Government Carbon Reduction Commitment 'has loopholes'

Morse, the IT services company, has called for the government to amend its Carbon Reduction Commitment after identifying “loopholes” that it said could undermine the commitment’s principles.

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Morse, the IT services company, has called for the government to amend its Carbon Reduction Commitment after identifying “loopholes” that it said could undermine the commitment’s principles.

The company claims that the CRC encourages offshoring by not taking into account the power businesses use outside of the UK.

The CRC Energy Efficiency Scheme, developed by the Department of Energy and Climate Change (DECC), aims to encourage organisations to reduce their power consumption.

Due to begin in April, businesses with a half-hourly electricity usage of more than than 6,000 megawatt-hours will have to buy ‘allowances’ based on the level of usage.

However, Morse claims that instead of adopting new and greener technologies, businesses may choose to offshore their more energy-intensive operations, such as data centres, to avoid the charges under the CRC.

Morse argues that this would cost the UK money in the form of lost business, and more carbon emissions may be created with the setting up of offshore facilities.

"Losing data centres from the UK is certainly a problem and we are aware of several organisations that have done just this," said Brian Murray, technology strategist at Morse.

However, the DECC said that the costs of offshoring would be far greater than the penalties under the CRC.

"Energy costs in CRC Sectors are typically only one percent of total costs, and CRC is estimated to add only 10 percent to these even for organisations at the bottom of the league table," said a spokesperson for the DECC.

"Government does not therefore believe that CRC will be a sufficiently large consideration to drive such a trend even for poor performers."

The spokesperson added that as further incentive, firms rated highly in energy effiency terms in the government’s performance league table, will be eligible to receive up to 10 percent back from their allowance payment.

Morse also raised the issue that the CRC does not fully take into account where energy comes from, claiming that a business using renewable sources is treated the same as one using non-renewable sources.

The DECC argued: "The CRC Scheme is intended to be an energy efficiency scheme. Government has developed other policies aimed at incentivising renewables, which the CRC Scheme is intended to sit alongside."

Other green policies include the Climate Change Agreements. For example, the CRC states that as a general rule, any emissions already covered by CCAs do not need to be included in the CRC calculations.

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