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November 19, 2010

Could the CRC be next for the Coalition chopper? Er – no

The less than popular CRC may not be long for this world. That at least is how some commentators are viewing the fact that a formal consultation has been launched to gain initial views on how to simplify the thing. Would we notice if it went?


Is the CRC next to go?

Certainly the damn thing has caused as much Fear, Uncertainty and Doubt as anyone could wish for. The Carbon Reduction Commitment, or as we now have to call it, the Carbon Reduction Commitment Energy Efficiency Scheme, was formally launched in April as one of the last acts of the outgoing Labour government, has for some all the hallmarks of Blair-Brown over-engineering, Nanny Statism, bureaucratisation, etc. etc.

It’s as we will all know by now UK HMG’s mandatory climate change and energy saving scheme, aimed at big organisational users of power, who have to produce detailed databases of their consumption, pay for being big users, get encouraged to spend less via a league table, and so on. But in last month’s Comprehensive Spending Review, the Coalition, responding to a combination of raw indifference on the behalf of organisations and allegations of too much red tape inhibiting take up, said that it will be "simplified" so as to "reduce the burden on businesses".

In practical terms, that means we all have an extra year to comply, with the first allowance sales for 2011/12 emissions now taking place in 2012 not next year. Revenue from the sale of these allowances are predicted by Whitehall to reach a £1bn a year by 2014/15, will be used to support the public finances, including spending on the environment, rather than recycled to participants.

(An allowance, in case you didn’t read all the bumf, is a market price for carbon, so within the scheme your company’s energy usage is converted (dependant on source) into tonnes of carbon; the more energy an organisation uses, the more credits they will have to buy to account for this. It’s basically the ‘fine’ you pay for running a big power bill.)

Anyway, as we said, the government has just published what it says it thinks needs to be done to get the thing off the ground – mainly "extending the introductory phase and postponing the first allowance sale of phase two". But some people think that is code for tearing it up and starting again.

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Thus Daniel Lowe, founder and managing director of one of data centre supplier UKSolutions, says, "The CRC has caused much confusion amongst UK businesses, and latterly that confusion has moved to anger towards the government’s decision to retain revenue generated from the sale of allowances – seen as a bottom line tax on growth. To many UK businesses, the CRC appears to be yet another tax, with no discernible benefit to the environment."

He’s hardly alone in such views, let’s be honest. But he’s wrong if he – and you – think it’s going away.

The Coalition has to be seen as doing something green and this is as good a way of doing any – and it’s going to use the dosh to pay off the National Overdraft. Critics of CRC may or may not have noticed the CSR said that the government will use the tax this way, not put it back in to the scheme. Who’s going to say no to that in Whitehall right now?

Yes, Energy and Climate Change Secretary Chris Huhne told the CBI conference this week that the scheme had got off to a bad start, admitting, "Given a blank slate, we would do things a little differently. But for now, you have my assurance that we will engage with all of our stakeholders to make the scheme work better – for you, and for us."

But he didn’t say he’ll scrap it. He won’t. So wake up and smell the coffee and learn how to make the CRC work.

Next problem, please.

If you want to see more about the consultation process, please go here. Be mindful of the fact the deadline for any input you might like to make is December 17th.

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