In our last review we discussed how revenue created from the CRC Energy Efficiency Scheme would now be used to support public finances rather than being recycled to participants. Following a series of informal discussion papers earlier this year, on 30 June the Government outlined further proposed changes, aiming to simplify the scheme and reduce the administrative burden created by it.

The main proposals include:

  • in phase 2, two fixed price sales p.a with unlimited allowances available will be introduced instead of auctioning a capped amount of allowances. This is hoped to increase business certainty, but allow for some market forces by having a lower sale price in the first sale each year;
  • simplification of organisational rules to reflect ‘natural business units’. Ahead of each phase the Environment Agency should, as before, be informed of the overall group structure by the parent organisation. Flexibility is however introduced by allowing the group to choose if they would like to disaggregate business units of any size;
  • simplification of the qualification process, requiring only electricity measured by settled half hourly meters to be taken into account;
  • limiting the number of fuels covered to electricity, gas, kerosene and diesel (for the last two, only if they are used for heating). This is a large reduction from the original 29 fuels;
  • removal of footprint reports and the 90% rule, with organisations now having to detail 100% of their supplies of the 4 fuels above; and
  • to reduce the overlap with other schemes, businesses covered by a Climate Change Agreement (CCAs) or the EU Emissions Trading Scheme (EU ETS) will be excluded from the CRC at the point of qualification. This removes the need for the existing complex CCA exemption process.  

Those wishing to comment on these proposals have until 2 September to do so. Full consultation on the draft legislation will then take place from February to April 2012, with the aim of the proposed changes coming into force in April 2013.