CRC Energy Efficiency Scheme (Carbon Reduction Commitment)

CRC Consultation Launched

As part of simplifying the CRC scheme, DECC has published a formal consultation to amend the CRC Energy Efficiency Order 2010 via an initial amendment which is planned to come into force by 1st April 2011. The proposed amendments are primarily focused on extending the introductory phase and postponing the start of Phase 2 until 2013. This will facilitate future amendments to be made to the legislation underpinning the scheme as a result of a broader simplification review. The consultation documents can be found here, and the deadline for feedback is 17th December 2010.

A further proposed change is that the 12,000 organisations that have half-hourly meters but consume less than 6,000 kWH of energy per year will be exempted, in an effort to reduce the administrative burden. The changes were announed by Energy and Climate Change Secretary Chris Huhne at the CBI's annual climate change summit.

DECC has emphasised that it is essential that all participants continue to comply with the existing CRC scheme in full as set out in the current legislation. CRC remains a mandatory scheme, and the Environment Agency continue to provide support to participants with their CRC compliance. Organisations who fail to comply will be subject to enforcement action. Participants should continue to fully comply with the scheme and use the introductory phase to gain experience on reporting, complying and surrendering allowances in CRC.

Revenue recycling element cancelled

Concurrent with the release of the public spending review on 20th October 2010, DECC announced that the CRC would no longer recycle revenue as incentive payments; instead all revenue raised by the scheme will be retained by the government, contributing around £1bn to help balance the deficit. As such, it represents a fixed cost of £13 per tonne of CO2 emissions for around 2,000 of the UK's largest private and public sector organisations - a figure that is set to rise in future years. It is unclear at this stage whether the reputational element of the scheme will be retained in the form of the planned league tables. If not, then the early adoption metrics become invalid, including the Carbon Trust Standard.

The press release from DECC containing this announcement can be found here: http://www.decc.gov.uk/en/content/cms/news/csr_hmt_releas/csr_hmt_releas.aspx