Carbon Reduction Commitment (CRC) 2017 – What you need to know

Carbon Reduction Commitment (CRC) 2017 - What you need to know

Spring has arrived so it is time for Carbon Clear’s latest update on the Carbon Reduction Commitment (CRC) scheme.

As we’re now in April, the CRC forecast sale window is open until the 28th of this month for those participants who wish to purchase CRC allowances in advance.

The CRC forecast allowance price is £16.60 per tonne, and allowances purchased in this window can be used against emissions generated in the April 2017 to March 2018 and April 2018 to March 2019 compliance years. This is a saving of £1.10 per tonne on next year’s buy-to-comply price of £17.70 per tonne.

Forecast sale allowances are valid for all compliance years from the year in which they are sold for the rest of the phase. They are not valid to meet the surrender obligation for previous compliance years, therefore any allowances purchased in the 2017 Forecast sale will not be valid to surrender for the 2016/17 commitment.

Carbon Clear advises caution –The Department for Business, Energy & Industrial Strategy (BEIS) have said that “We have no plans to amend existing scheme guidance on refund of allowances; current published guidance on refunds states that the only circumstances in which refunds may be given are reporting errors or mis-registration.”

That means that organisations should plan on the basis that no refunds will be given for any excess allowances at the end of the phase, (and the end of the CRC) except in the circumstances already set out in the Scheme rules. Furthermore, BEIS expects CRC participants, in their purchasing strategy, to recognise the uncertainty around energy use and emissions factors several years ahead.

Increased Climate Change Levy

In addition to this, April 1st saw the first of several year on year increases in the Climate Change Levy (CCL) applied to commercial gas and electricity bills.

  • The CCL on electricity increased by 1.6% to 0.568p/kWh.
  • The CCL on gas increased by 1.5% to 0.198p/kWh

It is the UK Government’s intention that the CCL continues to increase year on year as it replaces the CRC allowance fees. So from 2020, although you’ll no longer have to purchase CRC allowances to cover the emissions from your UK operations, you’ll instead face increased gas and electricity bills unless you take steps now to increase the energy efficiency of your portfolio.

You can start by thinking about this by considering how your company can best:

  • Manage CRC compliance, from energy data collection to allowance ordering and surrender;
  • Carry out portfolio energy efficiency assessments;
  • Undertake portfolio, site and asset energy management and energy savings opportunities implementation.

Photo by @wsantos


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