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Budget signals the end of the Carbon Reduction Commitment


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Summary: The unpopular Carbon Reduction Commitment Energy Efficiency Scheme is to come to an end.

The Spring Budget 2016 announced an end to the Carbon Reduction Commitment Energy Efficiency Scheme (the “CRC”). The Chancellor explained that CRC payments will be replaced in a revenue-neutral way with a corresponding increase in the Climate Change Levy from April 2019.

CRC qualifying companies will still be required to comply with all reporting and allowance surrender obligations under CRC up to the 2018-2019 compliance year.  

This change comes following the Government’s “Reforming the Business and Energy Efficiency Tax Landscape” 2015 consultation during which businesses raised concerns that the current energy tax and reporting regime is overly complex, administratively burdensome and ineffective.

The Budget does not indicate how the reporting elements of the CRC will be replaced. Last year’s consultation suggested that a single reporting framework will be created to incorporate requirements under both the CRC and the Energy Savings Opportunity Scheme (“ESOS”). Although the consultation implies that this is likely to be designed through the “prism of ESOS”, it remains unclear whether a new reporting regime will be introduced or whether the existing ESOS reporting framework will be expanded.

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