Official Report 382KB pdf
CRC Energy Efficiency Scheme Order 2013 [Draft]
Item 3 is subordinate legislation. The draft order has been made under the affirmative procedure, which means that the Parliament must approve it before its provisions can come into force. Following this evidence session with the minister, the committee will be invited to consider the motion to approve the draft order. I welcome the Minister for Environment and Climate Change, Paul Wheelhouse, and his officials from the Scottish Government: Bob Irvine, deputy director, climate change and water industry; and Ronan McGarry, policy adviser in the emissions trading branch.
Thank you, convener, and good morning, everyone.
The draft order implements the carbon reduction commitment and energy efficiency scheme simplification. It is a package of measures designed to reduce the administrative burden of the scheme, while maintaining the majority of its emissions coverage. The CRC is a largely devolved scheme, which the Transport, Infrastructure and Climate Change Committee approved in 2010 as a key part of our ambitious climate change strategy. I am pleased to say that there was unanimity at the time and I hope that it will be the same today.
The CRC is a mandatory UK-wide trading scheme that targets large, non-energy-intensive organisations to incentivise energy-efficient practices. There are 132 such organisations that participate in Scotland, including many of our largest private companies and public bodies. CRC participants are responsible for about 10 per cent of the UK’s carbon emissions—some 54 million tonnes of carbon dioxide annually—and have an average annual electricity spend of £500,000. Scotland’s participants account for about 8 per cent of our national emissions, or 4.1 megatonnes of CO2.
Following continued stakeholder engagement and dialogue with the UK Government and other devolved Administrations, we committed to simplify the scheme. A public consultation last year led to this draft order. Although the majority of the changes will be brought in at the start of phase 2 of the scheme in 2014, we intend to implement some of the more pressing changes, notably a reduction in fuel coverage from this year so that participants can immediately benefit from the reduced compliance costs.
10:30Overall, the simplification should lead to an average 55 per cent administrative saving for participants—or £272 million—up to 2030, with net present value of £77 million compared to the existing scheme.
With those changes in place, it is intended that the scheme will be less burdensome for participants, while still encouraging investment in energy-efficient practices, with the associated benefit of lowering Scotland’s carbon emissions. I have agreed with my UK and devolved Government counterparts to review the scheme in 2016 to ensure that it is operating as intended. The order has passed without issue through the Northern Ireland Assembly, the Welsh Assembly and the House of Lords. I hope that the committee will also approve the order so that we may enact its provisions.
Thank you. I invite members to ask any questions about the draft order.
Good morning, minister. You mentioned that the potential impact of the measures might be financial savings for those involved. Is it possible to estimate the positive impact that the measures might have on carbon emissions?
There have been some changes to simplify the coverage of the CRC scheme. Some fuels have been taken out, while other areas have been brought in, such as energy consumption by businesses. However, the net impact is broadly the same.
Although the revised CRC scheme will not deliver a substantial change in the emissions reduction, by 2027 the scheme will have contributed substantially to reducing emissions. We estimate about a 10 per cent reduction for the business and public sector as a result of the scheme. It plays a significant role in bringing down UK and Scottish emissions.
Good morning, minister. I have two questions, one for the minister and one for Ronan McGarry.
I note that you are from the emissions trading branch, Mr McGarry. Part 4 of the cover note for the draft order says:
“the administrator must maintain records in relation to allowances.”
Do you administer this or is it administered by another body?
It is administered by the UK Environment Agency, with assistance from the Scottish Environment Protection Agency for Scottish participants. Data on allowances is kept by the Environment Agency in a secure registry.
The minister mentioned reductions. Do you just keep a note of those?
Yes. We have access to all the data, but it is kept securely by the EA.
My second question is for the minister. Page 11 of the cover note refers to the Scottish Parliamentary Corporate Body. It says:
“The SPCB is required to comply with the CRC. For 2011/12 the cost of purchasing these allowances for the SPCB was £38,136. As a result of a reduction in electricity use by the Scottish Parliament”—
which I am sure is welcomed by everyone in the building—
“it will not be required to participate in the second phase of the CRC”.
Do you think that the lead that the Scottish Parliament has taken in reducing its electricity use may encourage others to do the same?
I am grateful to Richard Lyle for raising the performance of the Scottish Parliament. I congratulate the Parliament on a strong performance in the league tables. It is ironic in a sense that it is no longer required to take part in the scheme. It has demonstrated good leadership. The Scottish Government has tried to reduce its own emissions over many years.
On the specific reasons why the Scottish Parliament is no longer required to be covered by the CRC, I will direct the question to Ronan McGarry to answer from a technical point of view.
I have not seen the Scottish Parliament’s supplies. However, it is certainly the case that if it has dropped below the threshold for supplies of 6,000MWh a year, it would drop out.
Assuming that the draft order is agreed to, as I am sure it will be, will there be a completely level playing field across all the constituent parts of the UK? In other words, there will be no competitive disadvantages as a result of the scheme.
Indeed. It is a UK-wide scheme and the measures apply equally throughout the UK. In that respect, there is a level playing field for all businesses that are covered by the scheme.
So there are no differences between this order and the others.
No. As Ronan McGarry has indicated, SEPA has a degree of involvement in that it gives guidance to businesses in Scotland. Other than that, though, the scheme is uniformly applied.
Motion moved,
That the Rural Affairs, Climate Change and Environment Committee recommends that the CRC Energy Efficiency Scheme Order 2013 [draft] be approved.—[Paul Wheelhouse.]
Motion agreed to.
I thank the minister and his officials for attending.
10:37 Meeting continued in private until 12:06.Previous
Common Agricultural Policy