1. Simplifying CRC: Next Steps
Paul Wilson: DECC, Head of CRC team

2. Policy Landscape
Improvements in energy efficiency are needed to deliver our climate objectives
UK targets: Reduction of 34% in GHG emissions by 2020, at least 80% by 2050
EU Targets: 20% reduction in GHG emissions by 2020 (on 1990 levels)
CRC designed to encourage energy efficiency and address barriers to uptake of cost effective measures
Mix of incentives for action
Carbon Savings – saving carbon will help us meet our carbon budgets and enhance security of supply

3. Policy Landscape EU ETS: Phase II (2008-2012), Phase III starts 2013
CCAs: Consultation shortly
Carbon Price Floor: £16/t in 2013, rising to £30/t by 2020.
Green Deal:
Policy under development
Intended that Green Deal will be available to businesses as well as households
Could help large companies to reduce energy use at lower cost

4. Key elements of the CRC scheme
A league table : reputational incentive
Price signal: Allowances sales will provide a clear financial incentive.
Reporting: requires thorough investigation of energy use.
Board Room Responsibility: A member of the board is accountable

5. CRC Energy Efficiency Scheme Update
Scheme started April 2010
Registration for first phase : Closed 30th September 2010
2791 participants registered
First compliance year: April 2010 – March 2011
Annual Report and Footprint Reports should have been submitted
Must comply with the legislation as currently drafted
CRC is a mandatory scheme – financial penalties for non compliance

6. Simplification Progress
Spending review announcement: Oct 2010
Revenue from allowance sales will not be recycled to participants,
First allowance sale in 2012 for 2011/12 emissions
Ministers commit to simplify the scheme following stakeholder feedback
Legislation changed as of 1 April, following December consultation & Govt to give more time to consider wider simplification measures
Removal of approx 12,000 “information declarers”;
Delay of start of Phase 2: first compliance year now 2014/15

7. Simplification Progress
Wider simplification measures
Engaged in Dialogue with stakeholders regarding simplifying the scheme, specifically:
Supply rules
Qualification rules
Organisational rules
Timing and frequency of allowance sales
Overlap between energy efficiency/climate change instruments
We received extensive feedback this helped shape our proposals in
Simplifying CRC: Next Steps

8. Uphold the original principles of the scheme
CBI Feedback
Uphold the original principles of the scheme
Restore Revenue Recycling or Scrap the CRC
Fundamentally review the policy landscape
Consider alternative Reputational drivers

9. Simplify CRC: Next Steps
30th June: Publication of vision for the way ahead for a simplified CRC
Scheme which will:
provide greater business certainty
provide business with greater flexibility
reduce the administrative burden
reduce the complexity of the scheme
reduce overlap with other schemes.

10. Simplify CRC: Next Steps
Key Proposals:
Reduce the number of fuels covered by the scheme
Move to fixed price allowance sales
Simplify the organisational rules
Make qualification processes easier
Reduce overlap with other schemes
Reduce the administrative burden of evidence and records

11. Going Forward
We’re currently receiving feedback on our Next Steps until 2 September.
We will then look to draft legislation for formal consultation in early 2012.
Simplified scheme in place for the start of Phase 2 in April 2013

12. Questions/Comments? 12