News

Simplified CRC could save businesses £272m

In the wake of last week’s Autumn Statement, the Department of Energy and Climate Change (DECC) has released extra details of its planned simplification of the CRC Energy Efficiency Scheme (CRC).

In a statement the DECC revealed the reforms to the Scheme that it says will deliver a 55% reduction in costs, saving around £272m for participants in administration costs over the next 20 years.

These reforms include:

• Reducing the number of fuels that participants have to report against from 29 to two (electricity and gas for heating).
• Reducing scheme complexity by removing the 90% rule and Climate Change Agreements (CCA) exemption rule.
• Abolishing the Performance League Table but continuing to publish participants aggregated energy use and emission data.
• Reducing overlap with other climate change legislation.
• Withdrawing all state-funded schools in England from the scheme.
• Government will consider how the CRC can incentivise the uptake of new onsite renewable self-supplied electricity.
• The Government will review the effectiveness of the CRC in 2016. This review will consider whether the CRC remains the appropriate policy to meet industrial energy efficiency and carbon reduction objectives, and will consider alternative approaches that could achieve the same objectives.
• The tax element of the CRC introduced at Spending Review 2010 will be a high priority for removal when the public finances allow.

Minister of State Gregory Barker said:

“Energy efficiency increases productivity and is good for growth so it is important that we continue to incentivise this through the CRC.

“We have listened to the concerns of business and radically simplified the scheme in order to cut down on administrative costs and red tape. And we will consider how to encourage new renewable on-site generation through the CRC scheme.”

Commenting on the subject, Workplace Law’s Principal Environmental Consultant, Peter Watts, said: 

“Governments must ensure schemes which require businesses to report on environmental performance and change their behaviour are readily understandable, achievable but also suitably ambitious- particularly such as the CRC where there is a reporting requirement as a legal consideration.  

“The CRC is an important means to meet UK emissions reduction targets, and should not be cut to the bare bones so that it is no longer effective although it has proven to be rather cumbersome and difficult for many participatory organisations.    

“There is a fine line between cutting red-tape and over-simplifying though and the government has to be sure that the overall aims of the CRC are being achieved - that it is working towards the 80% cut in greenhouse gases over 1990 levels set out in the Climate Change Act 2008 - the CRC is one mechanism on the road to that aim.”

It has been revealed that the order to amend the CRC scheme will come into force on 1 June 2013, subject to Parliamentary approval.