In the comprehensive spending review, the Government announced
that the first allowance sale under CRC will take place in 2012
(rather than 2011), and that the recycling payment would be
eliminated. More recently on 12 November when responding to
the dialogue on reducing red tape, Lord Marland, stated that
"DECC is considering how best to simplify this scheme,
radically".
On 17 November 2010 a formal consultation was launched by DECC,
pending a substantive review of the scheme. The rationale for the
limited consultation is to alter the timing of phases in order to
create a "review window" to facilitate future amendments
prior to the start of phase 2, now proposed to be in April 2013.
The deadline for responses is 17th December 2010.
Of the immediate proposals, 2 should be of most interest:-
- extending the introductory phase and postponing the start of Phase 2 until 2013; and
- abandoning the requirement to make an information disclosure.
Other proposals relate to amending the unconsumed supply rules
for Northern Ireland departments to cover specific property related
arrangements, updating the responsibilities between the
administrators of the scheme and correction of errors in the
original Order. A draft amendment Order accompanies the
consultation. Click here for a link to the consultation.
Perhaps unsurprisingly, the consultation does not deal with the
reversal on recycling payments apart from stating that it now hopes
a firm signal for the price of carbon will be achieved and that
revenue recycling is a matter for all of the devolved
administrations to review.
Proposal 1
The introductory phase would be extended to March 2014 rather
than 2013. As a result participants would have an extra year
purchasing allowances at a fixed price rather than moving to the
cap and trade system and potential allowance price volatility in
2013. However, the performance assessment for league table purposes
in the fourth year of the scheme will be as previously stated (i.e.
absolute change 75% and relative change 25%).
The Government proposes to postpone the requirement to register
for the second phase and subsequent phases by 2 years e.g. from
2011 to 2013 for phase 2. The amendment would postpone the
qualification year for phase 2 and subsequent phases by 2 years
e.g. from 2010/11 to 2012/13 for phase 2. Therefore those entities
which did not qualify for full participation in 2008 but whose
consumption may have risen since could theoretically make changes
to energy usage before 2012/13 so that the threshhold is not met in
the qualification year of 2012/13.
Proposal 2
Organisations which have at least 1 half hourly meter (HHM) settled on the half hourly market but who do not meet the threshhold to qualify as participants in the scheme are required to make an information disclosure at the start of each phase. The requirement was intended to capture all settled HHMs and to obtain data which could be considered in any review of the scheme's participation threshhold. Now that information has been captured in the first phase, the intention is to remove the administrative burden on organisations going forward.
Present position
Whilst the changes proposed are only part of further change expected, all participants (and information declarers) should continue to comply with the existing CRC scheme in full as any failure to comply may be subject to enforcement action.
This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq
Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.
The original publication date for this article was 19/11/2010.
