From April 2010, some landlords and tenants will be hit by tough new rules on energy consumption, thanks to a scheme called the Carbon Reduction Commitment (“CRC”).

CRC will directly affect about 5,000 of the most energy-hungry organisations, but don’t think this gets you off the hook!  Any occupier of part of a big building could also be affected, and if your landlord owns a large network of properties, you could still be hit by compliance costs.

The scheme aims to discourage energy consumption through the time-honoured methods of charging levies (initially, about £12 per tonne of CO2 in excess of an allotted “cap”) and public humiliation (via published league tables).

CRC will set up a trading market in which large-scale consumers of electricity will be required to keep a close eye on their energy usage, submit reports to the government, trade carbon allowances, and (for some) deal with the PR fallout from a poor showing in the league tables.  Unsurprisingly, penalties can be imposed on participants who fail to comply with the rules.

The biggest impact will be on businesses which consume more than 6,000 megawatts of electricity per year (that’s an impressive electricity bill of about £600,000, to you and me).  But if you are a party to your landlord’s electricity contract, you may be required to comply with the reporting obligations under the scheme.  Even if you are not, a qualifying landlord is likely to try to recover CRC compliance costs.  Whether or not you can resist may depend on the wording of your lease and the bargaining strengths of each party.

The government claims that the new measures will be revenue neutral, but there is no doubt that the scheme will cost thousands of pounds in added administration, with even larger potential charges for high energy users.  It all sounds like a bit of a headache – so what better time to turn off the lights?    

For more information on these issues please contact

James Corbett

or your usual Lewis Silkin contact