Out-Law News 2 min. read
21 May 2013, 3:30 pm
The CRC Energy Efficiency Scheme Order replaces the previous 2010 Orderapart from specific provisions which are required for the remainder of Phase 1 of the CRC which runs until 31 March 2014.. However Linda Fletcher, an environment and energy law expert with Pinsent Masons, the law firm behind Out-Law.com, said that many organisations did not think the simplifications went far enough.
"There is still much criticism by organisations, and particularly private equity organisations, that the changes have not gone far enough with there being no change to the basic landlord and tenant rule or the aggregation of companies to assess whether a group is caught by the scheme in the first place," she said.
"The qualification year for Phase 2 is the 12-month period from 1 April 2012, with the key date for an organisation assessing its group structure being 31 March 2013. Organisations need to start considering if they are caught by Phase 2, gather information about their electricity consumption for the last 12 months to see if they are caught and duly register by 31 January 2014. On this basis, one simplification in the 2013 Order which may assist is that only electricity through settled half-hourly meters is to be counted towards the qualification threshold of 6,000 megawatt hours so this should be a simpler process," she said.
The CRC is a mandatory scheme aimed at improving energy efficiency and cutting CO2 emissions by large public and private sector organisations that are not caught by the EU Emissions Trading System (EU ETS). CRC participants must measure and report emissions, produced from their usage of electricity and heat, and purchase allowances to cover these emissions. Over 2,000 organisations are required to take part in the scheme.
The Government set out 46 simplifications to the scheme at the end of last year, following criticism from businesses which found the scheme costly to comply with and administratively complex. The majority of these changes will take effect at the start of the scheme's second phase in 2014, but some will be brought into force more quickly. The 'Performance League Table' associated with the scheme will disappear on 1 June 2013, while the number of reportable fuels will be reduced from 29 to two. Organisations due to report on their emissions this year will only have to do so for emissions as a result of electricity, and as a result of gas when used for heating purposes.
"The abolition of the Performance League Table is welcome news to participants as this did not provide a useful comparison as to how organisations were behaving or improving," environment and energy law expert Linda Fletcher said.
However, companies should note that the cost of compliance would rise in Phase 2 as a result of the changes, following the introduction of a carbon price floor of £16 a tonne by the Treasury.
"Within this, there will now be two sales of allowances – one being a forward sale and the second a 'buy to comply'," she said. "The price at the second point of sale is expected to be a higher figure."
