Terms that appear in capital letters in this Ask the team are defined in Practice note, CRC Energy Efficiency Scheme: PLC glossary and abbreviations.

I work for a company (A) that owns and occupies a large site. A has a contract with B for B to operate an energy plant at A's site. B owns the energy plant. The energy plant uses gas to generate heat, which A then uses on-site. No electricity is generated; only heat is generated by the energy plant. A has a Climate Change Agreement (CCA) that covers the site.

Would B (assuming it met the Qualification Criteria during the Qualification Year of the relevant Phase) be responsible under the CRC Energy Efficiency Scheme (CRC) for the gas input to the generating plant? And could B benefit from the fact that A has a CCA in respect of the site?

If the input fuel to the generating plant is covered by the CRC and the site using the heat resulting from the generating plant is covered by a CCA, doesn't this overlap of the two schemes amount to double counting?

Section 5 of the Environment Agency's Guidance on the CRC Energy Efficiency Scheme: Electricity generation (the EA Guidance) says that non-renewable input fuel (such as gas) into a generation plant must be reported by the operator of that plant (assuming that the operator is a CRC Participant) and that CRC Allowances will need to be surrendered in respect of the emissions associated with that fuel.

Assuming that B has a contract with a supplier for the gas that goes into the generation plant on A's site, B would be responsible for that supply and would have to report on, and surrender Allowances for, the emissions associated with that energy supply.

Heat is not covered by the CRC (see page 10 of the EA Guidance). Unlike the case where electricity is generated by an energy plant and is consumed by a third party, Electricity Generating Credits (EGCs) will not be available in respect of heat that is generated by an energy plant. Therefore, B will not be able to claim EGCs to offset against the gas supplies that it will have to report on.

CCAs relate to sites. The Environment Agency's Guidance on the CRC Energy Efficiency Scheme - EU Emissions Trading System (EU ETS) and Climate Change Agreements (CCAs) acknowledges that there may be scenarios where more than one legally distinct Undertaking is included in a single CCA. Pages 16-20 of the EA guidance provide examples when this might occur and explain the reporting requirements under the CRC in relation to those examples. Example four on page 20 is similar to the one above. In the example in the EA guidance, both the company that is generating electricity, and the company on the same site that it supplies electricity to, are able to exclude emissions that are covered by the CCA so that:

You have asked if B can benefit from the fact that A has a CCA in respect of the site where B has its energy plant. Or put another way, can a Participant claim a CCA exemption or a CCA exclusion using a CCA that is in the name of a third party? Based on the EA's guidance, we think that the answer to this question will depend on whether the emissions relating to the energy plant are covered by the CCA rather than who is the CCA operator. It will be necessary to look at the CCA documents to establish whether the energy plant is covered by the CCA. In the example above, if B's energy plant is covered by the CCA, then the fact that A may be the CCA operator would not prevent B from claiming a CCA exemption or exclusion (as relevant). If B's energy plant is not covered by the CCA then it would not be able to claim a CCA exemption or exclusion (as relevant).

In terms of double counting, it is possible for the CRC and CCAs to overlap. PLC has produced an Ask the team article that explains the policy reasons behind this (see Ask the team, CRC Energy Efficiency Scheme: How should participants account for electricity generated from an EU ETS installation which is used on-site?).

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If you have any comments on this or any other Ask the team, please mail the PLC Environment team at [email protected].