The CRC Energy Efficiency Scheme (CRC) will undergo a huge transformation that will see the whole scheme dramatically simplified after continued complaints that it was too complex, the government has announced.

The revisions, trailed in the Autumn Statement, are designed to deliver a 55% reduction in costs for those participating in the scheme – generating savings of around £272 million.

The CRC scheme was brought in to improve energy efficiency and cut emissions in energy intensive businesses, which account for some 10%of the UK's emissions.

In order to simplify the scheme government is proposing a number of steps, including: reducing the number of fuels that participants have to report against from 29 to just electricity and gas. The move is designed to reflect the fact that electricity and gas make up the vast majority of the CRC’s emissions coverage. The Department of Energy and Climate Change is also introducing an assumption that all gas used is for heating purposes and a 2% de minimis threshold on gas (for heating), in order to reducethe reporting burden for organisations with very low gas consumption.

Government will also remove the 90% rule as well as the Climate Change Agreements (CCA) exemption rule. This will mean that participants will no longer have to prove that at least 90% of their emissions are regulated under the EU ETS, CCA and CRC.

The changes will also see the abolition of the Performance League Table. A number of consultation responses raised concerns that the Performance League Table was not fit for purpose in its current format, respondents noted that it did not accurately reflect performance due to its reliance on the early action metric in the first year, and that the way in which it was presented was not effective in engaging the media, investors and participants. As a result the Performance League Table will cease to be published. Instead, the Environment Agency will publish participants’ aggregated energy use and emissions data.

Commenting on the proposals, the Minister of State, Greg Barker, said: “Energy efficiency increases productivity and is good for growth so it is important that we continue to incentivise this through the CRC.

“We have listened to the concerns of business and radically simplified the scheme in order to cut down on administrative costs and red tape. And we will consider how to encourage new renewable on-site generation through the CRC scheme.

“The scheme will now be more flexible and light-touch, saving participants money and helping them to save energy”.

Government has also made it clear that it will consider how it can use the CRC to better incentivise the uptake of onsite renewable self-supplied electricity after announcing that it will revise the emission factor for on-site renewable-generated electricity. During the consolation over the proposed changes to the CRC scheme, 83% of respondents supported the proposed revision to the emission factor for self-supplied electricity.