CRC simplification

CRC simplification

Published:

Author: Sophie Wilkinson

A consultation paper containing proposals to simplify the CRC Energy Efficiency Scheme (CRC) was published on 27 March 2012, with the aim of reducing the administrative and regulatory burden on companies obliged to participate in the scheme

The consultation proposes changes to CRC, rather than replacing it with a carbon tax, and closes on 18 June 2012.

The Government is aiming for amended legislation to be in force by April 2013, when phase 2 of the CRC commences.

Key proposals

  • CRC will not be scrapped
  • qualification for CRC will be based on electricity supplied through settled half hourly meters only (currently other meters are included provided there is at least one settled half hourly meter)
  • the qualification threshold of 6,000MWh will not change for phase 2
  • an organisation will be responsible for energy supplies received or made at its discretion. The requirement for a transfer of payment will be removed
  • landlords will remain responsible for energy supplies to tenants except in very limited circumstances
  • the number of fuels covered will be reduced from 29 to four - electricity, gas, kerosene and diesel (and kerosene and diesel are only covered if used for heating)
  • the requirement to produce a footprint report and residual measurement list at the beginning of each phase will be removed
  • electricity generating credits will be scrapped
  • electricity supplies to Climate Change Agreement facilities or EU Emissions Trading Scheme installations will not be included in assessing qualification for CRC and no allowances will need to be surrendered for emissions relating to these supplies
  • the rules on disaggregation will be relaxed so that organisations can participate in CRC in their 'natural business units'
  • there will be changes to the organisational rules on trusts to assist private equity and professional trustees
  • two fixed price sales per year will replace auctioning of allowances - the first a cheaper forecast sale and the second a retrospective sale at a more expensive price
  • there will be a reduction in the record keeping requirements under CRC

Consolidated CRC guidance has already been published in accordance with a proposal in the consultation.

A decision on retention of the Performance League Table has been deferred until the impact of the first league tables can be assessed.

Comment

These changes will achieve simplification of the scheme but do not amount to a complete overhaul of CRC.

However, the Government said in the 2012 Budget that if it is not possible to achieve very significant cuts in administrative burdens, it will bring forward proposals in autumn 2012 to replace CRC with an alternative environmental tax.

On the same date the consultation was issued, a report was published on whether greenhouse gas reporting in directors' reports should be mandatory.

The Government has decided to delay making regulations in this area while additional evidence is gathered. It seems likely that the results of the CRC consultation will feed in to the decision making process