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DECC launches consultation on “simplified” CRC

Green policy news – by GreenWise staff
27th March 2012
Ministers laid out plans today to reform the Carbon Reduction Commitment (CRC), which they said would save businesses £250 million.
The reforms are being put forward for final consultation to simplify the mandatory carbon trading scheme. The Department of Energy and Climate Change (DECC) said the proposals would reduce the administrative cost of the CRC on companies and organisations participating in the scheme by almost two-thirds – equating to around £250 million savings for businesses up to 2030 and £330 million in total for both public and private sector organisations.

The package of proposals, many of which have been on the table since last July, follows an acknowledgement by the Chancellor George Osborne last week that the CRC was "cumbersome and bureaucratic". In his Budget speech, he said that unless major savings in the administrative costs of the scheme for businesses could be found before the autumn, he would replace the CRC with an alternative environmental tax.

"We have listened to businesses' concerns about the CRC and have set out proposals to radically cut down on 'red tape’ to save businesses money," Energy and Climate Change Secretary Ed Davey said today. 

But Britain’s biggest business group has already labelled the consultation a "waste of time" and is calling for the CRC to be scrapped without delay.

The CRC, which launched in 2010, requires large public and private sector organisations to buy allowances to cover emissions produced from their usage of electricity and heat. Originally supported by business, the scheme is now considered by many as a stealth tax after the Chancellor decided to use money raised through the scheme to fund the public finances rather than recycling it back into the CRC. 

The CRC is expected to deliver carbon savings of 21 million tonnes of CO2 by 2027, according to the Government.

Proposals to simplify CRC
As set out last July, DECC said it will cut the number of fuels covered by the schemes from 29 to four and remove the requirement on facilities covered by Climate Change Agreement or EU Emissions Trading System installations to purchase CRC allowances. 

Other measures include shortening the CRC qualification process and reducing the amount of reporting required by businesses and the length of time participants will have to keep records.

In addition, DECC said it would retain the Performance League Table but would make it no longer a legal requirement to include detailed metrics within the table. 

And Ministers said the proposals would also create greater alignment between the CRC and company greenhouse gas (GHG) reporting by adopting for the CRC the emission factors used for GHG reporting purposes.

Davey promised the reforms, while simplifying the CRC, would still deliver energy and carbon savings. "The benefits of the scheme are clear though. It will deliver substantial carbon savings helping us to meet carbon budgets, and it encourages businesses to take action to improve their energy efficiency," he said.

The formal consultation will run for twelve weeks from today. Following on from this, Government will amend the legislation for CRC by April 2013.

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