On 5 December 2012 as part of the Chancellor of the Exchequer’s Autumn Statement it was announced that “the Government will simplify the Carbon Reduction Commitment (CRC) energy efficiency scheme from 2013, providing very significant administrative savings for businesses in the scheme. The CRC’s Performance League Table will be abolished, to simplify the scheme further. A full review of the effectiveness of the CRC will be held in 2016 and the tax will be a high priority for removal when the public finances allow”.

Key messages

The key messages set out in the Autumn Statement in relation to CRC are:

  • The CRC will continue in a simplified form for now but in the future may be abolished altogether and replaced with alternative environmental tax.
  • The Performance League Table – the key reputational driver of the scheme - is to be abolished.
  • The Department of Energy and Climate Change (DECC) will publish the details of the simplifications to the scheme.
  • A review of CRC is planned for 2016 to consider the effectiveness of the scheme in particular whether it remains the appropriate policy to meet industrial energy efficiency and carbon reduction objectives. The Government will consider alternative approaches that could achieve the same carbon reduction objectives.
  • The tax element of the CRC introduced at Spending Review 2010 may also be removed “when the public finances allow”.
  • The Forecast Allowance Price remains unchanged at £12 per tonne of carbon dioxide in 2013-14 but will increase to £16 per tonne of carbon dioxide in 2014-15. From 2015-16 onwards, the Forecast Allowance Price will increase in line with the RPI.

Government Response to CRC Simplification Consultation

The Government is yet to publish its response to the Consultation on Simplifying the CRC Energy Efficiency Scheme issued on 27 March 2012 (see our previous Lawnow on Simplification Proposals At present it is not clear whether all of the changes proposed in the consultation shall be implemented without amendment. Given the announcement the response should be expected shortly. Legislation to implement a simplified CRC is due to come into force in April 2013.

Click here to view the Autumn Statement 2012.

Click Lawnow on Simplification Proposals for details of simplification proposals published in March 2012.