The Minister of State, Department of Energy and Climate Change (Gregory Barker)

Last year in the annual energy statement my right hon. Friend, the Secretary of State announced that we would consider the future of the climate change agreements and review the CRC energy efficiency scheme. We did this because we wanted to ensure that the policies we had inherited from the previous Administration were fit for the future, and that any regulations we retained were less burdensome for business, and more practicable. Today we will set out our initial conclusions following a helpful dialogue with business, the public sector and regulators. As part of this, we have considered radical options, including the possibility of scrapping either or both of the schemes to simplify the landscape. We have concluded that in order to achieve our objectives, while at the same time minimising burdens on business, we will retain and simplify both the CRC and CCAs, with a particular emphasis on ensuring the overlaps are removed and the schemes are each streamlined.

Today my Department, together with the devolved Administrations, publishes a vision for the way ahead in simplifying the CRC scheme. This document sets out the main simplifications that we would like to propose for formal consultation early next year. These proposals will provide greater business certainty by continuing the fixed price sales into the second phase (rather than auctions of allowances in a capped system), as recommended by the Committee on Climate Change and requested by stakeholders. Our proposals will provide business with greater flexibility by allowing organisations to participate as natural business units. They will also reduce the administrative burden; for example by reducing the number of the fuels which are subject to the scheme from 29 to four. We will also reduce the complexity of the scheme by removing the 90% rule and CCA exemption rules, while achieving broadly the same outcomes and remove any overlap between schemes at registration. In particular, businesses covered entirely by CCAs will not need to register and we will no longer require EU ETS installations to purchase allowances for electricity supplies.

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