Nearly Half UK Firms Want CRC Scheme Scrapped

The government is facing more calls from UK businesses to scrap the Carbon Reduction Commitment Energy Efficiency Scheme (otherwise known as CRC), which the industry now views as just another tax.

This is according to new research from electricity provider npower, which surveyed 70 people responsible for energy management in their organisations last month. That survey follows hot on the heels of the business group CBI, which last week demanded that rebates should be restored to the CRC, or the scheme scrapped altogether.

The npower survey of UK businesses found that not only do companies wish the CRC to be ditched, but also more than a quarter (29 percent) do not think the CRC will help the UK meet its carbon reduction targets, which was one of its main aims.

Stealth Tax

It seems that the government’s decision to change key parts of the CRC, as part of its Comprehensive Spending Review last October, have not gone unnoticed by businesses. The key change was the government’s decision that instead of recycling money raised by the CRC scheme, it would use the funds raised to reduce the deficit.

Nearly half of businesses (43 percent) said they want financial incentives reintroduced and 40 percent said that now the CRC is effectively a tax, there is no incentive for businesses to reduce their carbon emissions.

“The results of our latest research reflect much of the feedback we receive on a daily basis from our customers,” said Dave Lewis, head of business energy services at npower. “It is concerning that the changes to the CRC have resulted in businesses putting less priority on reducing emissions, which was one of its key aims. We feel it is important that organisations focus on the best practice behaviour the CRC sets out to encourage, as energy efficiency and effective energy management make sound commercial sense, with or without the scheme.”

The survey also found that over half of businesses (54 percent) feel the CRC places an unnecessary financial burden on businesses, and 41 percent feel the CRC should be postponed until the UK economy’s financial recovery is more secure.

League Tables

“It is also worth noting that nearly half of businesses (48 percent) said they felt the scheme’s first league table, due to be published in October 2011, will not carry any real meaning,” added npower’s Lewis. “When the scheme was first launched, this was an important element of its financial and reputational incentives, so these results seem to suggest that organisations are viewing the scheme differently, and many of our customers have told us they see it purely as another tax.”

“The next milestone in the CRC calendar is submission of the first footprint report, which details an organisation’s carbon emissions from April 2010. This is due by 29 July and our research reveals that not only are over one in ten businesses concerned their company will miss the deadline but that 10 percent of them are not confident the data their company will submit is correct,” he added. “This is a real concern as accurate data is the first point of any effective energy management strategy and only by truly knowing how and where energy is being consumed can efficiency measures be put in place.”

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 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.

Business Hostility?

But the introduction of the scheme was met with a less than enthusiastic response from businesses, with many failing to register before last September’s deadline.

Currently the CRC is nearing the end of a consultation period on whether CRC should be further simplified or merged into other green taxes. This is because there are several different carbon taxes in the process of arriving, which will affect different sets of businesses, and impose different carbon prices.

And there have also been claims that the CRC scheme would trigger a move to relocate data centres – a vital component of the cloud economy – to other scheme-free countries.

Despite the hostility to the CRC scheme, the concept of reducing a businesses energy consumption, and hence its carbon emissions, is still being actively encouraged as a valuable way for companies to cut their costs.

IBM last week for example advised that many companies are missing a money saving trick by not knowing how much power their invisible infrastructure (such as their communication networks) are consuming.