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Maximising the efficiency of the CRC

Click here to download the report. 

Click here for a response to the Government consultation on this issue.

Help us maximise the efficiency of the CRC 

The CRC has been a hot topic over the past six months. First it was announced that the revenue generated will not be recycled to participants, generating over £1bn for the Treasury a year, then there was speculation as to whether the scheme might be scrapped altogether. 

Among the problems that remain to be resolved, one is fundamental to the environmental effectiveness of the scheme. 

Decrease in power use will not lead to decrease in emissions

If the CRC is successful in encouraging investment in energy efficiency, energy production in the UK will go down.  But net global emissions will not decrease as a result.  This is because energy production is covered by the EU Emissions Trading Scheme (EU ETS). The volume of allowances in the EU ETS is already set, so the allowances that energy companies no longer have to buy will instead be purchased by other sectors.

It is projected that CRC participants will save about 90 million tonnes of greenhouse gases due to decreased electricity use between now and 2020. If this issue is not tackled these potential carbon savings will be wasted.

So what can be done about it? We propose two policy options to overcome this issue. 

The first is simply that the Government removes the number of allowances that corresponds to the volume of emissions reductions achieved by CRC participants each year.  This will have no impact on CRC participants except for ensuring that their efficiencies genuinely translate into net emission reductions. This is our preferred proposal and it is this proposal that we are asking people to suggest in their consultation response.

The second is a closer linking of the CRC and EU ETS, whereby CRC participants buy EU Allowances instead of CRC permits. This option is more complex but is suggested as an alternative method of avoiding the CRC/EU ETS overlap.

Help us make the CRC create genuine reductions

The consultation asks for comments on this and other issues to crc@decc.gsi.gov.uk by 11th March 2011 (see the consultation paper on ‘Reducing the overlap between the CRC and the EU ETS’). 

CRC participants need to tell them it is not good enough that their hard work investing in energy efficiency will not translate into net global reductions. 

We have written a passage to be included in response to the current open consultation on this issue, click here to view it and feel free to use it.

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