CRC complexity, PV generosity and cuts calamity

On Wednesday, I spoke about the "carbon reduction commitment energy efficiency scheme" at a breakfast briefing at the Institute of Directors. April 1st marked the beginning of the first " foot-printing" year of this scheme which will hit up to 5,000 of the UK's largest organisations.

Organisations have until 30th September of this year to register. If they fail to register they will be hit by a £5,000 fine and then a draconian £500 for each subsequent day they don't register. The first payments of £12 per tonne of carbon will be made next April and the all important league tables of performance will be released in October 2011.

People at the briefing wanted to know if it is a good idea. It certainly has merits. It is the first initiative that has translated national targets into something meaningful for large organisations. It is forcing people to accurately measure their emissions.
The league tables with their associated reputational risk and financial penalties are actively encouraging people to take early adopter actions and it has raised the issue of energy use and carbon up the managerial agenda.

If successful it will also reduce carbon emissions by four million tonnes a year by 2020, the equivalent of taking one million cars off our roads.

However, there are fault-lines which could undermine the credibility of the initiative.

It excludes transport which obviously weakens its impact. Worse, I have a gut feeling that private sector organisations will do better than the public sector and this will result in money being transferred from the public to the private sector. How are we going to feel if money for a cash-constrained health service ends up being re-distributed to a multi-national company because the latter has a better carbon performance?

Finally, it is massively administratively complex and I wonder whether a simple carbon tax wouldn't have a similar impact without creating a ridiculous bureaucracy.
Watch out for a PV Solar Revolution

On 1st April the Government's feed-in-tariff came into operation. The initial indication is that the Government may have got its sums wrong and has been overly generous with its tariff which currently stands at around 41.3p per kilowatt hour. This was based on the assumption that PV (photovoltaic) costs about £5,200 per kilowatt hour. However, due to an over-production of PV and new supplies of silicon, prices are now as low as £2,600 per kilowatt hour.

Several sharp-eyed firms have spotted this opportunity and we are likely to see a huge surge in the number of solar photovoltaic units on UK roofs. These businesses are offering housing associations "PV for free" in return for all the revenue from the Feed-in-Tariffs. One organisation, Eaga, plans to install 1,000 units by the end of the year. Other companies are exploring the option of leasing business premises' roofs or even farmers' fields to install solar technology.

It will be interesting to see whether the Government sticks with the current tariff rate or undertakes an emergency review. A clue may come from Spain and Germany which have recently cut their feed-in-tariff rates due to overdevelopment of PV.