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Written question asked by Lord Berkeley (Labour), in the House of Lords. It was answered by Lord Marland (Conservative) on Wednesday, 1 December 2010.

Energy: Carbon Reduction Commitment

Question
To ask Her Majesty’s Government what assessment they have made of the impact on the private sector of the decision to retain the estimated £1 billion per annum revenue raised from the sale of Carbon Reduction Commitment (CRC) allowances under the CRC Energy Efficiency Scheme; how the figure of £1 billion was achieved; and whether the 6,000MWh threshold is to be reduced to raise £1 billion per annum.
Answer

The Government decided not to proceed with the recycling of CRC revenues proposed by the previous Administration in order to support the public finances and contribute to the spending plans set out in the spending review. The decision has the additional benefit of creating a clearer price signal in the scheme which participants have asked for. The clearer and stronger price signal provided by this change should reduce uncertainty and administrative costs while maintaining energy efficiency measures among participants and the commensurate savings in energy bills. The spending review 2010 policy costings document¹ sets out the impact on government expenditure of not recycling the revenue to participants. A positive figure indicates a saving compared to previous plans, corresponding to the revenue expected to be generated from allowance sales each year.

Year 2011-12 2012-13 2013-14 2014-15
Annually Managed Expenditure (AME) +£716 million +£731 million +£995 million +£1020 million

These estimates are based on significant assumptions, particularly with respect to the quantity of emissions covered by the scheme and the uptake of energy efficiency measures within the sector. The figures are based on a 6000MWh threshold. We will not know the CRC emissions coverage accurately until participants have submitted their emissions data in July 2011. The Government have committed to keeping the operation of this scheme under active review with a particular eye to simplifying it and ensuring it properly incentivises those who do most to improve energy efficiency and have begun a consultation with CRC participants on what further steps can be taken to simplify the scheme. "¹ http://www.hm-treasurv.gov.uk/spend_sr2010_policycostings.htm" "¹ http://www.hm-treasurv.gov.uk/spend_sr2010_policycostings.htm"

Secondary information

Type
Written question
Reference
4654; 722 c456-7WA
Session
2010-12
Related items
Energy: Carbon Reduction Commitment
Monday, 13 December 2010
Written questions
House of Lords
Subjects
Income Carbon reduction commitment energy efficiency scheme
Contains statistics
Yes
Link
View this Written question on www.publications.parliament.uk