CRC Energy Efficiency Scheme
Consultation on amendments to the CRC Energy Efficiency Scheme (20 November – 17 December 2013)
Our proposal is to deliver the commitment given in the Government Response on simplifying the CRC Energy Efficiency Scheme in December 2012 to consider how the CRC can incentivise the uptake of onsite renewable self-supplied electricity. In addition, to introduce an exemption to energy supplied to metallurgical and mineralogical processes, which arise from changes to the Climate Change Levy, announced by the Chancellor in the 2013 Budget. The consultation document also draws attention to a further two issues where we believe the current wording of the ‘CRC Energy Efficiency Scheme Order 2013’ is not quite right in delivering our policy intent.
The CRC Energy Efficiency Scheme (often referred to as simply ‘the CRC’) is a mandatory scheme aimed at improving energy efficiency and cutting emissions in large public and private sector organisations. These organisations are responsible for around 10% of the UK’s greenhouse gas emissions.
The scheme features a range of drivers, which aim to encourage organisations to develop energy management strategies that promote a better understanding of energy usage. It is designed to target energy supplies not already covered by Climate Change Agreements (CCAs) and the EU Emissions Trading System.
The CRC affects large public and private sector organisations across the UK. Participants include supermarkets, water companies, banks, local authorities and all central government departments.
The Department of Energy & Climate Change (DECC) has developed the CRC policy in partnership with the Scottish Government, the Welsh Assembly Government and the Department of Environment Northern Ireland.
How the CRC works
Qualification for the scheme is based on electricity usage. For Phase 2, organisations will qualify if, during the qualification year, they consumed over 6,000 megawatt-hours (MWh) of qualifying electricity through settled half-hourly meters.
Organisations that meet the qualification threshold must register using the CRC Registry, which is administered by the Environment Agency. Qualifying organisations have to comply legally with the scheme or face financial and other penalties.
A summary of steps to determine whether your organisation qualifies for participation in the CRC and more information on Qualification can be found on the Environment Agency website.
Organisations which participate within the CRC are required to monitor their energy use, and report their energy supplies annually. The Environment Agency’s reporting system applies emissions factors to calculate participants’ carbon dioxide (CO2) emissions on the basis of this information.
Participants must purchase and surrender allowances to offset their emissions. Allowances can either be bought at annual fixed-price sales, or traded on the secondary market. One allowance must be surrendered for each tonne of CO2 emitted. The allowance price in Phase 1 has been set at £12 per tonne of CO2.
More information on reporting and allowance sales is available on the Environment Agency website.
For the 2012/13 compliance year, the Environment Agency publishes the Annual Report Publication containing CRC participants’ aggregated emissions data.
The Annual Report Publication replaces the Performance League Table which was published for the 2010/11 and 2011/12 compliance years and ranked participants according to their energy efficiency performance against a range of metrics.
Simplification of the scheme
Following the Chancellor’s announcement in his 2012 Autumn Statement of the continuation of a simplified CRC, we published our response to the consultation on a simplified CRC Energy Efficiency Scheme on 10 December 2012.
The consultation 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 £275m up to 2030
The CRC Energy Efficiency Scheme Order 2013 came into force on 20 May 2013, following approval by Parliament and the devolved legislatures. The majority of the proposals will be introduced at the start of the second phase, in 2014/15.
Official guidance on all aspects of complying with the CRC Scheme is available on the Environment Agency website.
Statutory guidance on the discretion of penalties in the CRC.
DECC, the Scottish Government, the Welsh Assembly Government and the Northern Ireland Department for the Environment have issued statutory guidance to the administrators of the CRC on discretion of penalties in the scheme.
This guidance is designed to provide guidance to the Environment Agency, the Scottish Environment Protection Agency and the Chief Inspector (Northern Ireland Environment Agency) as the administrators of the scheme on the imposition of civil penalties under the CRC Energy Efficiency Scheme Order 2010.
DECC, the Scottish Government, the Welsh Assembly Government and the Northern Ireland Department for the Environment have issued guidance on the appeals process under the CRC Energy Efficiency Scheme Order 2010.
The guidance details the procedures which both the scheme’s administrators (the Environment Agency, the Scottish Environment Protection Agency and the Chief Inspector (Northern Ireland Environment Agency)) and appellants must follow in respect of a CRC appeal. An appeal form is also included to facilitate the submission of appeal notifications and statements.
Guidance on the CRC repayment mechanism for surplus allowances
DECC has issued guidance on the CRC repayment mechanism for surplus allowances.
The guidance outlines the conditions under which requests for repayment in respect of surplus allowances will be considered, and the process by which participants should make a request. A repayment request form is included to facilitate the submission of repayment requests.