Government Delays ‘Green Stealth Tax’ Until 2012

One of the government’s flagship green schemes to cut carbon emissions among businesses is in tatters, after it announced it would delay the introduction of the Carbon Reduction Commitment (CRC).

The CRC Energy Efficiency Scheme is a cap and trade scheme, started in April 2010, which forces large organisations to monitor their emissions and purchase allowances for each tonne of CO2 produced by the energy they use. The idea is that the more CO2 an organisation is responsible for, the more allowances it has to purchase, so there is a direct incentive for these organisations to reduce their emissions.

Companies had until the end of September to register – and it appeared that a large number did not do this, risking fines in the process. A number of companies called on the government to extend the deadline.

Changing the Goal Posts

Under the original terms of the CRC agreement, funds raised from the purchase of CO2 allowances would be pumped back into the system, rewarding those firms that cut their bills the most. This was known as ‘revenue recycling’.

But last month, in its Comprehensive Spending Review, the Government revealed that revenue was no longer going to be recycled – it would go straight to the Department for Energy and Climate Change (DECC), i.e. HM Treasury would get the proceeds, estimated to by £1 billion a year by 2014-15.

The decision to divert the funds to the public purse instead of recycling them was controversial to say the least. It led many critics to cry foul and label the CRC scheme as a ‘green stealth tax.’

Speaking at the climate change conference at the Confederation of British Industry, Chris Huhne, energy and climate change secretary, defended the decision to keep the money from the scheme. He said the decision had been a difficult one, made in the context of pressure on public spending.

Simplify And Delay

According to Businessgreen.com, he promised to simplify the programme and pledged to listen to organisations taking part on how to make it work better.

Huhne also announced that the government will delay the implementation of the scheme, so that the first sale of permits to cover energy use will not take place next year, but in 2012. Eligible companies will not have to register for the second phase of the scheme, due to kick off in April 2011, until 2013.

But some believe we are witnessing the end of the CRC as it currently stands.

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