The Simplified CRC Energy Efficiency Scheme Cath Pike – Policy Adviser, CRC Energy Efficiency Scheme

1. The Simplified CRC Energy Efficiency Scheme CathPike – Policy Adviser, CRC Energy Efficiency Scheme Paul McLaughlin – IEE Strategic Outreach and Engagement Manager

2. Energy Efficiency “Energy efficiency belongs at the heart of a low-carbon economy. By reducing energy use and cutting down on waste, we can reduce energy bills, make our energy system more sustainable, and drive down greenhouse gas emissions.” Ed Davey, Secretary of State “The simplified CRC – alongside the Green Deal – is the best way to achieve greater energy efficiency and contribute to meeting our carbon budgets in the relevant sectors.” Greg Barker, Minister of State for Climate Change

3. The Energy Efficiency Strategy Driving the availability and disclosure of energy use information Encouraging growth in green jobs Increasing awareness of energy use within organisations CRC Energy Efficiency Scheme Incentivising innovation in energy efficiency Reducing organisations’ energy bills

4. The simplification process Late 2010: Ministers committed to simplifying the scheme 2011: Evidence-gathering period March-June 2012: Formal Consultation December 2012: Government Response May 2013: New legislation April 2014: All simplifications in effect

5. Changes to proposals since consultation • Number of fuels covered reduced to two, rather than four • 2% de minimis on gas introduced, to reduce the reporting burden • State-funded schools in England withdrawn from the scheme • Landlord/tenant rules disapplied in the presence of a construction lease of a minimum of 30, rather than 40, years • Allowance surrender deadline extended to the end of October, rather than September • Removal of the Performance League Table, replaced with the publication of participants’ aggregated energy use and emissions data

6. Simplifications in effect for Phase 1 • Reduction in number of fuels covered, from 29 to 2 • Removal of the 90% applicable rule, with a 2% de minimis threshold for gas • Exclude domestic electricity supplies 9profile classes 01 and 02) and a similar meter-based exclusion for domestic gas supplies with an annual quantity of <73,200kWh • Extension of the CRC allowance surrender deadline to the end of October • Removal of the Performance League Table, replaced with the publication of participants’ aggregated energy use and emissions data

7. Renewables • Concerns raised during consultation that position on renewable self-generation within CRC was inconsistent with wider Government policy on renewables. • Commitment to review the position set out in Government Response to consultation on CRC simplification, December 2012

8. Renewables – option criteria • Need to fit with existing policies: • Renewable Obligation Certificates (ROCs) • Feed-in Tariffs (FITs) • Provide value for money

9. A one-stage qualification test • Fewer qualification criteria • Qualification based on supplies through settled half hourly meters only • 6,000MWh qualification threshold retained • Automatic population mechanism

10. A reduced reporting burden • Reduced reporting requirements • Only one annual report in 2013/14 • Abolition of footprint report requirement • Fewer fuels covered • Removal of 27 fuels from reporting requirements • Removal of 90% applicable percentage rule • 100% reporting, but only on two fuels - electricity and gas (responsible together for 93% of CRC emissions) • 2% de minimis organisational threshold for gas consumption • Reduced data retention period • Records required to be kept for only six years

11. A more coherent policy framework • Fewer policy overlaps • Clearer definition of EU ETS and CCA boundaries • All energy supplied to EU ETS installations and CCA facilities out of scope • Removal of CCA exemption rules • Emissions factors aligned with Government’s GHG Reporting Guidelines

12. A more coherent policy framework Report all at lower emissions factor Non-EU ETS/CCA part of site EU ETS/CCA Facility Out of CRC Scope Self-supplied electricity or gas Self-supplied electricity or gas Out of CRC Scope Report All Gas Supply Electricity Supply

13. More flexible organisational rules • More flexible disaggregation • Any subsidiary undertaking can disaggregate for separate participation • Disaggregation at any point during the first year of the phase, or during a compliance year • Replacement of Significant Group Undertakings • “Participant Equivalent” status for undertakings large enough to qualify for the CRC in their own right. • Simplified “designated changes” rules Example of Participant Equivalents within a CRC group

14. A more flexible trading system • Two fixed-price sales of allowances each year • Forecast sale at the beginning of the year • Buy-to-comply sale after the end of the reporting year • Allowance surrender deadline extended • Moved from the end of July to the end of October • Prices set through Budget process • Price at forecast sale lower than at buy-to-comply sale

15. Allowance Sale Deadlines • Staggering the compliance deadlines • Reporting deadline – 31 July 2013 • Allowance application period – 3 - 31 July 2013 • Allowance payment period – 2 – 20 September 2013 • Allocation period – 2 September – 15 October 2013 • Surrender deadline (CRC Order) – 31 October 2013 • Payment by BACS, where possible

16. Publication of Aggregated Data - Background • Chancellor’s Autumn Statement 2012 announced the removal of the CRC Performance League Table from the 2011-2012 reporting year onwards • Going forward, the Environment Agency will publish CRC participants’ aggregated data • Provides an opportunity to shape reshape future data publications and to address stakeholder concerns relating to the former PLT

17. Key Concerns around the PLT • Metrics • Disagreement over the appropriate metrics to accurately reflect participants’ performance. Future data publications will not be based on metrics • Ranking • Some participants had concerns around any form of ranking (based on the metrics). Going forward, participants will not be ranked. • Ranking all CRC participants in one table • Some participants wanted to be ranked against only their competitors. More flexible provisions in the CRC Order 2013 provide scope for this concern to be addressed

18. What data should be published? • Emissions Data • Published as part of the PLT • Energy Use Data • Not previously published. Some participants have raised concerns around commercial confidentiality. • May facilitate comparison of performance across phase 1 • Turnover Data • Not previously published. Commercial in confidence issues? • Data not always current

19. How to facilitate sectoral splits and year on year comparisons • Sectoral Splits • Would this be helpful? • Would the ability to sort organisations based on self selected SIC codes be the best way of facilitating this? • Other options? • Year on Year Comparison • PLT data covered only one reporting year • Would it be helpful to publish data for each year within a phase side by side?

20. Timing for publication of data • PLT • PLT publication timing was the autumn following each reporting year • Future data publications • Intention is to keep future data publications to the same timeframe as those for the former PLT • Comments?

21. How to represent changes in organisational structure • Designated changes and disaggregation • Changes in organisational structure might lead to an increase/decrease in the emissions of individual participants. • These changes might be attributed to performance, rather than organisational change, if not reflected as such in data publications • SGUs and Participant Equivalents • Should these be included and listed under their parent companies?

22. CRC Evaluation • Evaluation Approach • Annual data reports • Phase 1 evaluation (2015) • Phase 2 evaluation (2016-17) • Key Challenges • Identifying the counterfactual and isolating impacts of CRC from other factors • Identifying incentive levels related to different drivers • Ensuring robustness of qualitative data • Feasibility Study – July – September 2013

23. Visit our website at: www.gov.uk/crc-energy-efficiency-scheme Email us at: crc@decc.gsi.gov.uk