Simplifying CRC won't help businesses

19th June 2012


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Environment professionals do not believe proposed changes to the Carbon Reduction Commitment Energy Efficiency scheme (CRC) will cut the costs of compliance, warns IEMA

In its response to the DECC consultation outlining potential improvements to the CRC, IEMA reveals that the majority of its members are unconvinced the suggestions would generate significant savings for their organisation, with many confirming that even if the scheme changed they would keep the systems they have in place to comply to the scheme.

DECC’s proposals, which aim to reducing the administration costs of scheme compliance, include reducing the number of fuels covered from 29 to four; adopting new emissions factors that would align with greenhouse-gas reporting; and removing the requirement for facilities covered by a Climate Change Agreement or the EU emissions trading scheme to purchase CRC allowances.

However, according to IEMA, greater certainty on the price of carbon is much more important to environment professionals and their employers.

“The majority of private and public sector professionals IEMA consulted consider that long-term carbon price certainty is vital to enable effective business planning and investment in energy efficiency,” confirmed Martin Baxter, IEMA’s executive director of policy.

“Government urgently needs to address the need for long-term carbon price and policy certainty in the CRC scheme.”

Despite the CRC’s flaws, IEMA members confirm that is has helped to cut energy consumption with the requirements to report on emissions annually and purchase carbon allowances raising the profile of energy efficiency with senior management.

IEMA argues that if the scheme was to be scrapped, as organisations like EEF and CBI are calling for, or simplified to a straight carbon tax, then the case for mandatory greenhouse-gas reporting would be considerably strengthened.

“With CRC simplification there will be potentially 1,000 fewer organisations in the scheme. These organisations who do have significant carbon emissions, could be left with no additional fiscal, or reputational driver for cutting their emissions,” said Baxter.

“A new tax regime would not be sufficient on its own to achieve emission reductions, a reporting requirement would still be needed to help achieve this.”

IEMA members also warned that if the regulatory regime was to change, continuity was vital and that there should not be a time gap between schemes.

IEMA’s response followed that of the Environmental Services Association (ESA), which called for the CRC to be abolished if the government went ahead with its proposal to remove credits currently allocated to participants for generating energy renewably.

“Energy generating credits (EGCs) enable integrated waste operators to offset the inherent energy costs of running recycling facilities. Abolishing EGCs could work against raising recycling rates and will simply leave a bureaucratic scheme which adds cost to companies trying to invest and deliver the government’s green objectives,” argued Matthew Farrow, ESA’s director of policy.

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