CRC allowance allocation regs: Three days left to respond

posted in: Consultation, CRC, DECC | 0

The closing date for comments to DECC is this Friday 10th February. If you have not yet responded, here is Local Energy’s summary of the key points.

Allocation period

The ‘primary allocation period’ will run from the start of June to the last working day of July. During this time, participants must request, pay for and surrender the correct number of allowances. Difficulties for participants may arise due to:

  • Lack of any invoice or bill for allowances (usually required before payment can be made)
  • Insufficient time for payment to be processed – both internally and by the Environment Agency – during the allocation period (some organisations have 30-day or even 60-day payment terms)

We recognise that it may not be possible to extend the allocation period beyond the end of July, as the deadline for surrender of allowances is set by the CRC Order.

Instead, we suggest that the proposed allocation period should open earlier, allowing requests for allowances to be made from the start of May. This may require some estimation (or forecasting) by participants, but would at least ensure that there is adequate time for payments to be made, and received, prior to the allowance surrender deadline.

Fees

The regulations make provision for an additional, unspecified fee to be charged for the allocation of allowances. This is in addition to the current registration fee (£950) and annual subsistence fee (£1,290) already charged to CRC participants.

We believe that making provision for this separate charge is an unnecessary additional administrative burden. If the current level of registration and annual subsistence fees is insufficient to cover the cost of Scheme administration, then these should be raised accordingly. This would maintain a level of simplicity and transparency in the charging regime.

Allowance price

Although this draft regulation makes reference to the price of allowances, the future price is set by the Treasury and will be announced in the Budget.

We strongly recommend that the allowance price is set and notified to participants well in advance, for example for the duration of each CRC Phase. Carbon reduction measures take many months or years to plan and implement; greater certainty over the future price of carbon would allow more accurate costing of payback periods and future savings, resulting in more projects delivered more quickly. The imminent Budget should include an announcement of CRC allowance prices for the next three years, at minimum.

The draft regulations can be found here