CRC is a major legal compliance requirement affecting, in some form, around 15,500 qualifying organisations in the UK for Phase One of the scheme 2010/11 to 2012/13.

The scheme is operated on the Governments behalf by the Environment Agency.

About 2,800 different organisations are participating fully in CRC. An organisation participates fully if they had one or more half hour electricity meters with a combined throughput of 6000 MWh or more in the period January - December 2008.

Around 12,800 organisations will make some form of 'Information Disclosure.' Organisations with half hour meters with a combined throughput of 3000 MWh – 5999 MWh are required to register with the Environment Agency and provide a low level of information but nothing further.

The remaining organisations with settled half hourly meters and a combined throughput under 3000 MWh also need to register and provide an even lower level of information.

The Government has made some significant changes to the scheme - most notably not recycling allowance payments to participants. A number of changes are due to come into effect from April 2013 (Phase Two) and are still subject to consultation and ratification.

CRC Background Information

CRC was originally developed by the previous Government as a mechanism to:

Get large non intensive energy consumers, such as supermarkets, hospitals & office based companies, to reduce carbon emissions
Promote the more efficient use of energy by providing a strong financial and reputational incentive
Provide a rigid and consistent legal framework to allow fair comparison and competition between participating organisations

The original schemes' key aspects for full participants were:

Accurate measurement and reporting of energy consumption against a defined “footprint”
Notification of a Senior Officer (director level) to take responsibility for legal compliance
Annual forecasting of energy consumption and the purchasing of “allowances” to cover the volume of carbon emissions associated with the consumption. A trading secondary market for allowances was planned for the sale or purchase of allowances during the year
Emissions and reductions calculated to enable the publishing of a “Performance League Table” of all participants
Total “allowance” revenue to be recycled to participants in proportion to league table performance – some losers some gainers

The scheme was designed to be revenue neutral overall apart from the administration costs. It took several years and many rounds of consultation to develop and was in the initial stages of deployment at the point of the 2010 general election.

The present Governments’ priority is clearly deficit reduction and the recycling element of CRC has been dropped, with the Government now retaining revenues from allowance sales – estimated at £3.5 billion.

Further changes have been made to simplify the scheme, notably the need to purchase allowances in advance; this means that organisations no longer need to accurately forecast annual energy consumption. Allowances are now purchased retrospectively against reported actual consumption. This also removes the role of a secondary trading market.

CRC is now primarily a carbon tax with the associated requirement to measure and report consumption plus the publishing of a League Table. The requirement to nominate a Senior Officer responsible for compliance remains an important aspect of the scheme.

CRC is estimated to add 5% to the cost of energy. Fines for non compliance are substantial. In a worst case scenario they could run into hundreds of thousands of pounds.

Government plans to implement a number of simplifications from phase two onwards (April 2013) which will retain:

maintaining an evidence pack
reporting energy consumption in an annual report
purchasing of allowances to cover reported emissions
publishing results in a league table

Proposed Changes for Phase 2 of CRC 2013-14

This is a summary of the main proposed changes. Draft legislative proposals for public consultation will be published in early 2012.

Qualification and Registration

Sites already covered by CCAs or EUETS will be excluded from consideration from the outset.

Qualification will be based on usage through settled half hour electricity meters at non CCA or EUETS sites only.

The threshold for inclusion - currently set at 6000 MWh, will be amended (downwards) to maintain the same level of coverage as presently given the changes regarding sites covered by CCAs and EUETS.

Re registration for existing participants will be simplified and automated.

Disaggregation rules will be made more flexible to allow business units under single ownership to register separately more easily.

Fuels and Meters

Fuels covered will be reduced from 29 to 4 - electricity, gas, kerosene and diesel (excluding transport use as currently).

Domestic meters (class 01 and 02) will be excluded from CRC.

Sub metered energy (pseudo half hour and no half hour) will not count towards CRC qualification criteria but will be included in reported use by eligible participants.

100% of eligible fuel use will have to be accounted for - removing the current option to exclude up to 10%.

Footprint Report

This is no longer required.

Allowance Purchases

From 2013/14 there will be two Government sales of allowances - one at the beginning of the year (purchased on a forecast basis) and one at the end of the year (after actual emissions are known). Allowances will be sold at a lower price at the beginning of the year and will be able to traded on a secondary market during the year. It will be up to Participants to decide when to purchase allowances.

Evidence Pack

Requirements will be simplified from 2012/13 onwards. The requirement to keep documentation for 12 years will be reduced to 6.

Performance League Table

The league table will be retained as a reputational driver but the underlying metrics used to produce the table may be altered in the light of experience.

Timeline

For a timetable of CRC requirements and the implementation of proposed changes please contact Michael Webb or phone him on 08450 176299.

For details of The Green Consultancy’s CRC services please see: Carbon Reduction

Commitment Energy Efficiency Scheme (CRC).