A participant in the CRC Energy Efficiency Scheme (CRC) must surrender CRC allowances equal to its CRC emissions for the electricity and gas supplies declared in its annual reports by the last working day of October following the relevant annual reporting year (ARY). Each CRC allowance is equivalent to one tonne of carbon dioxide (t/CO2).

In the First Phase (1 April 2010 to 31 March 2014), CRC allowances were sold to participants in retrospective fixed price sales at the end of each ARY, starting from July 2012 for the 2011/12 ARY. The CRC Energy Efficiency Scheme (Allocation of Allowances for Payment) Regulations 2012 (SI 2012/1386) (Allocation Regulations 2012), which were amended by the CRC Energy Efficiency Scheme (Allocation of Allowances for Payment) (Amendment) Regulations 2013 (SI 2013/1097), provided for three sales of CRC allowances in June to July in 2012, 2013 and 2014 for the 2011/12, 2012/13 and 2013/14 ARYs.

The price of CRC allowances was £12/tCO2 in the 2012 and 2013 sales. In the 2012 Autumn Statement, the government announced that the price of CRC allowances would rise to £16/tCO2 in 2014-15 and would increase in line with the Retail Prices Index (RPI) from 2015-16 onwards, (see Legal update, 2012 Autumn Statement: environmental implications: CRC).

In December 2012, the government announced that from the Initial Phase (1 April 2014 to 31 March 2019) onwards, the auction of a limited number of CRC allowances that had originally been proposed for the Initial Phase would be replaced by two fixed price sales for each ARY. The fixed price sales would comprise a cheaper forecast (forward) sale and a more expensive retrospective "buy-to-comply" sale (see Legal update, CRC: DECC response to March 2012 consultation on proposals to simplify the scheme: Sale of allowances: changes to proposal 39).

For more information on the CRC in general, see:

On 22 November 2013, the CRC Energy Efficiency Scheme (Allocation of Allowances for Payment) Regulations 2013 (Draft Allocation Regulations 2013) were published in draft form. It is not clear whether the Draft Allocation Regulations 2013 have already been laid before Parliament.

The Draft Allocation Regulations 2013, which are due to come into force on 1 February 2014, will revoke and replace the Allocation Regulations 2012 from that date onwards.

The Draft Allocation Regulations 2013 will:

The Draft Allocation Regulations 2013 set forecast and compliance application, payment and allocation periods for each ARY. CRC: Summary of how CRC fixed price sales and allocation of allowances will work from the Initial Phase onwards shows how these dates will work in each ARY.

The Draft Allocation Regulations 2013 are due to come into force before the end of the 2013/14 ARY and therefore before the last fixed price sale for the First Phase is held between 2 June and 31 July 2014. As the Draft Allocation Regulations 2013 will revoke the Allocation Regulations 2012 and do not contain any saving provisions for the last sale of CRC allowances in the First Phase, it is assumed that is being replaced by the first compliance application period under the Draft Allocation Regulations 2013, which will run for the same period. The forecast application period, which will run from 1 April to 30 April 2014 will apply to the sale of CRC allowances for the 2014/15 ARY but the compliance application period held during June and July 2014 will apply to the sale of CRC allowances for the 2013/14 ARY.

The Draft Allocation Regulations 2013 do not yet specify what the price differential will be between the forecast and compliance sales although draft regulation 7 will provide this information once the pricing has been announced.

Draft CRC Energy Efficiency Scheme (Allocation of Allowances for Payment) Regulations 2013.