A number of important changes to simplify the CRC Energy Efficiency Scheme (‘CRC’) have been made law by the CRC Energy Efficiency Scheme (Amendment) Order 2014 (the ‘2014 Order’). The 2014 Order entered into force on 1 April 2014 and includes, amongst others, changes to disaggregation rules for CRC participant organisations, exclusion of metallurgical and mineralogical sectors from CRC supplies and a boost for onsite renewable energy generation through its exclusion from CRC allowance obligations. Details of changes to disaggregation are addressed below.
Disaggregation possible on an annual basis
Companies forming part of a CRC Participant group are able to disaggregate on an annual basis within a compliance year of the scheme and by mutual consent of the parent company within the group. This means that any undertakings which missed the original 31 January 2014 deadline for disaggregation (as part of the registration process for the Initial Phase which starts on 1 April 2014) can disaggregate from their existing Participant Group and become a separate Participant in their own right. This should facilitate simpler participation for large organisations and complex structures particularly trusts, funds and private equity groups. Undertakings who wish to disaggregate should consult their technical advisers on potential disaggregation options which may be available to their respective groups.
Implications of disaggregation
Disaggregation triggers a requirement to register as a separate participant thus requiring payment of registration and annual subsistence fees by each new participant. Public bodies are not allowed to disaggregate and specific rules govern how collegiate universities and colleges can participate separately once qualification has been assessed.
Upon registering disaggregated Participants will be entirely separate from the original CRC Group. Newly registered Participants will be able to appoint their own primary contact/account representatives, submit annual reports separately and surrender allowances separately. More importantly, joint and several liability in the event of any non compliances and associated penalties will no longer apply to the group as a whole, post disaggregation but at individual Participant or Participant Equivalent level.
An application for registration as a disaggregated undertaking or group of undertakings should be completed by the last working day of April (e.g. 30 April 2014), in order to take effect for the upcoming compliance year. The disaggregated entity will participate in their own right for the remaining length of a phase and will be responsible for emissions for the upcoming year, whilst the parent group will be responsible for the emissions of the previous compliance year. At the start of the following phase they will re-aggregate for the purposes of qualification under the highest parent although they may choose to continue as a separate Participant at subsequent registration.
For further information and to view the 2014 Order please click here.