Co-op hits out at Spending Review changes to carbon reduction scheme

The Co-operative Group has expressed disappointment over the changes to the Carbon Reduction Commitment (CRC) energy efficiency scheme, which it said has effectively turned into a new business tax.


The Co-operative Group has expressed disappointment over the changes to the Carbon Reduction Commitment (CRC) energy efficiency scheme, which it said has effectively turned into a new business tax.

Under the original scheme, participating organisations have to buy allowances based on their level of electricity usage, with all revenue raised to be recycled to businesses. Those who performed the best in increasing energy efficiency would have received a higher share of this money.

However, in last week's Spending Review, the government said it would be taking these revenues “to support the public finances”. In addition, the first allowance sales for 2011-12 emissions will now take place in 2012 rather than 2011.

“Revenues from allowance sales totalling £1 billion a year by 2014-15 will be used to support the public finances, including spending on the environment, rather than recycled to participants. Further decisions on allowance sales are a matter for the Budget process,” the government said.

The Co-operative Group said it felt it was being penalised as it had planned to reinvest the revenue into the business.

“Any incentives have now been removed, which makes this a blunt tax, with little environmental benefits given that most large businesses are already investing heavily in efficiencies. It is unexpected expenditure that detracts from putting more money into reducing our emissions and requires the business to re-write its long-term plans and find millions of pounds before 2012,” the company said.

Trewin Restorick, founder and CEO of green charity Global Action Plan, who had previously said in his blog that he believed a carbon tax would be a simpler solution the complex carbon trading scheme, was sceptical about the government’s intentions.

“It is a very bureaucratic, selective and illogical way to impose such a tax and gives every indication of an ill-thought through, last minute decision to bring in some extra dosh. Murmurs of discontent are already spreading through the corporate world and these will undoubtedly grow in the coming weeks,” he wrote on his blog.

Nonetheless, some organisations have welcomed the government’s efforts to make the scheme simpler.

“The old CRC was complicated, bureaucratic and unfair. It was a poorly-designed scheme that needed an overhaul, and making it simpler is a good move,” the charity Friends of the Earth said.

But it added: “Now the government has to make the CRC fairer as well. It was never right to force councils, hospitals and schools to compete with supermarkets and banks for carbon credits. Money raised from the public sector through the new CRC should stay in the public sector to help fund energy saving programmes. For example, funds should be used to continue loans to councils, schools and hospitals to green their buildings - and to help councils fund transformative carbon reduction programmes.”

Martin McCann, head of sustainability for SAP UK and Ireland, also believes that the changes address the concerns raised by organisations about the scheme being too complicated.

“No one was expecting that [the changes], however you can see logic in the change, both from an economic point of view and from feedback during registration, where there were concerns about how the cap and trade [emissions trading] system would work,” said McCann.

He also believed that the changes will actually encourage organisations to concentrate on becoming more energy efficient.

“The overall impact is there is a much greater focus on carbon abatement,” said McCann.

As of 18 October, 2,779 organisations had registered as participants, 1,190 as non-corporate information declarers, and 11,303 as corporate information declarers under the CRC scheme.

"Recommended For You"

New carbon reduction laws begin today - are you ready? Carbon Reduction Commitment: only 13% of companies have registered