Report suggests need for certainty on business carbon reduction legislation
- 17 May 2012, 16:00
- Ros Donald
Changes made by the UK Treasury to a scheme to reduce
businesses' emissions and encourage carbon recording amount to a
"stealth tax" which is reducing organisations' motivation to cut
carbon, according to new research.
The report also raises concerns that these measures could be
ditched altogether, which the authors say would have serious
negative implications for the government's perceived commitment to
cutting carbon and potentially putting a price on carbon in the
future.
Environmental behaviour change organisation
Global Action Plan presented its report to
the UK Parliament's Committee on Energy and Climate Change (ECC)
today. It says the
Carbon Reduction Commitment (CRC) -
originally designed to financially reward the large business and
local government bodies which reduced their emissions most
effectively, and penalise those who did not - has "effectively been
turned into a tax".
The CRC is a scheme under which large businesses (but not
the heaviest polluters) record their carbon emissions. A yearly
league table announces the best and worst performers, and those who
fail to meet targets must pay a levy. The idea was that this money
would be repaid to the best performers - but according to Global
Action Plan, the competitive element of the CRC "was dropped when
the Treasury announced that it was keeping all the income generated
by the CRC rather than re-distributing it" - a change that was
introduced in September 2010 as part of the newly-elected
government's
comprehensive spending review.
The researchers interviewed over 100 businesses who take
part in the scheme, of which the majority said the move away from
redistribution has "had a detrimental impact on encouraging them to
save carbon," according to Global Action Plan's
release.
The UK's Department for Energy and Climate Change (DECC) has
been
reviewing the CRC since March this year
after the Treasury said the mechanism either had to be
simplified or replaced with a
tax.
According to the businesses interviewed for the
report, the biggest problem with the CRC is the administrative
burden it places on companies - 69 per cent of respondents to the
survey said the current system was too cumbersome. Some said the
amount spent on complying actually diverted money away from other
sustainability projects.
But Trewin Restorick, Global Action Plan's CEO,
told us that with the proposed review coming only a year into the
policy's life has meant businesses could take future initiatives to
encourage carbon cutting less seriously:
"Our research suggests it's too early to
be reviewing the CRC's efficiency - we project the upfront costs of
putting in new systems to cope with the measures will decrease
dramatically in the near future. It's bound to be more expensive in
the first year.
"Businesses may not agree with the policy but they want
consistency. If the government keeps reviewing policies just after
businesses have put in the necessary systems and investment it'll
be impossible for them to create any sort of long-term strategy in
the future."
Restorick adds that it will become increasingly
difficult for corporate social responsibility and facilities teams
to persuade skeptical colleagues to get behind green measures if
there is no certainty about the direction of government policy.
This was visible in the
exodus of investment from the renewables sector after the
uncertainty about solar feed-in tariffs last year, he says.
Global Action Plan says that despite the
Treasury changes to the scheme, the CRC has been successful in
getting businesses to cut their carbon emissions. 40 per cent of
those interviewed had never reported their emissions before, with
67 per cent of the respondents saying the CRC had improved their
energy measurements.
The organisation suggests in the report that an
improved CRC should be the basis for compulsory reporting on carbon
emissions.
Speaking to the ECC committee today,
Restorick also advocated reducing the administrative burden of the
current scheme.
Later comments in the hearing highlighted
continuing confusion about climate change legislation amongst
politicians as well as the public. One MP asked how the burden of
CRC taxation might affect small businesses - which, as it was
pointed out, aren't included in the scheme. Lack of clarity on
green measures has also been clear in coverage and comments about
the Green Deal - the government's scheme to help businesses and
homes improve building energy efficiency.
Business Green's James Murray warned the
committee that if the CRC were replaced without clear indicators of
the level of emissions cuts expected now and in the future, the
door would be open to lobbying from business against pricing CO2 -
effectively turning the clock back to the introduction of the CRC
five years ago. For more information on Business Green's research
on the CRC, read its white
paper here.