20th OCTOBER 2015
GREEN TUESDAY • Data Management • Legislation • Compliance
A Unique Perspective
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A Unique Perspective | Green Tuesday | 20.10.2015
UK: Government consults on reforming energy efficiency taxes and reporting, including CRC and CCL On 28 September 2015 HM Treasury and the Department of Energy and Climate Change published a consultation on “Reforming the business energy efficiency tax landscape”.
In the July 2015 Budget, the government announced that it would review the “business energy efficiency tax landscape”
Review of business energy efficiency taxes In the July 2015 Budget, the government announced that it would review the “business energy efficiency tax landscape”, with a view to simplifying and improving the overall regime. During the summer, the government has been reviewing business energy efficiency and carbon reduction policies and schemes and how they interact, including the: • CCL (Climate Change Levy) and CCAs (Climate Change Agreements); • CRC (Carbon Reduction Commitment); • GHG (Mandatory greenhouse gas) reporting requirements under the Companies Act 2006; • ESOS (Energy Savings Opportunity Scheme); • Enhanced capital allowances.
The government recognises that there are a number of barriers for business in these policies
The government recognises that there are a number of barriers for business in these policies, including the: • Administrative burden of having a number of complex overlapping policies; • Challenge of making the business case for energy efficiency with decisionmakers; • Access to finance and lack of skills.
Government consults on energy efficiency tax reform (including CRC) The consultation closes on 9 November 2015 and sets out policy proposals to simplify the business energy tax and reporting landscape, while recognising the complexity of business energy policy and the different barriers faced by different businesses.
The consultation closes on 9 November 2015 and sets out policy proposals to simplify the business energy tax and reporting landscape
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A Unique Perspective | Green Tuesday | 20.10.2015
The key proposals set out in the consultation are: • A single reporting scheme and energy efficiency tax. The consultation invites views on its overall proposal to replace the current system of overlapping energy efficiency policies with a system where an organisation is subject to one reporting scheme and one energy efficiency tax. • A single, streamlined reporting framework based on ESOS. This would bring together the most effective elements from the existing range of reporting schemes. The government is considering using the ESOS reporting framework to design this single reporting framework, which would apply to all ESOS participants and potentially the public sector. • A single new energy consumption tax for businesses based on CCL. The government is proposing that it would abolish CRC and CCL and replace them with a new tax based on CCL. The consultation also invites views on reform of: • CCAs and any new scheme giving a discount on CCL or on any new tax based on the model of CCL. • Carbon reduction incentives and energy efficiency. The government says it will consider options for additional financial incentives for energy efficiency and carbon reduction. However, any incentives will need to be funded through increases in tax and would need to meet strict value for money criteria. The consultation invites suggestions for mechanisms to incentivise energy efficiency and carbon reduction (for example, supplier obligations, tax reliefs, grants and funding based on competitive bidding). • Public sector and third sector. The consultation invites views on the impact on the public sector and charities of replacing CRC and CCL with a single tax. For example, charities are currently excluded from paying CCL on energy consumption associated with non-business activities, but are not excluded from CRC.
Next steps: Government likely to publish formal response in 2016 The government says it is likely to publish its formal response to the consultation in the 2016 Budget. It may also carry out more detailed consultations on policy design and implementation.
The first key proposals set out in the consultation is for a single reporting scheme and energy efficiency tax
The consultation also invited views on reforms such as CCAs and any new scheme giving a discount on CCL or on any new tax based on the model of CCL
The government says it is likely to publish its formal response to the consultation in the 2016 Budget
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A Unique Perspective | Green Tuesday | 20.10.2015
EU: Mandatory energy audits: less than 2 months to comply Article 8 of the Energy Efficiency Directive (EED) requires all Member States to introduce legislation obliging all organisations that are not SMEs to undertake mandatory energy audits by 5 December 2015, and every four years thereafter. Implementing EED legislation should have been introduced during the summer of 2014; however, many Member States did not meet this deadline and some have still not implemented the requirements fully, or at all.
Article 8 of the Energy Efficiency Directive requires all Member States to introduce legislation obliging all organisations that are not SMEs to undertake mandatory energy audits by 5 December 2015
In light of this, some Member States have taken the decision to push back the compliance date (from 5 December 2015) but where this has not been done, non-SMEs and in some cases, their corporate groups, may still be required to undertake the audit by 5 December 2015. The requirements of Article 8 of the Energy Efficiency Directive have not been uniformly implemented across all States. For example, some States, as well as obliging non-SMEs to undertake audits, have also extended the obligation to those organisations which meet certain energy use thresholds or which are undertaking particular activities. In these circumstances, the legislation may bring in a much wider range of participants than the Directive originally envisaged. The relevant implementing legislation and guidance should therefore be carefully checked to determine whether and where an organisation (and its group) is in scope and if so, what are its routes to compliance and any risks/liabilities associated with any noncompliance (this could be monetary penalties, sanctions or reputational risks).
The legislation may bring in a much wider range of participants than the Directive originally envisaged
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