However, it might be all change again…
Before I comment on what detail there is on possible future change, let me provide (very) brief descriptions of the CRC and CCL, and also of the Energy Savings Opportunity Scheme ("ESOS") as this is involved in the changes.
The CRC is a mandatory UK Government scheme which is aimed at improving energy efficiency and cutting carbon dioxide emissions. It applies to large public and private sector businesses and organisations whose consumption of electricity exceeds the relevant threshold.
Such business must buy allowances from the Environment Agency to cover the amount of carbon dioxide emissions relative to the energy consumed in premises for which they are responsible.
It was introduced in 2010 and amended in 2013. We are currently in the second phase of the CRC, which runs from April 2014 to March 2019. The price of CRC allowances for the 2014-15 compliance year is £15.60 per tonne of CO2 (for those bought up front - the forecast sale) and £16.40 per tonne (for those bought following the end of the year - the compliance sale).
The CCL is also designed to reduce energy consumption and encourage use of renewable energy.
It is also a tax on business consumers relative to their consumption of various fuels - the categories being electricity, natural gas, petroleum and hydrocarbon gas in a liquified state and solid fuels. There are different CCL rates for the various types of fuel.
The CCL was introduced in 2001 and has been amended since.
Businesses can get a discount on CCL (and avoid CRC on the relevant consumption) if they enter into climate change agreements.
This is a scheme that applies to large UK undertakings (any that employ 250 or more people or have an annual turnover in excess of 50 million euro (£38,937,777)) and their corporate groups. It mainly affects businesses but can also apply to not for profit bodies and any other non public sector undertakings that are large enough to meet the qualification criteria.
The scheme forces those to whom it applies to carry out energy saving assessments. These cover:
- energy consumption;
- energy audits; and
- identification of where energy savings might be made.
Those involved must keep records and report compliance to the Environment Agency.
Consultation on reforming energy efficiency taxes
In September 2015, the UK Treasury and the Department of Energy and Climate Change launched a consultation called Reforming the business energy efficiency tax landscape.
The two key proposals are:
- to replace the CRC and CCL with a new single energy consumption tax, which is based on the current CCL; and
- to create a single reporting framework, which incorporates the most effective elements from the various existing regimes, with a view to reducing compliance costs to businesses - with that new framework being based on the ESOS.
Little more of real interest is revealed by this consultation. It simply indicates the basic direction that the Government considers that the reforms might take - but doesn't give much detail.
The lack of detail at the moment might be thought of as a good thing - as it appears that the Government are genuinely looking to those who will be affected to give feedback to allow detailed proposals then to be produced.
However, further reform in itself may result in more uncertainty in the short term. We'll keep you updated.