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Written - Carbon Reduction Commitment Scheme – Publication of third consultation on draft Order in Council

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Jane Davidson, Minister for the Environment, Planning and Countryside

A joint consultation is being published today by the Department  for Energy and Climate Change(DECC), the Welsh Assembly Government, the Scottish Executive and the Department for the Environment Northern Ireland on the Carbon Reduction Commitment Scheme(CRC).


The Climate Change Act, which received Royal Assent in December last year set legally binding targets for the UK to reduce its greenhouse gas emissions by 80% by 2050. To meet this target, the Climate Change Act provided powers to create emissions trading schemes. The CRC will be the first scheme created under these powers.


Climate Change is one of the greatest challenges facing the world and urgent action is needed to stabilise greenhouse gas emissions.  The CRC will be a key mechanism for achieving carbon savings from the non energy intensive sector.


One Wales illustrates the Assembly Government’s commitment to reducing emissions of all greenhouse gases and I recently published a consultation on the Assembly Government’s policy intentions in relation to climate change which expands on the commitments set out in One Wales. I am pleased to see the publication of the consultation on the CRC draft Order today which we have been developing with DECC and the other devolved administrations. The CRC will help us meet our targets and those set out in the Climate Change Act.                                                                                                                                                          


The CRC is a groundbreaking mandatory emissions trading scheme for the UK. It will cover large non-energy intensive organisations from both the public and private sector such as supermarkets, banks, local authorities and universities. The sectors of the economy covered by the CRC account for approximately 10 per cent of the UK’s emissions. The CRC will start in 2010 and after a three year introductory phase will introduce a declining cap on the amount of carbon this sector of the economy can emit. The UK Government and the devolved administrations will take the views of the independent Committee on Climate Change into account when setting the cap to ensure that the environmental goals of the scheme will be met. The CRC is expected to deliver emissions savings of at least 4Mt CO2 per year by 2020. It will deliver savings for participants through increased energy efficiency and changing behaviour.


We have been working closely with the UK Government and the other devolved administrations on the development of the CRC scheme and our consultation on the Climate Change Strategy highlights the need for Wales to prepare for a world in which a cost is attached to greenhouse gas emissions.


The CRC scheme is being developed on a UK wide basis, rather than having four schemes operating across England, Wales, Northern Ireland and Scotland; this will minimise administrative burdens and complexity and was a key concern highlighted in the responses to the last consultation.


The consultation published today (12 March) is the third public consultation on the development of the scheme. Published alongside it is the Draft Order in Council that sets out an organisation’s legal obligations under the scheme, and a User Guide outlining the practical steps that will need to be undertaken by an individual organisation to comply with the scheme.


The Welsh Assembly Government will participate in the scheme on a mandatory basis.


As part of the communication strategy for the CRC, the UK Government and the Devolved Administrations have written to all potential participants of the CRC, including public sector participants such as local authorities and NHS Trusts in Wales, to tell them about the scheme and to offer further information if they need it. As part of the consultation process we will be holding a seminar and workshop in Cardiff on 29 April to provide potential participants with further background and information about the scheme. A User Guide has also been developed which will be sent to all potential participants and a regular CRC update bulletin is despatched at regular intervals to stakeholders.


We do not know at this stage, how many organisations in Wales will qualify for the scheme, because the obligation to participate rests with the highest parent organisation, many of which will be national companies with their headquarters based in other parts of the UK, with only subsidiaries based in Wales. However it is estimated that about 5,000 organisations across the UK will be captured. Public sector organisations in Wales such as local authorities and NHS trusts will be participants in the scheme and have been actively engaged in its development.


We estimate that those emissions from the business sector that fall within the scope of the 3% target represent around a quarter of the total emissions covered by the target . The public sector has an important leadership role to play in reducing emissions. The CRC will provide a financial incentive to reduce emissions across the business and public sectors by placing a price on carbon emissions, whilst allowing the reductions to be made where they are most cost effective. It will also help to create a demand in low carbon technology and services which complements our Green Jobs strategy and, as businesses realise the financial benefits of becoming more energy efficient, will help the transition to a low carbon economy.


The views of those who will be affected by the scheme are important and I look forward to receiving consultation responses on the detailed operation of the scheme.