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ATH Resources’ CRC appeal dismissed

Company refuses to make payments until further clarity on legality of the CRC Scheme is received

ATH Resources plc have received notice from the Secretary of State for Energy and Climate Change that their appeal against the enforcement notice issued by the Environment Agency on 8 February 2011 requiring the company to register as a participant in the Carbon Reduction Commitment Scheme (CRC) has been dismissed.

However, the Secretary of State did not reach any conclusion on the ATH Group’s position that the anticipated CRC Energy Efficiency Scheme (Allocation of Allowances for Payment) Regulations will be unlawful in that they will create a tax which will contravene EU Directive 2003/96 (the community framework for the taxation of energy products and electricity).

The Group has been advised that it can now refer that matter, and its wider challenge to any requirement that it participates in CRC, for judicial review at moderate legal cost. ATH’s board says this is something it will consider at the appropriate time.

If the anticipated Allocation Regulations come into force as currently drafted (expected to be April 2012), and if ATH is ultimately required to participate in CRC, the cost to the Group could be in the order of £1.4 million for each of the three years from April 2012 in respect of emissions generated in each preceding 12-month period.

The Group says it will be discussing the position with its legal advisers and will not be making any payments under the CRC Scheme until further clarity on the legality of the CRC Scheme is received.

Alistair Black, chief executive of ATH, commented: ‘While it is clearly disappointing that our appeal has been dismissed by the Secretary of State at this stage, the outcome of ATH’s contention that the entire CRC Scheme is contrary to EU law has yet to be determined.

‘If the CRC Scheme is found to be in contravention of EU law, it will have a major implication for the operation of the Scheme in its current form.’

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