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CRC to be simplified to reduce costs to businesses

27 March 2012

The Department for Energy and Climate Change (DECC) says millions of pounds will be saved for businesses through new proposals to simplify the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme*. Participants will see their administrative costs cut by almost two-thirds, DECC claims, equating to around £330 million of savings up to 2030.

Edward Davey
Edward Davey

The CRC is a mandatory UK-wide trading  scheme covering large business and public sector organisation, who produce 12% 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 million tonnes of carbon dioxide emissions by 2027.

Secretary of State Edward Davey (pictured) 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.”

The package proposed is aimed at retaining the energy-saving and reputational benefits of the CRC, whilst reducing the bureaucracy of taking part. Simplifications include:

- A shortening of the CRC qualification process.
- Reducing the number of fuels covered by CRC from 29 to 4.
- Reducing the amount of reporting required by businesses.
- Reducing the length of time participants will have to keep records.
- Removing the requirement on facilities covered by Climate Change Agreement or EU Emissions Trading System installations to purchase CRC allowances. 
- Adopting new emissions factors for the CRC which will align it with Greenhouse Gas reporting processes.
- Removing the detailed metrics of the Performance League Table from legislation and placing them in government guidance.

A formal consultation will run for twelve weeks from today (Tuesday March 27 2012). Following on from this, the government proposes to amend the legislation for CRC by April 2013. Click here to find out more about the consultation process.

*The CRC covers large organisations in the public and private sector with at least one half hourly meter settled on the half hourly market who use more than 6,000MWh/annum of half hourly metered electricity qualify.  Typically participants spend more than £0.75 million a year on electricity.

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