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Resource allocation

23 January 2012

Year two of the Carbon Reduction Commitment Energy Efficiency Scheme (CRC) is coming to a close and with it the need to start buying allowances and not just counting carbon. How the mechanics of this will work for Phase 1 of the scheme is outlined in the, does what it says, CRC Energy Efficiency Scheme (Allocation of Allowances for Payment) Regulations (2012).

The regulations are currently in draft and comments on them can be feedback to DECC at .(JavaScript must be enabled to view this email address) until 10th February 2012. Currently they identify that

• The “primary allocation period” will be 1st June 2012 to 31st July 2012, for participants to buy allowances
• The secondary allocation period (11th August through to the end of September) is for Environment Agency use only
• As the cap has been removed from the scheme there will be no safety valve mechanism in operation
 
• The initial allowance price will be the headline £12 (for 2012), future prices “are a matter for Budget process” it is now being reported

Points to consider could be

• The allocation window for the purchase of allowances is in total two months and also coincides with the Year 2 reporting deadline. Last year the majority of reports (80%) were submitted in the last two weeks of July. If that trend repeats, coupled with the added allowance sale and surrender, it may prove a very interesting time for participants who haven’t planned properly.
• What are your payment terms and what mechanisms do you have in place to purchase allowances, bearing in mind it is against your measurements, there will be no invoice to raise against.
• Next year it may not be £12 per tonne CO2 (what is the bet it will go up), so do you over buy allowances this year to “offset” a little for next?

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