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Carbon Reduction Commitment - Government bows to pressure to simplify the Scheme



United Kingdom

Carbon Reduction Commitment - Government bows to pressure to simplify the Scheme

This alert was included in the summer 2011 issue of Informer - the real estate newsletter.

The Carbon Reduction Commitment Energy Efficiency Scheme ("Scheme") has been widely criticised as being too administrative and failing to address the issues that it was intended to tackle. It is therefore interesting that the Department of Energy and Climate Change (“DECC”) has recently announced proposals to simply the Scheme in order to reduce the level of administration on scheme participants. The changes are intended to come into force by April 2013. Interested parties have until 2 September 2011 to comment on those proposals, with DECC consulting on draft legislation in February 2012. The consultation runs until April 2012.

In summary, the proposals change the rules on organisational structures, the number of fuels covered by the CRC, the sale of allowances, and the overlap with existing climate change agreements and the EU Emissions Trading Scheme. The aim is to simplify the Scheme, but the new scheme will retain many elements of the previous one.

Of interest is that there is no change to the treatment of landlords and tenants, where landlords will still be responsible for the energy that they supply to tenants.  It is generally considered that landlords are in a better position to put into place energy efficiency measures than tenants. However the Government has indicated that it will consider reviewing the position where a landlord only owns the land (and not the buildings) on which the tenant has, for example, constructed a building, or where the landlord still supplies the energy to the tenant but the tenant is effectively the sole occupier and is therefore responsible for (and able to control) the energy management of the building. There is however a proposal for a change to the rule on land owned by trusts, whereby it should be the party with the genuine commercial interest in the property, and the ability to actually comply with the scheme, that should be responsible for complying with the Scheme.

For full details of DECC’s proposals, click here >

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