DECC confirms fee and dates for purchasing CRC allowances

 

The Department for Energy and Climate Change (DECC) has today published a new draft of the CRC Energy Efficiency Scheme allocation regulations. There are three key points of interest:

  1. Dates for purchase and allocation of allowances
  2. Price of allowances
  3. Fees

The regulations make provision for the sale of allowances in the first phase of the Scheme (2011-12, 2012-13 and 2013-14). Two allocation periods are provided for – an annual Government sale (the primary allocation period) and an opportunity for the Environment Agency to finalise the processing of late requests (the secondary allocation period). 

The primary allocation period for buying allowances for the 2011-12 compliance year is 1st June to the last working day of July 2012. Account holders will not be able to request allocations in the secondary period. As the cap has been removed there is no need for the safety valve mechanism, so this has been removed from the regulations.

The price of allowances for 2012 allocation is £12, but it is pointed out that this has been announced for 2012 only, and that future prices are a matter for the Budget process.

The regulations also make provision for the Environment Agency to “require the payment by an account holder who requests an allocation of allowances of a fee of an amount determined by reference to the costs of allocating the allowances”. The regulations do not specify the amount of such a fee.

Local Energy’s Peter Chasmer commented: “These regulations highlight another reason for buying allowances in advance for an entire Phase. Each time you purchase allowances, there is likely to be a fee, whether fixed or a percentage, so by purchasing only once, participants can minimise transaction fees.”

The draft regulations can be found here and comments to DECC are welcome by 10th February 2012.

One Response

  1. Karen Lawrence

    And here are some thoughts I wrote before Xmas following an Environment Agency CRC Customer Operations Liaison Group (COLG) meeting. I’ve noted some key points regarding next year’s purchase and surrender of allowances.

    1. Account Representatives – you will already be aware of the requirement to appoint at least one Account Representative, who may apply for, trade and surrender allowances through the compliance account of the participant organisation. Although you may appoint up to three Account Reps, it is recommended that participants do not appoint all three initially, as there will be an administration charge of £70 for any changes. The EA expects to issue guidance on the appointment of Account Reps in early 2012 and the CRC Registry will be begin validating nominations from April 2012.
    2. Digital certificates – each Account Rep must purchase an approved Government Gateway digital certificate for each compliance account. The certificate can only be obtained from Chamber SimplySign and currently costs £35+VAT per year. Each digital certificate is specific to an individual who must supply personal data (i.e. full name, date and place of birth, home address) during the application process. Identification checks are carried out to validate the individual applying – it is recommended that you also supply details such as your driving licence number or passport number in order to increase the chance of your application succeeding. It may take up to two weeks to receive a digital certificate.
    3. Technical issues – each digital certificate is specific to the computer on which it is downloaded. We believe that some users may experience difficulty downloading and installing digital certificates due to firewalls and other security measures, so we advise you to contact your IT department well in advance to establish whether your system is compatible with Chamber SimplySign digital certificates.
    4. Buying and surrendering allowances – the window for purchasing allowances will open on 1st June and close on 31st July 2012. During this time, an Account Representative must access the compliance account and place an order for allowances according to the quantity of carbon reported in the 2011-12 annual report. (You may purchase more than this, but you will need at least enough to surrender for this compliance year). Payment must be made and, when processed, the EA will credit the allowances you have purchased to your compliance account. The Account Rep must then access the account once more to surrender the correct number of allowances for the compliance year. We expect that this process will cause some difficulties, since no invoice will be generated and many organisations routinely take 6-8 weeks to process a payment; we advise participants to establish how they will process the payment in sufficient time to enable the Account Rep to surrender allowances on or before the deadline on 31st July 2012.
    5. Timescale – given that the majority of CRC participants submitted their 2010-11 reports in the last two weeks before the deadline, it is to be hoped that data can be collected and annual report generated much more quickly next time around. Your annual report will produce the emissions figure for the compliance year, which will enable you to order the correct quantity of allowances; you must then allow sufficient time for your payment to be made and the money to be received by the EA, before the allowances will be credited to your account and subsequently surrendered. We advise working back from the deadline date and factoring in all the key activities to identify a target date for production of your annual report (which is likely to be in May or June). If you do not have an accurate total by the target date, you should use your best estimate, plus a percentage contingency, and order allowances on that basis. If you do not need to surrender all the allowances purchased, you may carry them over to next year.

    Karen Lawrence

    NB CSPS network members have received this briefing by email previously. If you like to join the network to receive all of our CRC briefings, please contact us.