UK eases first year of carbon trading scheme
07 October, 2009
Retailers and big business caught in the UK’s domestic carbon trading scheme will only need to report on their emissions for the first year of the programme, not surrender allowances, under changes announced today.
The UK’s Department of Energy and Climate Change (DECC) has published the final details of its Carbon Reduction Commitment (CRC) Energy Efficiency Scheme, which aims to stimulate energy efficiency investments and cut emissions by 4.4 million tonnes of carbon dioxide equivalent (CO2e) a year by 2020. The mandatory scheme affects businesses and organisations which are heavy energy consumers but are not covered under existing regulations, such as the EU Emissions Trading Scheme.
The major change announced today softens the impact of the three-year introductory phase of the CRC, running from April 2010 to April 2013. An uncapped number of allowances will be sold by the government at a fixed price of £12 ($19) per tCO2e in this phase.
Revenues from sales of allowances will be recycled to organisations based on their performance in a published league table, based initially on early actions to reduce emissions.
Another change will give subsidiaries the option to participate in the CRC separately from their parent organisation– if they are large enough to qualify, meaning they consume at least 6,000MWh of electricity annually.
Gareth Stace, head of
environment policy at UK manufacturers’ association EEF, said:
“Businesses have been very concerned about the impact the CRC would have
on cashflow. Purchasing allowances, compliance, registration and annual fees are
all extra costs, additional to any money invested in energy efficiency
measures.
“The government’s decision not to seek
auction payment from organisations for the first year will give those firms the
leeway to use that money to invest in their businesses.”
Concerns have also been raised that not all companies affected know that they
will be required to participate in the CRC. Neil Bentley, director of business
environment at the UK’s main employers’ association, the CBI, added:
“Many firms are still unaware of how this new legislation will affect
them, and that they will be hit with fines of £5,000 for failing to
register.
“The government needs to step up efforts to
raise awareness of the legislation, so that firms have time to prepare before
next April. It also needs to ensure that the process for measuring emissions is
clear and simple to minimise the bureaucratic burden for companies.”
The CRC requires organisations to report on and surrender allowances to cover greenhouse gas emissions from their energy consumption – including electricity, gas and transport.
DECC estimates this means that covered organisations will typically spend more than £500,000 a year on electricity, and include NHS Trusts, universities, local authorities and big business such as retailers and property groups.
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