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CRC Energy Efficiency Scheme and Climate Change Agreements to be simplified

05 July 2011

Proposals to make the CRC Energy Efficiency Scheme simpler, easier and more straightforward have been outlined by the government. The CRC scheme started in April last year to reduce carbon emissions in businesses through energy efficiency improvements. Following recent discussions with businesses, industry, other scheme participants and regulators the proposals will result in a CRC scheme that imposes less administrative burden on business.

In addition, the scheme will provide greater certainty to participants about how they comply with the CRC; allow greater flexibility for businesses in how they take part; and reduce the overlap between the CRC and other government climate policies. Climate change minister Greg Barker said:
“Businesses have made clear to me their serious concerns about the overly complex and bureaucratic CRC scheme. We’ve got to help business reduce their emissions, not strangle them in red tape. We’ve already taken action to remove 10,000 organisations from the scheme but we’ve got to do more to help make it easier for those organisations taking part.

“I believe the principle of the scheme is right which is why I am proposing to make the CRC simpler while still protecting its strong environmental integrity to cut emissions in large organisations and businesses.

Energy efficiency is a no brainer. It saves money and cuts carbon. Our proposals will make it easier and simpler for businesses to feel the benefits of using less energy as well as supporting jobs in the energy savings industry.”

The proposals will be formally consulted on early next year but comments from participants are encouraged now.

Amongst the 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, but because approximately 95% of emissions captured under the CRC come from electricity and gas, businesses would need to report on just four. Kerosene and diesel for heating would also be included. This could significantly reduce administration burden without compromising the emissions coverage of the scheme.
·  Move to fixed price allowance sales
Instead of establishing an emissions cap and holding annual auctions, like the EU ETS, from the start of phase 2 in 2014 there could 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.
·  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.
Climate Change Agreements
The Government will also shortly start a consultation to revise the Climate Change Agreements (CCAs) to make it less burdensome on businesses and more effective until it finishes in 2023.

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