Government simplifies carbon reporting for private equity firms

The government will today detail changes to its Carbon Reduction Commitment (CRC) Energy Efficiency scheme, which should make it easier for private equity firms and large conglomerates to comply with the imminent carbon cap-and-trade scheme.

Under the original legislation, parent companies including private equity firms were required to report on the combined energy use of all their subsidiaries – a condition that prompted complaints from the British Venture Capital Association, which argued that forcing private equity firms and investment funds to report on the energy use of all organisations within a "group" would land them with a disproportionately large administrative burden.

However, under the finalised version of the CRC released today, parent organisations will be allowed to separate out subsidiaries that consume more than 6,000MWh of electricity a year and are large enough to qualify for the CRC in their own right, and have them enter the scheme as a separate entity.

A DECC official said the change to the rules would make it easier for large conglomerates and private equity firms to comply with the CRC's reporting requirements. Although she added that those groups that consisted of organisations that were not large enough to qualify for the CRC on their own would still have to collate energy use data from all their different subsidiaries.

The CRC will come into effect from April 2010 and will require about 5,000 of the UK's largest organisations to report each year on their carbon emissions and deliver consistent improvements in energy efficiency or risk both financial penalties and a low rating in an annual government league table.