The Carbon Reduction Commitment (which was recently renamed the CRC Energy Efficiency Scheme) is a mandatory carbon emissions trading scheme to cover all organisations using more than 6,000MWh per year of electricity (equivalent to an annual electricity bill of about £500,000). An organisation is a company, a group of companies will be treated as one organisation, local authority (schools are normally classed as part of the local authority) or any public body and any major hospital.

Organisations will be charged £12 per tonne of Carbon every year starting 2011. Organisations get all of this back and more if they do well compared to all the other organisations in the scheme. Those organisations who do badly will get progressively less back.

After 3 years the cost of carbon will then be dependant on an auction and so the price is expected to increase. Also the cost of underperformance compared to other organisations gets greater.

The worst performers in terms of carbon reduction will be hit with a penalty payment and 'named and shamed' in a league table of CRC participants.

This is a Government way of forcing large organisations to save money by implementing carbons savings schemes which will save them money.