Government advised to re-design ‘complex’ CRC scheme for the second phase – 24 September 2010

The Committee on Climate Change has recommended that Government re-designs the Carbon Reduction Commitment (CRC) energy efficiency scheme prior to the start of the second phase (2013-2017), in order to reduce its complexity.

The current intention is that a cap is set from 2013 with a fixed number of allowances made available to organisations through an auctioning system.  However, the Committee’s analysis suggests that the scheme is already complex, and would become more so if a cap and auction were to be introduced, with no apparent benefits.

Chief Executive of the Committee on Climate Change, David Kennedy said: 

“The CRC scheme has the potential to make an important contribution towards meeting carbon budgets. However, current proposals risk making the scheme unnecessarily complex. We are therefore proposing that Government modifies its design to make participation in the scheme easier to for companies and public sector organisations”.

The Committee also set out options for a more fundamental redesign of the scheme, that Government could consider in the context of a strengthened carbon price. These included; reviewing the wider regulatory system and reforming the current method of revenue recycling and, dropping the requirement to purchase allowances.

If the design of the 2nd phase was simplified, the Committee said that Government could consider lowering the threshold of the scheme to include smaller businesses.

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