The future of the CRC Energy Efficiency Scheme has been the subject of much anticipation and debate, which should reach a conclusion today when Chancellor George Osborne reveals his Budget.
The Government's formal response to the consultation on the Business Energy Tax Review (which includes the CRC scheme) is due to be published during the 2016 Budget.
Given the comments by the Department of Energy and Climate Change (DECC) in their 5-year plan, which was published in February 2016, the commitment to change is clear:
"The business energy tax and policy framework is complex and businesses tell us it does not provide the incentive it could to reduce energy consumption. The Government has therefore consulted, through the Business Energy Tax Review, on how to reduce administrative burdens while improving the effectiveness of policy in driving cost-effective energy and carbon savings. A Government response to that consultation is expected at the 2016 Budget."
Back in 2012's Autumn statement, the Government committed to reviewing the CRC Scheme in 2016 and considered alternative approaches to meeting targets for carbon reduction established in the Energy Act 2008. Since then, new policies such as ESOS annd mandatory greenhouse gas reporting have been introduced, and the future of the CRC is in doubt in relation to how it fits within the wider policy landscape, both regard to its effectiveness and to business concerns.
The current consultation proposes replacing the current CRC and climate change levy (CCL) with a new energy consumption tax based on the CCL. Any revenue shortfall from losing CRC allowances would be replaced through increasing the CCL. Should the CRC be scrapped, its final date is nowhere near certain. It has been suggested that the outcome of the review will be put in place within the life of the current Government. So its possible that the CRC could run until the end of Phase 2 (31 March 2019), which would give some time for further consultation on the details of the replacement scheme.
It is highly unlikely, but not impossible, that the CRC will end in March 2016, so the content of Osborne's Budget will be intriguing. Follow @cedrec_news throughout today and we'll tweet you news when we hear it!
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