Apollo Energy makes the case for scrapping the Carbon Reduction Commitment and ending the "train-wreck" it has become
The original Carbon Reduction Commitment, later renamed as the CRC Energy Efficiency Scheme, was meant to be a prestigious carbon emissions trading scheme with reputational and financial benefits for those who made the effort to do well within the scheme. It looked promising and presented another excellent incentive for large corporate and public organisations to seriously consider a new wave of energy efficiency investments and improvements.
Consultants offered their carbon footprinting expertise to the affected participants of the scheme, software companies created bespoke CRC management packages, some participants even took on full time employees to manage their CRC obligations - so great was the amount of data collation and record keeping required to keep a handle on their emissions and CRC allowance purchases.
However, following a series of budgetary and simplification reviews the CRC Energy Efficiency Scheme has now essentially become an overly complicated carbon tax with reduced financial incentives for those participants who do well. The annual and footprint reporting elements of the scheme remain unnecessarily complex and the reputational league table which was supposed to "name and shame" quite frankly fell flat on its face. Consequently those at board level who were supposed to be inspired to enter the green debate have now grown despondent with the whole mess.
Having watched and been involved in the scheme since the beginning; registering and reporting of behalf of numerous participants, we at Apollo Energy have begun to wonder what reason there is to keep the scheme going?
We agree that some large scale policy shift to help tackle the rising carbon emissions from large companies and public sector bodies in the UK is desperately needed. We agree that a legislative measure is urgently required to put energy efficiency and "green" issues firmly on the agenda at board level. We agree that a financial cost should be placed on carbon emissions in order to help drive future investment in energy efficiency technologies like voltage optimisation.
We also believe, however, that the answer no longer lies in the train wreck of the CRC Energy Efficiency Scheme. Instead we would propose that a two pronged alternative should replace CRC. First introduce a Carbon Emissions Levy (CEL) similar to the Climate Change Levy (CCL) on the utility bills of large energy users. Secondly make greenhouse gas (GHG) reporting mandatory for large energy users.
The reasons why this combined approach would be far superior to the CRC Energy Efficiency scheme are numerous, but what Apollo Energy believes to be the key benefits are listed below:
- The administrative burden of a CEL would be minimal; those impacted would simply have to pay the additional amounts through their utility bills and energy suppliers already have the functional capability within their systems because they generate the CCL payments.
- CEL payments could be calculated to be equivalent to the current £12 per tonne of CO2 in the CRC scheme - 0.649p/kWh of electricity for example (using the current 0.541kgCO2/kWh CRC emission factor) meaning revenue generated and expenditure incurred would be identical leaving budgets unaffected.
- Mandatory GHG reporting has been on the Government's agenda for more than four years already - since the Climate Change Act was published in 2008 - there is significant evidence that GHG reporting delivers cost savings and environmental benefits for businesses. In spite of increasing pressure from environment professionals, through organisations such as IEMA, government recently announced they will be further delaying their decision.
- Large organisations already produce annual reports for the benefit of their customers, suppliers, employees and shareholders. The addition of a chapter detailing their GHG emissions and carbon footprint would not only serve to better inform their board level decision makers, but would also help inform their suppliers, customers and employees.
In essence, the benefits the original Carbon Reduction Commitment was supposed to bring to the UK could be covered by this combined approach with minimal additional administrative burden placed on all concerned. It's a win for Government, a win for the environment and a win for UK businesses.
Apollo Energy is a utility management consultancy whose directors have combined experience of more than 50 years in the utility industry. We offer a "one stop shop" for all our clients' utility issues including electricity, gas, water and the CRC Energy Efficiency Scheme. Please get in touch to find out more about what we can do for your business.
This sponsored content was provided by Apollo Energy.