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Simplification of the scheme

10 December 2012: Government response to the consultation on Simplifying the CRC Energy Efficiency Scheme

Following the Chancellor’s announcement in his Autumn Statement of the continuation of a simplified CRC, the Government has published its response to the consultation on a simplified CRC Energy Efficiency Scheme earlier this year.

The consultation, held between 27th March and 18th June 2012, drew a total of 255 responses from both public and private sector participants, with the majority of respondents supportive of DECC’s proposed amendments.

Under the new proposals, participants will benefit from:

  • reduced complexity, greater business certainty, and less overlap with other schemes
  • a 55% reduction in administrative costs, which equates to £272m up to 2030
  • clearer rules to incentivise the adoption of cost-cutting energy efficiency measures

The Government response and Final Impact Assessment available:

The Government will now lay an Order before Parliament and the Devolved legislatures, with the Order intended to come into force on 1st June 2013. The majority of the proposals set out in the Government Response will then be introduced at the start of the second phase, in 2014/15.

Consultation events on simplifying the CRC Energy Efficiency Scheme in Manchester on 16th May and London on 23rd May 2012

DECC held consultation events in London (23 May 2012) and Manchester (16 May 2012). A report of the events can be found on the CRC Energy Efficiency Scheme web pages.


The Government is considering the simplification of the CRC in the light of experience since the scheme began in April 2010. In doing so, government will take into account feedback from stakeholders including:

  • Optimising the projected energy savings attributable to the CRC scheme. Projected savings attributable to the CRC are outlined in Annex G of the June 2010 DECC Energy and emissions projections

On 27 March 2012, Government published a consultation on simplifying the CRC Energy Efficiency Scheme. The consultation document includes proposals which aim to streamline and simplify the scheme to create a new leaner, simplified and refocused CRC. Government is seeking views from participants and other interested parties. The deadline for responses to the consultation is Monday 18th June 2012. Further details can be found on our consultation on simplifying the CRC Energy Efficiency Scheme page.

These views will then inform amendments to the current legislation underpinning the scheme (see Legislation.gov.uk: The CRC Energy Efficiency Scheme Order 2010). Any formal legislative proposals would come into force through affirmative Orders in Council before registration for the second phase of the scheme begins in April 2013.


Review of Academies’ participation in the CRC Energy Efficiency Scheme

Under existing CRC legislation, maintained schools in England are grouped with their funding local authority for the purposes of CRC participation. As part of Government’s CRC simplification process, local authorities have expressed concern the grouping of Academies with local authorities for the purposes of CRC participation is untenable.

The Government welcomes stakeholder feedback on the discussion options presented in the review, as well as alternative options that maintain the scheme’s emissions coverage.

Please send your comments to crc@decc.gsi.gov.uk or CRC Team, National Carbon Markets, Department of Energy and Climate Change, 3 Whitehall Place, London, SW1A 2AW, by 23 September 2011.


Simplifying The CRC Energy Efficiency Scheme: Next Steps – 30 June 2011

As part of the informal dialogue with stakeholders on how to simplify the CRC, the Government today sets out its proposals for the future of the scheme. Responding to feedback received, we propose a number of simplifications to the CRC scheme which, subject to further analysis and formal consultation, will be implemented from Phase 2 onwards (where registration for Phase 2 begins in April 2013).

Amongst other simplifications the Government is proposing to:

  • Reduce the number of fuels covered by the scheme
    Under the current scheme businesses have to report on the emissions from 29 different fuels, and we propose reducing this to four: electricity, gas, kerosene and diesel for heating. This will cover over approximately 95% of emissions captured under the CRC come while significantly reducing the administration burden of the scheme.
     
  • Move to fixed price allowance sales
    Instead of establishing an emissions cap and holding annual auctions as proposed by the previous Administration we propose from the start of phase 2 in 2014 there should be two sales per year where the price of allowances is fixed. This would remove the need for businesses to come up with auctioning strategies and give price certainty to help investment decisions, A lower price in the first sale will incentivise good energy management and reward those who successfully forecast energy use.
     
  • Simplify the organisational rules
    Abolish the need for large businesses to participate in groups which do not reflect their natural structure.
     
  • Make qualification processes easier
    To make qualification a one step process instead of two. Previously businesses had to firstly prove they had a qualifying electricity meter and then declare they used a particular amount of electricity. This would be abolished in favour of participants just having to prove they use a certain amount of electricity from the qualifying meter.
     
