The CRC Energy Efficiency Scheme is a mandatory emissions trading scheme which aims to improve energy efficiency and reduce the amount of carbon dioxide emitted in the UK.
Who does it apply to?
The scheme will apply to organisations consuming at least 6,000 MWh of electricity measured on half hourly meters (generally when electricity bills are over £500,000 during the qualification year in 2008).
It applies to groups of companies and the highest parent organisation or a nominated company (the primary member) will be responsible for compliance by the whole group, including all subsidiaries.
CRC came into force in April 2010 and the first introductory phase will run until March 2014.
Timing
CRC came into force in April 2010 and the first introductory phase will run until March 2014.
Organisations which qualified for CRC had to register by 30 September 2010 and needed to submit a report in 2011 on their emissions for the first scheme year, which started in April 2010.
Registration for the second phase will be based on energy consumption for April 2012 to March 2013 and registration for this will have to be done between April and September 2013.
Under the CRC Order organisations should purchase allowances reflecting the expected amount of their emissions at the beginning of a scheme year in April (one allowance per tonne of CO2 emitted, initially sold by the government at £12 each). They will then surrender the right number of allowances at the end of the scheme year when submitting their report. The Government’s Comprehensive Spending Review on 20 October 2010 stated that the first sale of allowances would be held in April 2012 and would be retrospective in respect of 2011/2012 emissions.
In the March 2012 Budget, the Government announced that it would consult on simplifying CRC to reduce administrative burdens on business and if it found that significant administrative savings were not deliverable, it would bring forward proposals in Autumn 2012 to replace CRC revenues with an alternative environmental tax.
Back in April 2011, in response to criticism of its perceived complexity, the Government had already extended the CRC’s introductory phase by one year (to March 2014) and postponed the second cap-and-trade phase by two years and, in June 2011, announced proposals to simplify the CRC. The latest consultation published on 27 March 2012 proposes changes to the CRC for Phase 2 (from 1 April 2013 onwards) rather than replacing the scheme with a carbon tax.
Key proposals include changes to:
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the rules on organisational structures;
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the electricity that counts towards qualification;
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the requirement to produce Footprint Reports;
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the overlap with climate change agreements (CCAs) and the EU Emissions Trading Scheme (EU ETS) and its reduction;
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the number of fuels covered by the CRC; and
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the sale of allowances.
It appears that the landlord-tenant rule is however going to stay broadly the same with landlords responsible for tenants’ emissions unless the tenant has its own supply. This is because the Government still believes that the Landlord is the person most able to influence the consumption of energy within the building.
View the full consultation document. The consultation closed on 18 June 2012 and the results are awaited with interest.
On 24 May 2012 the CRC Energy Efficiency Scheme (Allocation of Allowances for Payment) Regulations 2012 came into force. The Regulations only cover Phase 1 (2010-14) of the CRC scheme and deal with who should conduct allocations (sales) of allowances; when requests for allocations can be made, how payment for allowances can be made and when allowances will be issued. The first primary allocation period for Phase 1 runs from 1 June 2012 until 31 July 2012.
League table
Participants are ranked in a league table according to how their emissions have reduced, which will have an impact on their reputation. There is much discussion as to how effective this league table will prove to be in practice and whether an alternative such as mandatory publishing of Display Energy Certificates for all commercial buildings would be a preferable route.
Contact Us
For further information or advice on the CRC Energy Efficiency Scheme, please speak to one of our CRC specialists or to your usual Linklaters contact.
