Gov streamlines CRC scheme for businesses

The government's CRC scheme has been criticised for being too complex

01/07/2011

The Department of Energy and Climate Change (DECC) has announced proposals to make its flagship Carbon Reduction Commitment (CRC) Energy Efficiency Scheme simpler and easier to understand for UK businesses. The announcement follows recent criticism of the scheme complexity and structure (CBI says CRC is untenable). 

Key proposals include:

• Reduce the number of fuels covered by the scheme
Under the current scheme businesses have to report on the emissions from 29 different fuels, but because approximately 95 per cent of emissions captured under the CRC come from electricity and gas, businesses would need to report on just four. Kerosene and diesel for heating would also be included. This could significantly reduce administration burden without compromising the emissions coverage of the scheme.
• Move to fixed price allowance sales
Instead of establishing an emissions cap and holding annual auctions, like the EU ETS, from the start of phase 2 in 2014 there could be two sales per year where the price of allowances is fixed. This would remove the need for businesses to come up with auctioning strategies and give price certainty to help investment decisions.
• Simplify the organisational rules
Abolish the need for large businesses to participate in groups which do not reflect their natural structure.
• Make qualification processes easier
To make qualification a one step process instead of two. Previously businesses had to firstly prove they had a qualifying electricity meter and then declare they used a particular amount of electricity. This would be abolished in favour of participants just having to prove they use a certain amount of electricity from the qualifying meter.
• Reducing overlap with other schemes
Any CCA or EU ETS site would be automatically exempt from the CRC scheme.

Climate Change Minister Greg Barker said:

Climate Minister Greg Barker

“Businesses have made clear to me their serious concerns about the overly complex and bureaucratic CRC scheme. We’ve got to help business reduce their emissions, not strangle them in red tape. We’ve already taken action to remove 10,000 organisations from the scheme but we’ve got to do more to help make it easier for those organisations taking part.”

He continued: “Energy efficiency is a no brainer. It saves money and cuts carbon. Our proposals will make it easier and simpler for businesses to feel the benefits of using less energy as well as supporting jobs in the energy savings industry.”

To read Greg Barker’s full Ministerial Statement, click here

The proposals will be formally consulted on early next year but comments from participants are encouraged now, DECC said.

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