Energy efficiency tax review must target carbon

9th November 2015

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  • Management/saving ,
  • Management


Amy Cook

IEMA members overwhelmingly want carbon reduction to be the central aim of a reformed energy efficiency tax system, according to a poll.

The survey results, released to coincide with today's end of the government's consultation on improving the effectiveness of existing measures to boost business energy efficiency, show strong support from environmental professionals for a more joined-up approach to policy that includes carbon reporting and pricing.

These and other policy measures can together provide the incentives for businesses to reduce CO2 emissions, which 75% of IEMA members believe can be either cost neutral for organisations or save them money.

The government announced the review with the budget in July. It is being led by the Treasury, whose main aim is to simplify compliance for business, while maintaining the revenue raised by the schemes.

Nick Blyth, policy and engagement lead at IEMA said the review is missing clear objectives on how much carbon reduction any new policies will aim to achieve. New policies should be transparently assessed against a central aim of carbon reduction, he said.

"90% of IEMA professionals believe that the government's current review should maintain or exceed the same ambitious levels of carbon reductions sought by earlier policies," he said.

Members support the simplification of energy and carbon regulation, which currently consists of several overlapping schemes, including the carbon reduction commitment (CRC), greenhouse gas (GHG) reporting, the energy savings opportunity scheme (ESOS) and the climate change levy.

But a replacement should be phased in to ensure minimal impact on businesses, many of whom have only recently established internal systems to deliver against current policies, IEMA said.

More than 90% of members support the need for taxes and price signals to be set over at least a three-year period. Blyth cites the landfill tax as an example of a policy with its clear timeline.

There was also very strong support among IEMA members for GHG reporting (93%), which is currently mandatory for around 1,200 companies. Most participants also believe mandatory reporting of either carbon or energy should be extended to all organisations currently covered by ESOS.

Mandatory reporting alongside an effective pricing driver, such as the CRC, is key to enabling business to invest in energy efficiency measures, IEMA said.

Blyth said that a joined-up approach to energy policy is essential in the long term to maximise carbon savings by companies. The government's review could provide that if it retains key elements of existing policy and reduces overlap, he added.

The survey also found:

- strong support (90% of respondents) for any new reporting requirement on large organisations to be consistent to the energy and transport scope of ESOS (assuming that quoted companies are still have to report wider GHGs).

- 90% of members agree that the carbon allowance process in the CRC has been effective in raising the profile of energy and carbon costs.

- 61% agree that if the CRC is removed, the scheme's current allowance price of £16 per tonne should continue to function for companies subject to the scheme, and possibly extended to other large energy users outside it.

- 79% favour the introduction of an escalator on either carbon or an energy tax similar to the landfill tax, as it is seen as a good example of a fiscal driver that has delivered change.

- 90% say that taxes, mandatory reporting or scheme compliance aimed at reducing energy and carbon emissions work most effectively when combined and when made highly visible and rarely work in isolation.

IEMA's full response to the consultation can be viewed here.


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