As the start of the Initial Phase of the CRC Energy Efficiency Scheme (CRC) on 1 April 2014 draws closer, so too does the opportunity for participants to purchase cheaper allowances for surrender in the 2014/15 compliance year. Participants interested in making the most of the forecast sale should be carefully calculating the number of allowances they are likely to need in readiness for the first sale which takes place in April 2014.

New legislation

The CRC Energy Efficiency Scheme (Allocation of Allowances for Payment) Regulations 2013 (2013 Allowances Regulations) came into force on 1 February 2014 and revoked the 2012 Regulations of the same name. The 2013 Allowances Regulations apply to all sales of CRC allowances from 1 February 2014, including the last sale for the First Phase, which is due to take place from 3 June to 31 July 2014.

The 2013 Allowances Regulations set two fixed price sales in each CRC compliance year, a forecast sale of £15.60 per allowance and a retrospective compliance sale at £16.40. Participants should therefore be encouraged to estimate their allowances earlier in the year to benefit from the saving of purchasing their allowances at the forecast sale, rather than at the retrospective compliance sale.

For First Phase participants it is important to note that allowances purchased for compliance under the First Phase will still be priced at £12 per allowance.

Timing

The forecast application period for the first compliance year of the Initial Phase takes place between1 April and 30 April 2014. Forecast payments will then be made between 1 June and 20 June 2014 with the allocation taking place between 1 June and 15 July 2014.

If participants are unable to forecast their allowances, there will also be the opportunity to retrospectively apply for allowances at the end of the compliance year, between 1 June and 31 July 2015. Allocation of these allowances will be made between 1 September and 15 October 2015 and payments will be made between 1 September and 19 September 2015.

Next steps

If participants wish to make the most of the lower priced forecast sale, they should estimate the number of allowances they will need for the Initial Phase and apply to the Environment Agency for the forecast sale between the 1 April and 30 April 2014. As the forecast sale purchase will be based on an estimate, participants should check their final emissions figure at the end of the compliance year in case they also need to purchase additional allowances in the compliance sale. All allowances purchased will then need to be surrendered by 31 October 2015.

However, as the final allowances for the First Phase will also have to be paid for in September 2014, some participants may decide that they would prefer to spread the cost and purchase the more expensive allowances for the first compliance year of the Initial Phase.