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UK Carbon Reduction Commitment (CRC) on the way out

UK Carbon Reduction Commitment (CRC) on the way out
  • United Kingdom
  • Environment
  • Environment - Energy and sustainability
  • Consumer
  • Energy and infrastructure
  • Industrials


As anticipated it was announced in the UK’s March 2016 budget that CRC would be abolished at the end of the current phase (i.e. 31 March 2019).

CRC has long been criticised as overly complicated and placing an undue burden on business. Its original complexity was, to some extent, justified by that fact that businesses received money back from the government. However, since the decision in the 2010 Spending Review that the Treasury would retain the proceeds of allowance sales CRC has been a tax in all but name.

Key points to be aware of are:

  • CRC remains in place until the end of the current phase and business is still required to comply with the requirements.
  • CRC Participants must submit their final annual report by 31 July 2019, with the final surrender of allowances by 31 October 2019.

Allowance prices for the remaining years are set out below:

CRC Compliance Year

Forecast Sale Price (in advance of a compliance year)

Compliance Sale Price (after the end of a compliance year)




















  • In order to ensure no loss of revenue to the Treasury the main rates of Climate Change Levy (CCL) (the carbon tax levied on certain non-domestic energy supplies) will be increased from April 2019.
  • CCL rates for different fuels will also be updated to provide a financial incentive for businesses to reduce gas use.
  • CCL discounts available to organisations with a Climate Change Agreement (CCA) will increase from April 2019 to ensure any increases in energy costs are in line with the Retail Prices Index. The eligibility criteria for a CCA will remain as is until at least 2023. However, in the meantime DECC will review CCA targets to ensure they are achievable.
  • Watch out for the next public consultation on a simplified energy and carbon reporting framework which is expected this Summer.

The consultation will propose mandatory annual reporting for companies meeting the eligibility criteria for the Energy Savings Opportunity Scheme (ESOS) i.e. employing more than 250 persons or having an annual turnover in excess of 50 million euros and a balance sheet in excess of 43 million euros. The consultation will cover issues such as eligibility criteria and the amount and type of information to be collected. To minimise administrative burdens integration of existing compliance and reporting requirements under CCAs, the EU Emissions Trading System and ESOS will be considered.

To protect the smallest and/or lowest energy consuming businesses de minimis arrangements will also be explored.

The UK Government considers these changes will unlock cost-effective energy savings. Business will no doubt welcome the abolition of CRC which should reduce their administrative burdens even if it proves to be cost neutral due to an increase in CCL.