UK: CRC Energy Efficiency Scheme remains taxing for businesses

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8 July 2011, Gas, Electricity, Nuclear, Solar, Wind

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Shortly before around 2,800 businesses submit their first reports under the CRC Energy Efficiency Scheme (formerly the Carbon Reduction Commitment), the government has amended its original plans about how it hopes to improve their energy efficiency and carbon emissions records.

Among the proposals, the Department of Energy and Climate Change is reducing the number of fuels that companies need to report on from 29 down to four (those being electricity, gas, kerosene, and diesel); in addition, it has moved to biannual fixed price allowances sales, simplified the organizational rules, made qualification processes easier, and exempted companies that are already registered under the EU Emissions Trading System and Climate Change Agreements.

Although these measures will bring about some degree of improvement for businesses struggling with the heavy burden of red tape, the biggest concern has long been the government's decision to scrap the proposed revenue recycling element as part of its spending review conducted in October 2010. Under the original plans, the government had promised bonus payments to firms that made the greatest energy efficiency improvements.

As a result, all allowances sales will end up in treasury coffers, which is why many business owners perceive the CRC Energy Efficiency Scheme to be a stealth tax rather than a financial incentive. The publication of league tables of the best and worst energy efficiency improvers is meant to give businesses concerned about their public reputation an added incentive to engage in energy efficiency.

The simplification of the CRC Energy Efficiency Scheme will go some way towards making life easier for businesses, but the government would do well to ensure that small- and medium-sized enterprises in particular receive other financial incentives to reduce their energy consumption. The Green Deal may be the perfect opportunity to do so, but the government will have to get the details right.

Source: Datamonitor

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