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Simplifying CRC: Next Steps

This update discusses the next steps for simplifying the CRC Energy Efficiency Scheme, including reducing complexity, administrative burden, and overlap with other schemes.

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Simplifying CRC: Next Steps

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  1. Simplifying CRC: Next Steps Paul Wilson: DECC, Head of CRC team

  2. Policy Landscape • Improvements in energy efficiency are needed to deliver our climate objectives • UK targets: Reduction of 34% in GHG emissions by 2020, at least 80% by 2050 • EU Targets: 20% reduction in GHG emissions by 2020 (on 1990 levels) • CRC designed to encourage energy efficiency and address barriers to uptake of cost effective measures • Mix of incentives for action • Carbon Savings – saving carbon will help us meet our carbon budgets and enhance security of supply

  3. Policy Landscape EU ETS: Phase II (2008-2012), Phase III starts 2013 CCAs: Consultation shortly Carbon Price Floor: £16/t in 2013, rising to £30/t by 2020. Green Deal: • Policy under development • Intended that Green Deal will be available to businesses as well as households • Could help large companies to reduce energy use at lower cost

  4. Key elements of the CRC scheme • A league table : reputational incentive • Price signal: Allowances sales will provide a clear financial incentive. • Reporting: requires thorough investigation of energy use. • Board Room Responsibility: A member of the board is accountable

  5. CRC Energy Efficiency Scheme Update Scheme started April 2010 Registration for first phase :Closed 30th September 2010 • 2791 participants registered First compliance year: April 2010 – March 2011 • Annual Report and Footprint Reports should have been submitted • Must comply with the legislation as currently drafted • CRC is a mandatory scheme – financial penalties for non compliance

  6. Simplification Progress • Spending review announcement: Oct 2010 • Revenue from allowance sales will not be recycled to participants, • First allowance sale in 2012 for 2011/12 emissions • Ministers commit to simplify the scheme following stakeholder feedback • Legislation changed as of 1 April, following December consultation & Govt to give more time to consider wider simplification measures • Removal of approx 12,000 “information declarers”; • Delay of start of Phase 2: first compliance year now 2014/15

  7. Simplification Progress • Wider simplification measures • Engaged in Dialogue with stakeholders regarding simplifying the scheme, specifically: • Supply rules • Qualification rules • Organisational rules • Timing and frequency of allowance sales • Overlap between energy efficiency/climate change instruments • We received extensive feedback this helped shape our proposals in • Simplifying CRC: Next Steps

  8. CBI Feedback • Uphold the original principles of the scheme • Restore Revenue Recycling or Scrap the CRC • Fundamentally review the policy landscape • Consider alternative Reputational drivers

  9. Simplify CRC: Next Steps 30th June: Publication of vision for the way ahead for a simplified CRC Scheme which will: • provide greater business certainty • provide business with greater flexibility • reduce the administrative burden • reduce the complexity of the scheme • reduce overlap with other schemes.

  10. Simplify CRC: Next Steps Key Proposals: • Reduce the number of fuels covered by the scheme • Move to fixed price allowance sales • Simplify the organisational rules • Make qualification processes easier • Reduce overlap with other schemes • Reduce the administrative burden of evidence and records

  11. Going Forward • We’re currently receiving feedback on our Next Steps until 2 September. • We will then look to draft legislation for formal consultation in early 2012. • Simplified scheme in place for the start of Phase 2 in April 2013

  12. Questions/Comments?

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