CRC plans fail to meet demand for change

15th July 2011

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Climate change minister Greg Barker has unveiled plans to further streamline the Carbon Reduction Commitment Energy Efficiency scheme (CRC), which he claims is overly complex and bureaucratic.

“I believe the principle of the scheme is right, which is why I am proposing to make the CRC simpler while still protecting its strong environmental integrity to cut emissions in large organisations and businesses,” said Barker.

Energy efficiency is a no-brainer. It saves money and cuts carbon. Our proposals will make it easier and simpler for businesses to feel the benefits of using less energy as well as supporting jobs in the energy savings industry.”

The proposals, which will be issued for consultation early next year, include:

  • reducing the number of fuels covered by the CRC from 29 to four (electricity, gas, kerosene and diesel);
  • removing the auctioning of allowances by introducing fixed-price sales, twice a year from 2014 (the start of phase II);
  • abolishing the need for large organisations to participate in groups;
  • introducing a “one-step” qualification process; and
  • exempting from the CRC sites that are covered by a Climate Change Agreement or the EU emissions trading scheme.

The plans follow earlier changes, including the decision last year to scrap the revenue recycling payments, which was heavily criticised by business groups and effectively turned the scheme into a tax on business.

Those critics have not been appeased by the latest proposals.

The CBI described them as “tinkering around the edges”. Director of business environment, Rhian Kelly, said that the government should either reinstate the revenue-recycling element, or scrap the CRC altogether and look at other ways of increasing energy efficiency among businesses.

The manufacturing body EEF, another critic of the scheme, also said the planned changes did not go far enough.

“The government could have gone further,” commented Gareth Stace, head of climate change and environment policy.

“In particular, it could have scrapped the ‘league table’, a name-and-shame list that will not, in any way, reflect the ongoing performance of an organisation and will send the wrong signal to investors, supply chains and the consumer.”

WSP Environment and Energy calculates that the CRC will cost businesses about £165,000 each next year and the consultants warn that the continuing uncertainty over the scheme is preventing companies from investing in measures to improve energy efficiency.


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