Double Sale Rejected By The Crc Energy Efficiency Scheme
What the British government was proposing was groundbreaking
, which resulted to the adamant action in seeking feedback before the launching of the CRC Energy Efficiency Scheme. It is a cap and trade concept which will compel more or less 5000 organizations to comply, being among the highest producers of greenhouse gas emissions.
When the program was first mooted, it was suggested that companies start buying allowances right from the beginning of the program, each allowance representing a tonne of carbon dioxide. Organizations will not need to pay the funds til the end of the first and the payment also coincides with payment of the nest year's allowances in advance. This was known as a double sale of emission allowances and became very unpopular as it would have been extremely prohibitive from a cash flow perspective.
As they were aware that what they were proposing was groundbreaking and was being rushed through as quickly as possible, the British government went out of its way to look for feedback prior to the launch of the CRC Energy Efficiency Scheme. When the program is fully operational it will be a "cap and trade" auction scheme with some high-stakes. Identifying the largest greenhouse gas polluters, about 5000 organizations are compelled to comply, being those companies that spend approximately USD 0.5Million on energy.
The CRC Energy Efficiency Scheme will unfold phase by phase. There will be a three-year introductory phase which is on its way. Allowances will be available for sale at the rate of 12 per tonne. As there are no limits to the amount of emissions purchasable under the initial phases, the meat of the scheme does not get underway until the cap is in place. A company will determine how many allowances it needs to purchase at the end of the first year of the program which gets underway in the spring of 2010 and this phase is called the "footprint year."
Companies now only need to pay for their emissions in advance and do not have to pay, in April 2011 as had been originally mooted, for both the footprint year and the following year.
At the end of the footprint year, companies in the CRC Energy Efficiency Scheme will buy their allowances from the government for the subsequent year. By April 2011, companies shall make payments to the government. A registry will be developed during 2010 enabling the transactions in the scheme to be processed centrally.
If additional allowances are required to be purchased by an organization in the emissions scheme, basically due to the lack of efficiency or a miscalculation, these will be available on a secondary market. Thus companies will be allowed to trade with other participants in the scheme to buy and use allowances in this way. The agreed terms would be between buyers and sellers without anything to do with the government.
The double sale idea was hugely unpopular and organizations are pleased to see its elimination. The CRC Energy Efficiency Scheme is criticized to be too complex and the double sale is one of its major flaws. Cash flow arrangements in April 2011 will be essentially half of what they would've been otherwise.
Energy efficiencies are very important and the organization will be highly advised to take action now. Once a league table of participants is published, those who are in the top half and have taken early initiatives will benefit more so than those who are in the bottom half. Early risers are fitting automatic meter readers and joining the Carbon Trust Standard as part of this effort. Ultimately, the league table will represent pure performance in terms of efficiency.
by: Daniel Stouffer
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