The End of CRC

Finally a decision has been made on the future of the Carbon Reduction Commitment Energy Efficiency Scheme (CRCEES) – it is to be abolished.

As part of Wednesday’s Budget the Chancellor, George Osborne, announced that CRCEES will cease to exist from April 2019. This is the culmination of years of uncertainty over its future, with various changes being made which reduced its impact.

Mandatory for large businesses and public sector organisations in the UK the idea was that by reducing downstream demand for energy, upstream CO2 emissions would be reduced. It started as a carbon trading scheme where large organisations had to buy carbon credits to off-set their carbon dioxide emissions from energy use. The intention was that a league table would be produced to name and shame participants for failure to reduce their emissions. Good performers would achieve a high placing and a refund payment. Poor performers would have a low placing and have to pay a fine.

However, various changes to the scheme meant that the league table was dropped and the CRCEES became more akin to a carbon tax payable retrospectively for annual carbon emissions rather than the intended carbon trading scheme.

Officially, the Budget text states that an increase in Climate Change Levy will replace the CRCEES from April 2019 to maintain the revenue but there is no mention of proposals for the continuation of carbon reporting. Perhaps this will be done through an extension to the new Energy Savings Opportunities Scheme (ESOS) which requires energy audits to be completed every 4 years. Large organisations will already have obligations under ESOS though no payments are due, the intention being that energy efficiency will be encouraged.

Further details will no doubt emerge in due course.