Thumbs down for CRC.

Industry slams carbon trading scheme

Published:  13 August, 2010

UK: Business groups have branded the Carbon Reduction Commitment (CRC) energy-efficiency scheme 'complex and costly'.

Under the Government's scheme, this new wave of 'green taxes' could penalise businesses that spend more than £500 000 a year on energy.

All public and private sector organisations that used at least one half-hourly electricity meter during 2008 qualify for CRC and will have had to register for the scheme from April this year.

Companies that fail to register their energy use by September 2010 will be hit with fines that could reach £45 000 under the little-known rules.

Payments are expected to average £38 000 a year for medium-sized companies, and could reach £100 000 for larger organisations.

Research has shown that a large proportion of businesses are unaware that they are supposed to take part in CRC, or even that the scheme exists at all.

Registered companies will be ranked in a league in 2011, according to how much energy they have saved or spent, with financial rewards and penalties dependent on their position.

They will also have to buy allowances at a fixed price of £12 a tonne to cover their emissions.

Analysts from PricewaterhouseCoopers believe the scheme is likely to add 6% to affected companies' energy prices in 2011. The worst performing may have to pay an extra 20% on their bills by 2015, while the best may save 6% over the next five years.

The new charges and fines will put pressure on companies at a time when economists are warning of a double dip recession as spending is being reigned in by private companies, the public sector and consumers.

The scheme is claimed to be 'revenue-neutral', according to the Department of Energy & Climate Change. That means all money raised from the main sale is re-distributed back to participants, with the highest-ranking organisations in the league table receiving the greatest financial reward.

That was cold comfort for business leaders. CRC – which was created by Labour but implemented by the coalition government – was criticised for being both complex and bureaucratic.

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