Today I am publishing the third consultation on the carbon reduction commitment (CRC).

The Climate Change Act, which received Royal Assent in November last year, set legally binding targets for the UK to reduce its greenhouse gas emissions by 80 per cent by 2050.

To meet this target, the Climate Change Act provided powers to create emissions trading schemes. The CRC will be the first scheme created under these powers. We have worked closely with the devolved Administrations in developing a scheme that will work across the UK. We believe the CRC will be the world's first mandatory carbon dioxide emissions trading scheme to auction all allowances. It will cover large non energy-intensive organisations from both the public and private sector such as all British central government departments, supermarkets, banks, local authorities, the National Health Service and universities. The sectors of the economy covered by the CRC account for approximately 10 per cent of the UK's emissions. The CRC will start in 2010 and after a three-year introductory phase we will introduce a declining cap on the amount of carbon this sector of the economy can emit. Government will take the views of the independent Committee on Climate Change into account when setting the cap to ensure that the environmental goals of the scheme will be met. The CRC is expected to deliver emissions savings of at least 4 million tonnes of CO₂ per year by 2020.

By harnessing financial and reputational drivers, the CRC will encourage participating organisations to use energy more efficiently, thereby reducing their energy costs and saving up to £1 billion by 2020. We expect the market for energy-efficient technology and energy services to grow in response to the CRC, spurring innovation and helping to lay the foundations for new, low carbon economic growth.

We have worked closely with stakeholders in business and the public sector to develop the scheme, and have consulted twice on the scheme design and implementation. The CRC will capture a diverse range of organisations, so we have listened to the perspectives and experiences expressed—and these have been critical to the development of the scheme. I therefore believe that the CRC will successfully drive improvements in energy efficiency in a large sector of the economy.

I have today placed in the Libraries of the House, and published on the Department of Energy and Climate Change website, a consultation package on the draft CRC order, which will form the statutory basis of the scheme. This includes the CRC consultation document, the CRC draft order, the CRC user guide and a regulatory impact assessment.

The consultation document:

describes CRC policy as determined over the course of the two previous consultations;

details the changes in policy since the last consultation;

seeks views on the draft order and in particular if it results in unintended consequences; and

seeks views on certain policy details.

I have also launched today a review of climate change agreements (CCAs). The current scheme ends in 2013 and, subject to state aid approval, the scheme will be extended to 2017. CCAs have been highly successful in reducing emissions in the energy intensive sector. In 2006, the latest period for which information is available, sectors saved 16.4 million tonnes of CO₂ and an estimated £1.5 billion in energy costs, when measured against baselines. This review provides an opportunity to simplify the agreements for the benefit of business and government, and to ensure coherence with other climate change policy.

The proposals in these consultation documents will help us reduce the carbon emissions from these sectors of the economy in the most cost-effective way possible. They will bring us one step closer to our goal of creating a thriving low carbon economy.