On the 20 October 2010, the Chancellor of the Exchequer, George Osborne, set out the Government's four year public spending plans in the Comprehensive Spending Review 2010 ("CSR 2010"). The CSR 2010 will significantly impact upon the previously understood mechanism of the CRC Energy Efficiency Scheme ("CRC"), with the key change that recycling payments will now be kept by the Treasury to support public finances instead of being recycled to participating organisations. Is this a stealth tax on businesses and is it fair? This article looks at the potential impact of the CSR 2010 on the CRC.
What is the CRC Energy Efficiency Scheme?
The Climate Change Act 2008 requires the UK to reduce its greenhouse gas emissions by 80% by 2050 (compared to 1990 levels). The CRC is one mechanism aimed to help meet this reduction target; it is a "cap and trade" emissions trading scheme and came into force on 1 April 2010. It is aimed at non energy intensive businesses and organisations operating in the UK not currently affected by the EU emissions trading scheme and/or climate change levy. The CRC may also affect overseas companies that operate in the UK either directly or indirectly (for example, if they operate through UK-based subsidiaries, joint ventures or franchises) and private equity funds.
Under the CRC, organisations (on a group wide basis) must declare their energy use and purchase allowances for every tonne of greenhouse gas they emit. Those organisations that were supplied with electricity through at least one settled half hourly meter ("HHM") during 2008 and consumed over 6000 mega watts ("MWh's") of electricity from all HHM's during that year will have to fully participate under the CRC scheme. Such organisations should have registered with the Environmental Agency by the end of September 2010. Businesses that consumed between 3000 and 6000 MWh's will also have to register but will not have to fully participate in the current phase of the CRC.
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