CRC delay makes investment decisions more difficult – CBRE
CB Richard Ellis has reacted with dismay to the news that the government is to delay some elements of the Carbon Reduction Commitment scheme (CRC), after it announced a further period of consultation. The firm says that this will make it harder for UK-based businesses to make decisions about investments in energy efficiency and carbon reduction.
Darren Berman, director of Energy & Sustainability at CBRE, said the changes announced on 17 November would reduce the administrative burden for smaller businesses and would give the government more time to review the legislation announced in October, but added that the government “should be conscious of the heart of the issue here, which is to almost guarantee carbon reductions – this legislation is not just another revenue-generating initiative for government.”
He said these most recent changes to the scheme risked discouraging businesses from investing in carbon reduction, pointing out that the CRC is still a complex undertaking for larger participants, while the need to invest in energy efficiency remains urgent.
Phase 1 of the scheme started in April 2010. Phase 2 was due to start in 2013 but this has now been delayed to 2014. CBRE has pointed out that it was originally intended to introduce a cap on the number of allowances available, from Phase 2 onwards, with the cost set by auction. “The cost of carbon will now be fixed until April 2014, as the government consults on the next phase of the scheme, and in particular on how, and whether, the auction will be implemented. It should be noted however that the consultation paper leaves open the option for the government to increase the fixed price in future Budgets,” the firm noted.
Last month the government said it would abolish the recycling of the sale of carbon allowances back to participants, in a move it said would provide greater price transparency and reduced complexity in forecasting the true cost of carbon. Commentators said the move meant the cost of complying with the scheme had risen sharply for the average participant.
Chris Huhne, Secretary of State for Energy & Climate Change, told the CBI Conference on Wednesday this week that while the CRC Energy Efficiency Scheme was sound in principle, its implementation had fallen short of the ideal, and the government had therefore made a commitment to simplify it. He said the decision not to proceed with revenue recycling had been difficult and had been made “against a background of unprecedented pressure on the public finances”.
He also announced that the government was proposing to exempt more than 12,000 information declarers from the scheme, as it now had enough feedback from the first stage of the CRC to remove obligations on information declarers without compromising the scheme’s environmental aims.
“We need to stop thinking about carbon as a bolt-on, and more as an integral part of a company’s profile,” Huhne declared.
