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CRC – revenue recycling or just revenue

21 October 2010

The Carbon Reduction Commitment (CRC) was introduced as a mandatory emissions trading scheme aiming to improve efficiency and to reduce the amount of carbon dioxide emitted in the UK. Organisations that meet the qualification criteria are to monitor their emissions and purchase allowances sold by the Government. Participants were due to be rewarded for better performance with revenue raised from selling allowances to be ‘recycled’ back to participants, with better performers receiving a greater return of the revenue.

The comprehensive spending review suggests that business will continue to benefit stating that the CRC will be ‘simplified’ to reduce burden on business with initial sales now taking place in 2012 rather than 2011 – 12. However, the ‘simplification’ comes at a cost to business; the money raised from the scheme will not now be reinvested in the scheme, and will instead be retained by Government, meaning that the CRC is now essentially a tax on business and will net the Government £1 billon in additional revenue.

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