DECC reveals streamlined Carbon Reduction Commitment

Energy Minister Greg Barker has announced details of the new look Carbon Reduction Commitment scheme aimed at reducing costs for business.

The Department of Energy and Climate Change has unveiled details of the new slimmed-down version of the CRC energy efficiency programme to boost emission savings but cut the administrative burden.

In his Budget last week, Chancellor George Osborne threatened to replace the “cumbersome and bureaucratic” scheme with an alternative environment tax if savings cannot be found by this Autumn.

And today DECC launched a formal consultation setting out the details of the ‘simplification package’, which is designed to cut costs by almost two-thirds and generate savings of around £330 million up to 2030.

The set of proposed rule changes will shorten the CRC qualification process and will simplify what counts as a supply. In addition, the number of fuels covered by the scheme will be reduced from 29 to four.

Energy Minister Greg Barker pointed out that these four fuels still represent over 96 per cent of total CRC emissions.

Mr Barker added: “These proposals will radically reduce the administrative costs to participants by reducing the complexity of the scheme, and reducing the overlap with other climate legislation.”

The Government also plans to reduce the reporting required by cutting the number of reports that participants are required to submit and the length of time participants need to keep records.

In addition, the detailed metrics of the performance league table will no longer be a legal requirement but in future included as guidance.

In his statement, Mr Barker said the government will look to reduce the overlap between schemes at registration.

He added: “In particular, climate change agreement facilities and EU emissions trading system installations will not be required to purchase CRC allowances. Our proposals will also create greater alignment between CRC and company greenhouse gas reporting (GHG) by adopting for CRC the emission factors used for GHG reporting purposes.

“These proposals will help us meet our simplification objective of optimising the projected energy and carbon savings delivered by the CRC energy efficiency scheme while reducing the complexity and administrative cost.”

Mt Barker said he hoped to implement the changes so the amended legislation could be in place by April 2013.

The CRC is a mandatory UK-wide trading scheme covering large business and public sector organisation, who produce 12 per cent of UK carbon emissions.

It requires businesses to report on and pay a tax on energy used, and ranks businesses in a performance league table which provides a further reputational incentive to improve their energy efficiency.

The CRC is expected to deliver carbon savings of 21 MtCO2 by 2027.

Secretary of State Ed Davey said: “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.

“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”.