Spending Review Announcement
In the October 2010 Spending Review, the UK Government announced that the CRC will be simplified to reduce the burden on businesses, with the first allowance sales for 2011/12 emissions now taking place in 2012 rather than 2011. Revenue from the sale of CRC allowances, totalling £1 billion a year by 2014/15, will be used to support the public finances, including spending on the environment, rather than recycled to participants.
The implications of this announcement for CRC are:
- In order to clarify the price signal to participants and to support the public finances, revenue from allowance sales will not be recycled back to participants by the UK Government
- The first sale of allowances will take place in 2012 instead of 2011, postponing the financial requirements of the scheme for participants. Participants will therefore be able to purchase allowances to cover their 2011/12 emissions at the end of the 2011/12 compliance year.
- The Performance League Table will be retained as the main reputational driver within the scheme, with the metric weightings and publication dates as envisaged in the current legislation (including the October 2011 table)
The CRC scheme is a joint scheme between the UK Government and the Devolved Administrations and revenue recycling is a matter for all the Devolved Administrations to review following the UK Government’s announcement.
As part of simplifying the CRC scheme, we conducted a formal Consultation on amendments to the CRC Energy Efficiency Scheme Order 2010 via an initial amendment which will come into force by 1 April 2011.The consultation ran from the 17 November – 17 December 2010 and the Government response was published in February 2011. The amendments are primarily focused on extending the introductory phase and postponing the start of Phase 2 until 2013. This will facilitate future amendments to be made to the legislation underpinning the scheme as a result of a broader simplification review.
Reports
The reports below document analysis carried out during the policy development of the CRC Energy Efficiency Scheme, known originally as the Energy Performance Commitment and more recently as the Carbon Reduction Commitment (CRC).
CRC Energy Efficiency Scheme Order 2010
The CRC Energy Efficiency Scheme Order 2010 came into force on 22nd March 2010. The Scheme started on 1 April 2010. The CRC Energy Efficiency Scheme Order 2010 can be found on the the Office of Public Sector Information: CRC Energy Efficiency Scheme Order 2010 web page.
Latest draft of the Allocation Regulations
The draft Allocation Regulations provide for the two types of sales of allowances in the CRC. Further information will be available in due course. A policy note was also produced to explain the minor change that has been made since the response to the Consultation on the CRC was published in October 2009. Both documents are available below:
Implementation options - consultation
In March 2009, DECC launched a consultation on the draft order to implement the Carbon Reduction Commitment to ask stakeholders for their views on the proposed legislation. The consultation closed on 4 June 2009.
On 7 October 2009, a response to the consultation and policy decisions was released. The response covers issues raised during the consultation process and the changes in the CRC brought about by DECC to address these issues.
On 25 January 2010, DECC published an Addendum to the Consultation response which reflects some minor policy changes to the CRC Order since the publication in October 2009 of the response to the consultation.
Full details of this consultation can be found on the Consultation on the draft order to implement the Carbon Reduction Commitment web page.
In June 2007, DECC launched a consultation on the implementation proposals for the CRC to secure the required emissions reductions. You can find out more here:
Transcribed reports from the July 2007 consultation stakeholder workshops and subsequent March 2008 workshop. These reports are not statements of DECC policy.
In November 2006, a consultation was launched on ways to reduce carbon emissions and improve energy efficiency cost effectively in the large non-energy-intensive business and public sectors. This was the start of the CRC, but at the time it was known as the Energy Performance Commitment.
CRC policy update
CRC policy decision on schools and proposed scheme-wide amendments (16 July 2008) (Updated 14 August 2008). An update on the inclusion of schools, the proposed move to a financial year, changes to the baseline year and clarification of the scheme’s qualification criteria.
Energy white paper
The commitment to implement the CRC was announced in the Energy white paper 2007: ‘Meeting the energy challenge’, following consultation on measures to best secure cost-effective carbon savings from large non-energy-intensive business and public sector organisations.
Definition of a CRC organisation
Analysis of CRC organisation structures in the public and private sectors (March 2008). This report concerns the definition of a CRC organisation, specifically focusing on how to assign responsibility for emissions and how particular public and private sector organisation structures should be included in the CRC.
Feasibility of implementation
How is the successful qualification of EPC organisations ensured? (May 2007). Determines the requirements to establish a complete list of UK organisations using more than a threshold quantity of half-hourly metered electricity.
Market design
The Design of auction, ‘safety-valve’ and revenue recycling within the Energy Performance Commitment (EPC) (May 2007). Analyses possible auction methods, potential safety-valve mechanisms, and the way revenues could be recycled to participants within the CRC.
Policy options
Comparison of policies to reduce carbon emissions in the large non-energy-intensive sector (August 2006). Appraises the strengths and weaknesses of different policies to reduce emissions cost effectively, and promote energy efficiency in large non-energy-intensive business and public sector organisations.
Energy efficiency and trading part II: options for the implementation of a new mandatory UK emissions trading scheme (April 2006). A detailed examination of the Carbon Trust's proposal for a new, mandatory emissions trading scheme covering the large non-energy-intensive sector - and, drawing lessons from other trading schemes, how to implement it cost effectively.
The UK Climate Change Programme: potential evolution for business and the public sector (December 2005). A Carbon Trust analysis examining how to optimise policy instruments acting on business and the public sector to achieve significant carbon savings, while maintaining and enhancing UK companies’ competitiveness.
Analysis of the voluntary UK ETS
Appraising years 1-4 of the UK Emissions Trading Scheme (December 2006). Evaluates the first four years of the voluntary UK ETS, including lessons learned for CRC policy development.
Non-CO2 gases
Mechanisms for reducing methane and HFC emissions from four selected sectors (October 2005). Analysis of potential inclusion of non-CO2 gases, as part of the CRC, highlighting a number of difficulties in terms of incorporating non-CO2 gases.