CBI proposes carbon reporting improvements
Energy efficiency can improve a company’s environmental performance. The CBI wants the current scheme for large businesses to be replaced by a more flexible system.
A key policy for encouraging energy efficiency is effectively a tax which fails to bring about environmental benefits, according to the CBI. The organisation has set out its own plans for improving energy efficiency in a submission to the UK Government.
The Carbon Reduction Commitment (CRC) is a mandatory scheme which was set up in 2010 and applies to large public and private sector organisations. Participants include supermarket chains, banks, local authorities and government departments. Policy is set by the Department of Energy and Climate Change at Westminster, with Minister of State Greg Barker having responsibility. The Executive’s views are put forward by the Department of the Environment.
Lack of awareness, cost and the “hassle factor” are three major barriers which hold up progress on energy efficiency in businesses. The CBI therefore says that effective government policy is needed to maximise the benefits.
The CRC, in its view, is “not encouraging energy efficiency and should be scrapped.” CBI members see it as an over-complicated tax which had become “purely a revenue-raising instrument.” Internal surveys suggest that 80-90 per cent of businesses would have gone ahead with energy efficiency measures anyway, regardless of the CRC.
The reporting element of the scheme did not allow for like-for-like comparisons because no allowances are made for adding sites and creating jobs. If a company expands, its energy use will obviously go up and companies from different sectors are compared, with no explanation for the differing usages in those sectors.
Removing revenue recycling – payments to companies from carbon allowances – leaves energy efficiency proposals either unfunded or restricted to using up other CSR funds set aside for environmental and social purposes.
A time-limited tax, collecting the same amount of revenue from CRC-eligible businesses, is suggested as an alternative. This would use a simplified formula and include a sunset clause to abolish it three to five years after its introduction.
Energy efficiency itself, though, still matters. The CBI is lobbying for a strategic assessment of the barriers and potential policy solutions which is “designed from the point of view of driving energy efficiency rather than raising revenue.”
The removal of the CRC would take policy back to the drawing board and allow new thinking. Mandatory carbon reporting under the Climate Change Act is a possible first step and the contextual information provided would assure businesses that their efforts are being taken seriously.
The Government has made a commitment to simplify the scheme and published several proposals in November. These aim to incentivise the uptake of renewable electricity from on-site plants and also introduce exempt energy supplied to metallurgical and mineralogical processes, which would include fracking. A consultation closed on 17 December and a further announcement is expected later this year.
