The UK is committed to a 20% reduction in CO2 emissions by 2020 and an 80% reduction by 2050 compared to 1990 levels. To help speed up the UK's transition towards a low carbon economy the Government created the Carbon Commitment Reduction scheme.

The Carbon Reduction Commitment is a mandatory carbon trading scheme being administered by the Environment Agency on behalf of the Department of Energy and Climate that went into regulation on April 1st 2010. Since then public and private organisations that consumes more than 6,000 MWh (6,000,000 kWh) a year of half-hourly metered electricity (equivalent to an annual electricity bill of about £500,000) will have to purchase and surrender allowances each year to cover their CO2 emissions.

Basically, heavy polluters from the public and private sector will have to purchase allowances to cover their emissions each year. The revenues raised from the sales of allowances will then be recycled back to their participants according to their relative performance in the scheme.

These rewards will be based on the performance of each CRC participant. Since April companies will be monitored and ranked according to their efforts to reduce carbon dioxide emissions. A high ranking on the CRC performance league table is likely to affect a company’s reputation with customers, business partners, employees and investors alike.

During the first year, league table rankings will be highly influenced by "early action measures". The first step of any organisation's carbon reduction strategy is to apply for a free carbon trust survey from The Carbon Trust itself, this survey will help your company or organisation earn another "early action measure", The Carbon Trust Standard.

The Carbon Trust Standard certifies that an organisation has genuinely reduced their carbon footprint and is committed to making further reductions year on year. To achieve certification against the Standard, your organisation will need to meet the requirements in three areas:

Measurement: Your organisation will need to measure its key greenhouse gas emissions. Initially this means measurement of the electricity and fuel you use onsite, and the fuel you use in your vehicles.

Management: Your organisation needs to show good carbon management performance. This means providing evidence of activity such as investment in new equipment, maintenance programmes and staff training.

Reduction: Your organisation must be able to show emissions reduction over the last year – either on a total emissions basis, or on a relative basis (e.g. emissions/£m turnover).

The CRC's first phase will last three years and all qualified organisations will have to report their carbon emissions and carbon emission allowances purchases each year.