Actual Text from HM Treasury Document

The CRC Energy Efficiency scheme 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.

Revenues from allowance sales 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.

Further decisions on allowance sales are a matter for the Budget process.

Insights

Our experts provide the following insights into the change to CRC. As with many of the announcement in the spending review the exact details are unclear. Our current views are:-

• CRC is now a Carbon tax
• Equates to roughly 10% of energy costs
• Recycling payments are abolished
• Cost of participation has gone up tenfold
• All revenue from allowance purchases retained by Treasury
• Another year before allowances need to be purchased
• 2012 will be the first purchase year
• Allows time for organisations to implement an effective carbon management strategy
• Investing in energy reductions now has more tangible financial benefits
• No longer need to forecast emissions
• Purchase just what allowances you need
• Cost of allowances will be determined by the annual budget process
• Allowances likely to increase from the current £12 a tonne (£14 in 2013? £16 in 2014?)
• Change to a Carbon tax opens the door to including more companies below 6,000 MwH cut off
• Climate Change Committee has recommended extending the scheme
• Original estimate was 5,000 CRC participants
• Registration data shows there are less than 3,000
• If you are one of the 10,000 information declarers? Be prepared! CRC is coming....