21/10/10

By Claire West

It is imperative that the public and private sector remain focused on long-term carbon measurement and reduction despite the unexpected announcement by the Department of Energy and Climate Change yesterday that revenue raised from the CRC Energy Efficiency Scheme will no longer be recycled to participants.

The decision does not diminish the need to reduce carbon emissions and there continue to be three key benefits to organisations from a structured and credible approach to carbon management. First, it serves to identify key emissions generated which form the basis for reduction initiatives to remove waste and improve operational efficiencies. Second, credible carbon measurement and reduction differentiates organisations from their competitors as customers and investors are increasingly looking for well-managed and responsible organisations to do business with. Finally, it drives a lower expenditure on carbon allowances for organisations affected by the CRC, as well as helping to ensure preparation for future legislation such as mandatory carbon reporting currently under discussion.

Lucy d’Arville, Director of Carbon Reduction Services at Achilles, refers to the example Achilles’ CEMARS registered customers are setting, saying “The key driver for these leading organisations has been to participate in a forward-looking programme that focuses on accurate carbon data management in the first year and then on achieving reductions in subsequent years. In addition these organisations benefit from achieving ISO14064-1 certification that stands up to scrutiny and is recognised internationally.”

Nonetheless, there is no escaping that the CRC regulation is set to become more costly for public and private sector organisations with the decision to remove the recycling of carbon allowance payments. Originally, the scheme required organisations to buy allowances in April 2011 and then the money to be returned with a bonus or penalty in October 2011. Now while there will be no requirement to buy allowances until April 2012, all money received from the purchase of allowances will be kept by the Government.

Furthermore, a fifth of participants who had or were on track to achieve the Early Action Metric will no longer receive benefits for early reductions. The implication is that the CRC Energy Efficiency Scheme has become little more than a green tax, adding at least five percent per annum to energy costs.

Lucy d’Arville, said “This is a disappointing and costly change of position which affects fifteen percent of our customers working to achieve CEMARS certification. For one of our customers, the CRC will now result in a tax over £1M as well as remove the revenue recycling bonus for early action of up to £100,000.”