Carbon Reduction Commitment Energy Efficiency Scheme

Energy and Climate Change written question – answered on 1st November 2010.

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Photo of Zac Goldsmith Zac Goldsmith Conservative, Richmond Park

To ask the Secretary of State for Energy and Climate Change

(1) what his most recent estimate is of the gross revenue which will arise from the sale of allowances through the Carbon Reduction Commitment before the recycling of such moneys to scheme participants in each of the next five years;

(2) what plans he has for the future of the Carbon Reduction Commitment scheme.

Photo of Gregory Barker Gregory Barker The Minister of State, Department of Energy and Climate Change

Government have committed to keeping the operation of this scheme under active review with a particular eye to simplifying it and ensuring it properly incentivises those who do most to improve energy efficiency.

In order to clarify the price signal to participants and to support the public finances, including spending on the environment, as part of the comprehensive spending review the Government announced that revenue from allowance sales will not be recycled back to participants. As part of the commitment to simplify the scheme and reduce the burden on businesses, we also announced that the first allowance sales for 2011-12 emissions will now take place in 2012 rather than 2011. A public dialogue and consultation with participants on how to further simplify the scheme will begin shortly. The UK Government and devolved Administrations will consider the results of that consultation process and, subject to the views expressed, make legislative proposals to amend the CRC ahead of the second phase.

The spending review 2010 policy costings document: sets out the impact on Government expenditure of not recycling the revenue to participants. A positive figure indicates a saving compared to previous plans, corresponding to the revenue expected to be generated from allowance sales each year.

Annually Managed Expenditure (AME)
£ million
2011-12 +716
2012-13 +731
2013-14 +995
2014-15 +1,020

The decision to delay the first sale of allowances will affect the timing of these receipts.

These estimates are based on significant assumptions, particularly with respect to the quantity of emissions covered by the scheme and the uptake of energy efficiency measures within the sector. We will not know the CRC emissions coverage accurately until participants have submitted their emissions data in July 2011.

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