CRC Energy Efficiency Scheme is now a Tax

By Carbon Clear, PRNE
Tuesday, October 19, 2010

LONDON, October 20, 2010 - The 2010 Spending Review unveiled today by George Osborne outlines
changes to the CRC Energy Efficiency Scheme. The excerpt from the Spending
Review is detailed below:


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 GBP1 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.

Carbon Clear's Head of CRC, James Ramsay, believes that in practice this
will mean:

    - The CRC becomes a tax: Recycling payments will be abolished, with any
      revenue from permit purchases going to the Treasury.

    - The CRC is simplified: Administration is likely to be more
      straight-forward as participants will not need to forecast emissions
      and purchase their permits upfront. However the scheme is still likely
      to retain complex monitoring and reporting requirements.

    - Permit purchase is delayed: Permit purchase will take place at the end
      of each compliance year, with the first allowance sales scheduled for
      in 2012, instead of 2011.

    - Cost of permits is now uncertain: it is unclear as to whether the cost
      of permits is affected, however the final sentence 'further decisions
      on allowance sales are a matter for the budget process' could indicate
      that the price of carbon will be set differently to the GBP12/tonne
      previously proposed.

James Ramsay says: "The CRC is now a tax and will be enormously more
expensive for businesses and public sector organisations. In terms of its
impact, this change will accelerate the take up of energy and carbon
reduction measures. Whilst existing participants will welcome simplification
of the scheme, these changes leave the door open for government to expand it
to other organisations not currently captured."

About Carbon Clear

Carbon Clear is a world leading carbon management consultancy with a
proven track record of helping organisation to measure, reduce and offset
their carbon emissions. For more information, please see

For more information please contact James Ramsay on +44(0)7979-59-44-58
or Mark Chadwick on +44(0)7796-16-41-40, or email

For more information please contact James Ramsay on +44(0)7979-59-44-58 or Mark Chadwick on +44(0)7796-16-41-40, or email crc at

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