaggregation is likely to be key to reducing the overall cost of the CRC for a large number of businesses.

Groups of companies

The CRC treats a Group of companies as a single organisation for participation in the scheme. An entity (A) is considered part of a Group with another entity (B) if A is the parent or subsidiary of B, or if A is a subsidiary of any of B's parents. A parent-subsidiary relationship can be formed in a number of ways, including where the parent:

  • holds the majority of voting rights in the subsidiary; or
  • is a member of the subsidiary with rights to appoint/ remove the majority of its board of directors; or
  • has a right to exercise a dominant influence over the subsidiary.

The rules on what constitutes a "group" can lead to some strange results. For example, in the context of private equity and funds, there is a risk that investee companies become aggregated with the investor/fund manager. Again, in the banking sector, debt-for-equity swaps can present a difficulty if the underlying investment becomes part of the bank's Group.

Where a Group participates in the scheme, all Group companies will be jointly and severally liable for any non-compliances with the scheme rules.

Overseas entities are covered by the scheme, although the obligation to hold allowances equal to a Group's energy use only applies in relation to the UK.


Groups can choose to 'disaggregate' any subsidiaries which would qualify for the CRC in their own right (known as Significant Group Undertakings or SGUs). This means the selected SGUs will become separate participants of CRC. However, disaggregation is only possible with the consent of the SGU and to the extent that the remainder of the Group does not fall below the 6,000MWh qualification threshold.

Considered application of the rules on disaggregation could enable Groups to achieve significant cost savings as the impact of growth in a Group (in terms of its position in the league table) is isolated to the disaggregated Group.

Joint ventures and franchises

Certain other business structures will require careful examination when assessing the application of the CRC including:

  • Joint ventures; where one party has a greater than 50% stake, that person will be responsible for the energy use, but where no single person or entity has a majority share, the JV itself is responsible;
  • Franchises; where the CRC deems that a 'franchise' exists, typically the franchisor assumes responsibility for the energy use attributable to the franchisees.

Leased premises

Landlords and tenants may wish to consider how they will allocate the benefits and burdens of the CRC. Responsibility under the scheme will depend on the supply arrangements: if the landlord holds the supply contract, energy use may be regarded as the landlord's (even if the cost is passed on to the tenant) but where the landlord entity is a different entity to that holding the supply contract (even where these two companies are in the same group) the tenant may be regarded as responsible for the energy use.

Learn more about our Real Estate and Energy practices.

Visit us at

Mayer Brown is a global legal services organization comprising legal practices that are separate entities ("Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP, a limited liability partnership established in the United States; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales; and JSM, a Hong Kong partnership, and its associated entities in Asia. The Mayer Brown Practices are known as Mayer Brown JSM in Asia.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

Copyright 2010. Mayer Brown LLP, Mayer Brown International LLP, and/or JSM. All rights reserved.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.