Carbon Reduction Commitment – Consultation

Another consultation document published on 12th January…

Another consultation document on CRC was published on 12th January, but this was NOT the eagerly-awaited simplification proposals; this one relates to the allocation of allowances.

Responses to the consultation are required by 10th February.

Key points

  • These regulations concern Phase 1 only
  • They relate exclusively to existing full participants
  • £12/tonne confirmed for 2012, but in future the price will be set annually in the Budget.

For each of the remaining years of Phase 1 participants must apply for allowances between the first working day of June and the last working day of July. This clears up any doubts as to whether participants will have to buy an estimated quantity of allowances before the end of the year. This is NOT the case: there will be nearly four months after the end of the reporting year on 5th April for participants to calculate their requirements before they have to apply for allowances.

Allocations must be requested and paid for before the end of the allocation period. Late payments will be returned and no allocation made, putting the organisation immediately in breach of the regulations. (Penalties for non-compliance with the CRC scheme are severe.)

Allowances will be allocated only to CRC participants, which appears to rule out trading or speculation. Regulation 11 implies that if a participant has received excess allowances they may sell them, but presumably only to another participant. Excess allocations presumably arise when a participant fails to calculate his requirement before the deadline and requests an estimated amount that proves to be more than he needs.

Regulation 8 allows the Environment Agency to charge for the administration costs involved in allocating allowances. There is no indication as to how much this will be, but I know that a number of participants intend to reply to the consultation and suggest that this should be taken out. We accept that CRC is now nothing more than a tax, albeit a highly complicated one, but paying for the privilege of paying it is surely a step too far!

DECC has requested comments on these draft regulations by 10th February 2012. You can find the full text at:

http://www.decc.gov.uk/en/content/cms/emissions/crc_efficiency/crc_efficiency.aspx

Comments should be sent to crc@decc.gsi.gov.uk