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CRC Simplified but DECC must try harder

hdrury@eef.org.uk by hdrury@eef.org.uk 1. July 2011 16:01

Since its launch in 2009, the CRC has faced much criticism, not least by ourselves.  Many have long argued that the CRC is too complex, that this goes against the coalition’s commitments to simplify taxation and reduce regulatory burden. 

 

And last year, when the Government announced that revenue from CRC will not be recycled to companies, many accused the Government of introducing a ‘stealth tax’ and removing one of the only incentives in CRC.

 

Earlier this year DECC published a series of informal discussion papers for priority areas for CRC reform following complaints from stakeholders.  These focussed on simplification, overlap with other climate change schemes, and unnatural grouping of companies.

 

And so, finally, yesterday DECC announced the simplification of the CRC Energy Efficiency Scheme.  This long awaited announcement did go some way to simplification and although EEF are happy to see there are attempts to simplify the scheme, DECC could have gone further.

 

Yes, we are happy to see that some of the most complicated parts of the CRC have been removed, for example the qualification rules, which will now focus on only half hourly electricity meters and the flexibility of how you disaggregate.

 

We are happy to see that there will be two sales of allowances per year and that they will be fixed price and not cap and trade.

 

The blanket CCA exemption is welcomed as making it easier for companies to understand whether they are in or out.  However, read on a little further and you read ‘…there may be a requirement for the level of the threshold…to be revisited to ensure the bulk of the coverage of the scheme is retained’.  EEF are concerned this is a signal to lower the threshold of CRC in future meaning more companies who are not au fait with the complexities (that yes still exist) will be caught under the scheme meaning a new generation of participants who will struggle to get their heads around the scheme.

 

CRC is now essentially a tax, but could do without the League Tables that add no value whatsoever and provide no comparable data.  Gareth Stace, EEF Head of Climate and Environment stated in ENDS yesterday:

 

“The CRC is now essentially a straightforward tax and government must ensure that the only reporting requirements on employers are those that are needed to ensure that the correct amount of tax is paid.” 

There will be a consultation in 2012 on these proposals, until then there is a call for feedback on today’s announcements by September.  EEF will be responding to this to push DECC to go that bit further and truly provide something that is simplified.

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