CRC boosts energy efficiency in 56% of businesses

21st July 2015


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The carbon reduction commitment scheme (CRC) has driven energy efficiency investments in over half of businesses, according to a report for the energy and climate change department (Decc).

The report assesses the impact of the scheme since it began in 2010 and was produced by CAG Consultants, Imperial College, the Carbon Trust and Databuild. The research found that nearly all organisations investigated were taking some action on energy efficiency.

More than two-thirds of energy managers (71%) reported that their organisation’s level of action on energy efficiency had increased compared to 2010, the report states.

Rising energy prices were most commonly cited by businesses as the main driver for investing in measures to improve energy efficiency (80.5%). This was followed by an increase in board-level priority (67.4%) and a desire to improve or protect reputation (64.2%). The CRC scheme was ranked fourth, with 56% citing it as a key factor.

The cost of CRC allowances has both raised awareness and improved the business case for energy efficiency, the report states, while fear of enforcement and resulting reputational damage has encouraged compliance.

The most common measures taken to improve energy efficiency were: energy efficient technologies (93%); energy monitoring (85%); energy audits by external bodies (79%); staff education (79%); and automatic meter reading systems (77%).

Lack of funding was cited as the most common barrier to improving energy efficiency (48%), followed by uncertainty over the long-term benefits and costs (10%), and limitations of buildings (8%).

Around half of CRC participants told researchers they felt the scheme was not delivered efficiently or consistently. However, satisfaction with the scheme had increased since the early phases, they found. The government’s “simplification” of the scheme has reduced the perceived burden associated with complying, as well as overlaps with other schemes, says the report.

Nonetheless, many participants criticised successive changes to the scheme. They said the alterations had made compliance more complicated, had created an administrative burden in adjusting to changes and had undermined the credibility of the scheme.

Many complained that the CRC had effectively become a tax since the government removed revenue recycling, which gave best performing companies revenue back from the scheme. But others reported that the process of reporting energy consumption and approving purchase of CRC allowances helped make energy efficiency more visible in their organisations.

The report highlights calls from several respondents for a clearer overview of government energy efficiency policy and more consistency between government carbon schemes, including greenhouse-gas reporting.

The government announced in the budget that it is to carry out a review of business energy efficiency taxes. However, the report shows no overall consensus from business on how this should be done. Some participants suggest a more closely targeted approach might reduce overlap between schemes, while others would like to see one overarching scheme, with variations for particular sectors.

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