UK businesses will save a total of £1bn and more than four million tonnes of carbon dioxide each year by 2020 by reducing energy use.
The figures are part of a new scheme from the Department of Energy and Climate Change to save organisations money on fuel bills and to reduce carbon emissions.
The Carbon Reduction Commitment (CRC) Energy Efficiency Scheme is a new regulatory programme to improve energy efficiency in large public- and private-sector organisations.
Large energy users in business and the public sector will be required to take part in the scheme from 1st April 2010.
DECC claims that the mandatory scheme will help these energy users reduce emissions at least 34 per cent on 1990 levels by 2020 through improved energy efficiency.
Organisations that have annual half-hourly metered electricity use of at least 6,000MWh qualify for the scheme. Such electricity use typically costs £0.5m a year.
The Environment Agency will publish the qualification and registration guidance for potential CRC participants by November.
DECC claim it has recently made several improvements to the scheme, following consultation with businesses and trade bodies.
In order to ease concerns on the introduction of the scheme and upfront costs, DECC is now only requiring organisations to report emissions in the first year from 2010 to 2011.
In subsequent years, organisations will have to buy allowances corresponding to their emissions from energy use and then surrender them by the end of the year.
In the second year from 2011 to 2012, DECC will give extra weighting to organisations that take action early to improve energy efficiency. The department claims that recognition will be given to organisations that use on-site renewable energy like wind turbines or solar panels by publishing the increased carbon savings from such measures.
There will also be greater flexibility in how organisations participate. Subsidiaries that are large enough to qualify may opt to do so separately from their organisational group.
Joan Ruddock, energy and climate change minister, said: ‘The UK is leading the way in tackling climate change and in the move to a low-carbon economy. Organisations and the public sector must play a central role, including all government departments, regardless of size.
‘Large organisations have huge potential to achieve cost-effective energy efficiency savings. There are clear benefits from positive, immediate action to tackle climate change. Investment that takes place in the next few decades will have a profound effect on the climate in the second half of this century and in the next.
‘The CRC Energy Efficiency Scheme will help organisations to become more energy efficient, to save significant sums of money on fuel bills and to show customers, clients and competitors that their organisation is a leader in tackling climate change.’
CRC is a UK-wide scheme and the policy has been developed by DECC, the Scottish Government, the Welsh Assembly Government and the Department of the Environment Northern Ireland.