16/03/2016

Carbon Reduction Commitment (CRC) Scheme is to be abolished at the end of Phase 2 (2014-19). The revenue that was generated by the CRC Scheme will be recouped by increasing Climate Change Levy (CCL) from 2019.

 

“The government is committed to meeting the UK’s ambitious environmental targets in a cost-effective way, ensuring value for money for the taxpayer and retaining protection for the smallest and most energy intensive businesses. This Budget announces the biggest business energy tax reforms since the taxes were introduced, in response to the business energy efficiency tax review. To simplify the landscape and drive business energy efficiency the government will:

  • Abolish the CRC energy efficiency scheme (CRC) following the 2018-19 compliance year, ending a complex scheme with bureaucratic and costly administrative requirements. It will significantly streamline the business energy tax landscape by moving to a system where businesses are only charged one energy tax administered by suppliers rather than CRC participants being required to forecast energy use, buy and surrender allowances
  • Increase the Climate Change Levy (CCL) from 2019, to recover the revenue from abolishing the CRC in a fiscally-neutral reform, and incentivise energy efficiency among CCL-paying businesses”

From George Osbourne's Budget 2016

Source: HM Treasury Budget 2016, 16th March 2016, page 52

In a widely-predicted move by the Chancellor of the Exchequer that will radically simplify the energy tax landscape, CRC is to be abolished, removing the administrative burdens of a much-criticised scheme at a stroke. However, this is a financially neutral move, since the loss of the revenue generated by CRC will be offset by increases to Climate Change Levy (CCL) from 2019. By simplifying energy policy in this way, the government hopes to streamline carbon reporting requirements to merge with other areas of regulatory activity, such as ESOS.

In the meantime, CRC Allowance prices for CRC compliance years 2016-17, 2017-18 and 2018-19 will increase in line with RPI.

SMS Plc will continue to provide first-class guidance and support for our existing CRC client base, and ensure that the end of CRC will be marked by a smooth, effective transition to energy management strategies focused on tackling increased rates of CCL.

SMS Plc will continue to offer compliance services connected with ESOS, EPCs, DECs and ISOs 14001 and 50001. Any other changes to the energy legislation and policy landscape will also be covered by our experts.

If you would like to discuss this further, please contact our energy experts today on 02920 739 540 or email us and we will call you back.

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