Q&As

What if a seller has purchased CRC allowances that haven't been surrendered?

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Produced in partnership with Noy Trounson of DLA Piper
Published on LexisPSL on 31/07/2014

The following Environment Q&A produced in partnership with Noy Trounson of DLA Piper provides comprehensive and up to date legal information covering:

  • What if a seller has purchased CRC allowances that haven't been surrendered?
  • What if a seller has purchased CRC allowances that haven't been surrendered?

What if a seller has purchased CRC allowances that haven't been surrendered?

As a result of the prospective sale of part or all of his undertaking, a seller may have unsurrendered CRC allowances that they will no longer require for compliance purposes under the CRC.

This is particularly likely to be the case following the introduction, with effect from 1 February 2014, of a system of 'dual pricing' for CRC allowances. Under this system, sales of allowances in the normal course of business will take place in two tranches. There will be a 'forecast sale' (currently at a fixed price of £15.60 per tonne CO2) with an application period in April of each year, a payment period in June and an allocation period in June and July. The following year there will also be a 'compliance sale' (at a higher price of £16.40 per tonne CO2) with an application period in June and July, a payment period in September, and an allocation period in September and October.

The system of dual pricing is intended to create a limited secondary market in allowances, to ensure that the CRC scheme does involve an element of emissions trading. That is a

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