DECC dismisses fears that CRC will cost the taxpayer

Officials at the Department of Energy and Climate Change (DECC) have said there is no reason believe that the imminent Carbon Reduction Commitment (CRC) energy efficiency scheme will result in a net transfer of taxpayers' money from the public to the private sector.

Under the CRC, which is due to come into effect from April next year and will impact around 5,000 organisations, those participants that deliver the biggest improvements in energy efficiency will receive bonus payments while those that fail to curb their energy use will be forced to pay penalties.

A report this summer from the Environmental Audit Committee of MPs warned that the structure of the scheme meant there was a risk that the poor-performing hospitals, schools and councils would effectively be forced to transfer funds to organisations in the private sector that prove more effective at reducing their energy use.

Citing figures showing that a number of government departments had missed emission reduction targets, committee chairman Tim Yeo MP warned that "unless the government gets its house in order, taxpayers could end up paying a heavy price to buy carbon credits from the private sector".

However, speaking ahead of the release today of the final version of the CRC, officials at DECC said there was no evidence the scheme would lead to a net transfer of taxpayer funds to the private sector.

"We do not believe there is any reason to anticipate the public sector will be worse than the private sector at improving energy efficiency," she said. "In fact, the public sector should be leading the way."

DECC maintained that despite the risk that some public sector bodies could be penalised, it remained necessary to incorporate financial penalties in the scheme in order to provide organisations with the clear incentive they need to invest in energy saving measures.

"Too many organisations talk about energy efficiency but are not delivering, " said the official. "That is costing them money and is damaging to the climate, which is why we are introducing the scheme."

She added that the government expected the scheme to cover 10 per cent of all UK emissions and deliver four million tonnes of carbon savings a year by 2020, saving participants £1bn a year by the same date.