How will the commitment to carbon reduction affect the landlord and tenant relationship? Malcolm Dowden reports
The extended Carbon Reduction Commitment (CRC) is likely to begin operation in April 2010. CRC is designed to reduce energy use. It applies to organisations that annually use more than 6,000MWh of electricity through half hourly metering—typically a £500,000 electricity bill, based on 2008 consumption. Companies and organisations aff ected by CRC will need to buy allowances, initially at a fi xed price of £12 per tonne of CO². Once CRC is in full operation, the price of allowances will be determined by auction.
The need to buy carbon allowances is expected to increase energy costs between 7% and 15%. Th ere will be an element of repayment or “recycling” with the best performers (identified in a government published league table) recovering up to 100% of the cost of their allowances. Eventually, the worst performers might recover nothing.
Effect on landlords and tenants
Where a landlord is a CRC entity, its tenants will also be aff ected. Where a landlord is the “contracting party” who pays the
