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CRC: Environment Agency sends letter to participants about changes announced in the Spending Review 2010
Practical Law UK Legal Update 0-503-7847 (Approx. 3 pages)
CRC: Environment Agency sends letter to participants about changes announced in the Spending Review 2010
by PLC Environment
| Published on 02 Nov 2010 • UK |
The Environment Agency sent a letter, on 29 October 2010, to participants in the CRC Energy Efficiency Scheme (CRC), setting out the implications of the changes to the scheme that were announced by the government in the Spending Review on 20 October 2010.
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The Environment Agency has sent a letter to participants in the CRC Energy Efficiency Scheme (CRC) following the announcements regarding changes to the CRC made by the government in its Spending Review on 20 October 2010. The letter, dated 29 October 2010, outlines the implications for participants of the changes that were announced on 20 October 2010.
The CRC Energy Efficiency Scheme (CRC) is a new emissions trading scheme for non-energy intensive private and public sector organisations in the UK. The CRC came into operation on 1 April 2010. Phase 1 of the scheme (the Introductory Phase) runs from 1 April 2010 to 31 March 2013.
On 20 October 2010, the coalition government announced in its Spending Review 2010 (SR 2010) that the:
- First sale of allowances under the CRC for 2011/12 would take place in 2012 rather than 2011.
- Revenue raised from the sale of CRC allowances would not be recycled back to participants in the scheme but instead would be used to support the public finances.
Following the announcements on the CRC in the SR 2010, the Environment Agency (EA), which is the main administrator for the scheme, made the following statement on its website:
"Changes to the CRC Energy Efficiency Scheme have been announced as part of the Government's Spending Review. The Environment Agency can provide no further information on these changes at this time. We will be working with the Government to understand the implications of these changes and will provide you with further information as it becomes available."
On 29 October 2010, the EA sent a letter to participants setting out the implications for participants of the changes that were announced on 20 October 2010:
- First fixed price sale (FPS): The first FPS of allowances will be delayed from April 2011 until 2012. Unfortunately the statement in the EA's letter does not clarify:
- When in 2012 the FPS will take place (it is assumed this will still be April 2012 as allowances will need to be surrendered for the annual reporting year (ARY) 2011/12 by 31 July 2012).
- Whether the FPS will be a double sale covering both ARYs 2011/12 and 2012/13 or whether, as some commentators have suggested, the FPS for each ARY will now take place at the end of the year rather than the beginning. Participants do not, therefore, know if they will have to budget for buying one or two ARY's worth of allowances in 2012.
- League Table: The league table will be retained as the main reputational driver in the CRC. The metric weightings and publication dates will remain as envisaged in the current legislation. The first league table will, therefore, be published in October 2011 as required by the CRC Energy Efficiency Scheme Order 2010 (SI 2010/768).
- Consultation: A public dialogue and consultation on how to simplify the CRC further will begin shortly which may, depending on the responses received, result in legislative proposals to amend the CRC being put forward in 2011. Further details about the consultation will be published in November 2010.
For more information on:
- The changes to the CRC announced in the SR 2010, see Legal update, CRC: Government scraps recycling of revenue from the sale of allowances.
- The other environmental announcements made in the SR 2010, see Legal update, Spending Review 2010: environmental implications.
- The CRC in general, see the CRC Survival Kit.