  • Reducing overlap with other schemes
    Any CCA or EU ETS site would be automatically exempt from the CRC scheme.

We will continue to engage with stakeholders and welcome their views on the proposed simplified CRC scheme. We will publish draft legislative proposals in early 2012 for formal public consultation which will amend the existing CRC scheme.

This statement along with the proposals for the simplification are available here:


Stakeholder Event on simplification of the CRC Energy Efficiency Scheme – 3 March 2011

The Government held a stakeholder event on the simplification of the CRC Energy Efficiency Scheme on Thursday 3 March 2011.

This event provided an opportunity for an exchange of views about simplification, based on the papers published by DECC in January, to help inform future government proposals. The Minister of State for Climate Change, Gregory Barker, made the keynote speech at the event.

Participation in the event

Due to logistical constraints, we were not able to accommodate all requests for participation on this occasion so DECC tried to ensure there was a good representative profile of the CRC community at the event.

Please note: we are still in the early stages of the simplification process and those who were unsuccessful this time will be considered for future DECC CRC consultation events.  


Priority areas for simplification

Feedback to date has led DECC to conclude that priority areas for simplification include:

Your views are sought on how these aspects of the CRC scheme could be simplified. To help inform your considerations, discussion papers aimed to stimulate an informal discussion on simplifying the aspects of the scheme are set out above. 

These papers are not statements of government policy. Rather, they intend to provoke discussion amongst interested parties resulting in ideas and suggestions for changes and improvements to the CRC for subsequent consideration by government. We welcome initial written views on simplifying these aspects of the scheme by 11 March 2011 (send your responses to crc@decc.gsi.gov.uk or CRC Team, National Carbon Markets, Department of Energy and Climate Change, 3 Whitehall Place, London, SW1A 2AW).

If you do not want your response – including your name, contact details and any other personal information – to be publicly available, please say so clearly in writing when you send your response to the consultation. Please note, if your computer automatically includes a confidentiality disclaimer, that will not count as a confidentiality request.

Please explain why you need to keep details confidential. We will take your reasons into account if someone asks for this information under freedom of information legislation. But, because of the law, we cannot promise that we will always be able to keep those details confidential.


Further areas where simplification could be discussed

Feedback to date has also shown that a number of other aspects of the CRC could also be revisited. These include, but are not limited to:

  • the nature of the reputational incentives of the scheme
  • definition of transport used in the scheme
  • treatment of public versus private sector participants
  • energy threshold for qualification
  • treatment of heat
  • landlord/tenant relationships and responsibilities  

If you have views about possible further simplification of the scheme in these or other areas, please write to DECC by 11 March (send your responses to crc@decc.gsi.gov.uk or CRC Team, National Carbon Markets, Department of Energy and Climate Change, 3 Whitehall Place, London, SW1A 2AW). Depending on the response to this request for views, DECC will consider publishing further discussion papers on other aspects of the scheme and hold associated sessions on these topics at future stakeholder events.


Guidance on sharing your ideas with government

The Government would welcome any views on how the CRC scheme could be simplified. However, if respondents make suggestions for changes to the scheme, it would be particularly helpful if the following aspects of any such suggestions were discussed in submissions to DECC:

  • How your proposals would tackle the four barriers to the uptake of energy efficiency in large organisations (namely, insufficient financial drivers, uncertain reputational benefits of demonstrating leadership, split incentives between landlords and tenants and organisational inertia). The barriers to the uptake of energy efficiency measures are discussed in policy options papers and consultation documents which can be found on the Policy background page.
  • How your proposals might affect the magnitude of the energy use coverage of the scheme
  • How the energy efficiencies / emissions savings associated with your proposals could be verified / audited in a proportionate but effective manner.  

An important note about the existing scheme

Although the Government has announced its proposal to simplify the CRC scheme, it is essential all participants continue to comply with the existing scheme, in full, as set out in the current legislation. The CRC remains a mandatory scheme and the Environment Agency and other administrators continue to provide support to participants with their CRC compliance. Organisations that fail to comply will be subject to enforcement action. Participants should continue to fully comply with the scheme and use the introductory phase to gain experience on reporting, complying and surrendering allowances in CRC.

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