Change to CRC carbon tax will cost big industries dear 27 October 2010

Although companies will no longer see financial rewards from the CRC (Carbon Reduction Commitment) Energy Efficiency Scheme, industry is urging compliance.

Following the Comprehensive Spending Review, the revenue raised by carbon allowance sales will no longer be recycled back to organisations performing well in the scheme, but will instead be used to support public finances, including environmental schemes.

The cost of allowances – currently £12 per tonne of CO2 – will in future be decided through the budget process, effectively making the CRC Scheme a new carbon tax.

Nevertheless, Rachel Cooper, energy consultant with Schneider Electric, says: "The good news is that organisations will not need to purchase allowances for 2011—12 until 2012. This allows organisations to prepare for the start of the scheme by ensuring that they understand their emissions usage and are taking action to monitor and reduce."

But she adds: "The bad news is that they will be paying significantly more than anticipated for the energy that they produce through this tax," she concedes.

Cooper urges plants to review energy saving projects in light of the government's change, as this may make some projects with good return on investment more attractive than others. "If organisations act quickly, they will reduce their risk in relation to the scheme and benefit from lower fuel bills," she explains.
T
hat said, the outlook, in terms of costs, is bleak. As Lucy d'Arville, director of carbon reduction services at Achilles, puts it: "This is a disappointing and costly change of position, which affects 15% of our customers working to achieve CEMARS [certified emissions measurement and reduction scheme] certification.

"For one of our customers, the CRC will now result in a tax over £1 million, as well as remove the revenue recycling bonus for early action of up to £100,000."

Brian Tinham

Related Companies
Achilles Group Ltd
Schneider Electric Ltd

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