CRC to continue in simpler form
The Department of Energy & Climate Change (DECC) has decided to keep the CRC Energy Efficiency Scheme, despite calls for it to be axed in favour of an increased Climate Change Levy. After consultation with business, the public sector and regulators regarding the CRC Energy Efficiency Scheme, the government says it will simplify both the CRC and Climate Change Agreements (CCAs), with an emphasis on removing the overlaps between the schemes and streamlining each one.
Many large public and private-sector organisations have had to report their energy use for the first time during the past year under the CRC scheme. The proposals, on which the government plans formally to consult next year, include a continuation of fixed-price sales into the second phase of the scheme, which it says would provide greater certainty for businesses. Prices for carbon allowances were previously to have been set by the market from 2014, but these proposals would see fixed prices continue until 2019.
“Our proposals will provide business with greater flexibility by allowing organisations to participate as natural business units. They will also reduce the administrative burden; for example by reducing the number of the fuels which are subject to the scheme from 29 to four. We will also reduce the complexity of the scheme by removing the 90% rule and CCA exemption rules, whilst achieving broadly the same outcomes and remove any overlap between schemes at registration. In particular, businesses covered entirely by CCAs will not need to register and we will no longer require EU ETS installations to purchase allowances for electricity supplies,” said Climate Change Minister Greg Barker in a written ministerial statement.
CB Richard Ellis says the changes to the CRC are only minor technical amendments. It notes that the government’s decision last autumn to remove the revenue recycling mechanism “saw the scheme transformed overnight into what is widely regarded as an overly complex ‘carbon tax’”. The firm also says that with consultations not due to start until early next year, uncertainty regarding the second phase will continue.
