Businesses unaware of looming UK carbon regulation

The government has today laid out the details of its domestic emissions trading scheme that will affect some 20,000 public and private sector organisations who spend more than £1m a year on electricity.

But the CBI says many businesses will be unaware and unprepared for the scheme – known as the Carbon Reduction Commitment (CRC) – and called on the government to do more to prepare industry for the "shock" of green regulation.

Neil Bentley, CBI director of business environment said the government needs to do much more to raise awareness within the business community.

"Many companies remain unaware and unprepared for what the Government's Carbon Reduction Commitment will involve, and are in for a real shock when these changes become law," he said.

The scheme has drawn much criticism from businesses who say that it is unfair because it judges electricity drawn from renewables to produce the same amount of carbon as emissions drawn from fossil fuels.

Energy from renewable sources for which carbon credits have already been claimed will be considered to have the same carbon footprint as the average national grid mix.

Many businesses such as BT are outraged about the proposals and say it threatens their renewables plans.

They are angry because although they have made a significant investment in clean energy to date, the CRC – which begins from April 2010 – will not reflect these investments in its league tables.

The league tables are designed to show consumers which businesses have done the most to reduce their carbon footprint and reward them financially.

Companies must purchase allowances under the scheme, depending on how much they intend to emit. This money will be recycled into the CRC after three years. Those at the top of the league will receive a 10 per cent bonus on the sum they paid, while those at the bottom will forfeit 10 per cent of their fee.

But because those who are already getting their energy from green sources won't be rewarded many early movers see the league tables as unfair.

The Carbon Trust has partially attempted to remedy this problem by setting up a Carbon Standard for those who have made emissions reductions in the past three years. Those who have attained the standard will see their position improved within the CRC league tables.

But some businesses, such as BSkyB, are unwilling to sign up to the Standard because it measures emissions in the same way as the CRC and thus endorses methods they are unhappy with.

The government is still consulting on the CRC, but is reportedly unlikely to change the evaluation system.

The details of the scheme – which targets companies that produce about 10 per cent of the UK's total emissions – have been laid out on the Defra web site.

Energy and Climate Change Minister, Joan Ruddock, said the measures will save more than four million tons of CO2 a year.

"By taking measures to improve energy efficiency, businesses can slash their energy costs," she said. "The Carbon Reduction Commitment could help business save a total of £1bn by 2020, whilst also helping them play their part in the fight against climate change."