If targets included in local area agreements (whether targets related to carbon emissions or otherwise) are not achieved in full it can result in a lower level of performance reward grant. My Department consulted on the operation of a new reward scheme for local areas in 2008, based upon local area agreements. This will be related to targets agreed by local authorities and their partners and our intention is to judge the amount of reward payable by reference to average performance across the targets agreed within the LAA. Responses to this consultation are being considered and an announcement will be made shortly.
The Carbon Reduction Commitment is a mandatory cap and trade scheme designed to cover emissions from large business and public sector organisations which the Government intend to bring in to operation in 2010. Large local authorities are expected to qualify for the scheme. There will be no targets for individual organisations in the scheme, but an overall cap will be applied to the sector. Revenue raised from CRC will be recycled back to participants. To incentivise improved energy efficiency, the revenues repaid to participants will be subject to a bonus or penalty related to their relative performance compared to other participants. In 2010-11 the maximum bonus or penalty will be +/-10 per cent. rising to 50 per cent. in later years. However it is important to recognize that the net savings due to energy efficiency measures will outweigh any costs of the scheme.