CRC Rejects Double Sale

Please note: The content of this article is in the process of being updated to reflect the latest CRC scheme design. Updated content will be posted shortly. The Department of Energy and Climate Change (DECC) website contains complete details on program requirements and design.

CRC Energy Efficiency Scheme Rejects the Double Sale

As they were aware that what they were proposing was groundbreaking and was being rushed through as quickly as possible, the British government went out of its way to look for feedback prior to the launch of the CRC Energy Efficiency Scheme. When the program is fully operational it will be a "cap and trade" auction scheme with some high-stakes. 5000 or so organizations are being forced to comply and as each company spends about a half million dollars per year on energy costs, they are all by definition significant polluters of greenhouse gas.

When the program was first mooted, it was suggested that companies start buying allowances right from the beginning of the program, each allowance representing a tonne of carbon dioxide. While the organization would not actually pay these funds until the end of the first trading year, the point of payment also coincided with a requirement for them to pay the following year's allowances in advance. This was known as a double sale of emission allowances and became very unpopular as it would have been extremely prohibitive from a cash flow perspective.

As they were aware that what they were proposing was groundbreaking and was being rushed through as quickly as possible, the British government went out of its way to look for feedback prior to the launch of the CRC Energy Efficiency Scheme. When the program is fully operational it will be a "cap and trade" auction scheme with some high-stakes. 5000 or so organizations are being forced to comply and as each company spends about a half million dollars per year on energy costs, they are all by definition significant polluters of greenhouse gas.

The CRC Energy Efficiency Scheme is being rolled out in different phases. The introductory phase is three years long and is already underway. Allowances will be available for sale at the rate of £12 per tonne. As there are no limits to the amount of emissions purchasable under the initial phases, the meat of the scheme does not get underway until the cap is in place. A company will determine how many allowances it needs to purchase at the end of the first year of the program which gets underway in the spring of 2010 and this phase is called the "footprint year."

Companies now only need to pay for their emissions in advance and do not have to pay, in April 2011 as had been originally mooted, for both the footprint year and the following year.

It Pays to Know the CRC Energy Efficiency Terms

At the end of the footprint year, companies in the CRC Energy Efficiency Scheme will buy their allowances from the government for the subsequent year. Thus, during April 2011 a payment must be made to the government, which must clear its bank before allowances are issued. A registry will be developed during 2010 enabling the transactions in the scheme to be processed centrally.

If additional allowances are required to be purchased by an organization in the emissions scheme, basically due to the lack of efficiency or a miscalculation, these will be available on a secondary market. Thus companies will be allowed to trade with other participants in the scheme to buy and use allowances in this way. The terms of this agreement will be between sellers and buyers and have nothing to do with the government as such.

No Double Sale Within the CRC Energy Efficiency Scheme

The double sale idea was hugely unpopular and organizations are pleased to see its elimination. The CRC Energy Efficiency Scheme has been charged with being overly complex anyway and the double sale was seen as a serious flaw. Cash flow arrangements in April 2011 will be essentially half of what they would've been otherwise.

Energy efficiencies are very important and the organization will be highly advised to take action now. Once a league table of participants is published, those who are in the top half and have taken early initiatives will benefit more so than those who are in the bottom half. Early risers are fitting automatic meter readers and joining the Carbon Trust Standard as part of this effort. Ultimately, the league table will represent pure performance in terms of efficiency.

About Verisae

Verisae helps measure, manage and reduce equipment and energy costs including the related business and environmental impacts of carbon emissions. The Sustainability Resource Planning (“SRP”) software platform improves operational efficiency, protects brand integrity and helps ensure regulatory compliance for distributed enterprises across many industries. Verisae delivers a broad range of sustainability solutions to dozens of clients globally with thousands of daily users including an extended network of third-party suppliers. Verisae’s integrated sustainability platform actively tracks millions of assets across thousands of sites worldwide.

RELATED PAGES

Read Recommendations from Sustainability Experts
How to Reduce Costs & Improve Efficiencies
Watch Our 3 Minute Sustainability Overview (video)