UK Government: CRC to be Simplified or Replaced – Consultation Launched

Tuesday, 27 March 2012, 4:32 PM

On 27 March the Department of Energy and Climate Change (DECC) launched a consultation setting out proposals to simplify the Carbon Reduction Commitment Energy Efficiency Scheme (CRC EES). The consultation follows in the wake of Chancellor George Osborne’s Budget statement last week, in which he said the scheme would be replaced with an alternative environmental tax if "major savings in the administrative cost of the Commitment for business" could not be found.

DECC say that the proposals contained in the CRC consultation are aimed at retaining the energy-saving and reputational benefits of the CRC, whilst reducing the bureaucracy of taking part. It is estimated that this simplified CRC would see scheme participants’ administrative costs cut by almost two-thirds, equating to around £330 million of savings up to 2030.

The CRC is a mandatory UK-wide trading scheme covering large business and public sector organisations, which is expected to deliver carbon savings of 21 MtCO2 by 2027.

The simplification package includes:

• A shortening of the CRC qualification process.
• Reducing the number of fuels covered by CRC from 29 to 4.
• Reducing the amount of reporting required by businesses.
• Reducing the length of time participants will have to keep records.
• Removing the requirement on facilities covered by Climate Change Agreement or EU Emissions Trading System installations to purchase CRC allowances.
• Adopting new emissions factors for the CRC which will align it with Greenhouse Gas reporting processes.
• Removing the detailed metrics of the Performance League Table from legislation and placing them in government guidance.

In his Budget statement on 21 March, Mr. Osborne said the CRC was "cumbersome, bureaucratic and imposes unnecessary cost on business" , and that the government would bring forward proposals in autumn 2012 to replace CRC revenues with an alternative environmental tax if significant administrative savings were not deliverable.

The Treasury also confirmed that any allowances sold for the 2012-13 emissions would be priced at £12 per tonne of carbon dioxide.

The consultation on the CRC EES will close on 18 June 2012.

Access the Consultation on a Simplified CRC Energy Efficiency Scheme.
Access the related DECC press release.
BusinessGreen article on CRC consultation.