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Posts Tagged ‘CRC Legislation’
What effect will the Government’s recently-announced Comprehensive Spending Review have on the HVAC sector? Industry experts gave H&V News readers their response.
David Frise, HVCA head of sustainability says that incentives for renewables and the radical transformation of Carbon Reduction Commitment energy efficiency scheme (CRC) are “just what many in the industry have been asking for”. The CRC is now, effectively, the carbon tax many have said was necessary to make energy a boardroom issue.
“This is one of those ‘be careful what you wish for’ moments,” said Mr Frise. “People have been pleading with the Government to simplify the CRC – well, it is certainly simpler now. A tax on consumption will push up the price of energy so creating the ultimate incentive to save it.”
He urged the industry to focus on the “big prize”, which is the boost these measures should give to the building refurbishment market. Although the CRC only effects 5,000 companies, information is being gleaned from as many as 20,000 organisations, creating an opportunity to expand the tax to these businesses at a later date. This could lead, he believes, to a huge potential market for energy efficiency upgrades.
The Department of Energy and Climate Change (DECC) has confirmed the £860m of funding previously set aside for the Renewable Heat Incentive (RHI) and Mr Frise says this will “shift renewable heat from a fringe industry firmly into the mainstream”.
Announced as part of the government’s Comprehensive Spending Review, the decision by the Treasury to retain the tax revenue collected under the Carbon Reduction Commitment scheme has been met with outcry.
Launched by the Department of Energy and Climate Change in April, the Carbon Reduction Commitment Energy Efficiency Scheme (CRCEES) is a mandatory energy efficiency scheme aimed at cutting the emissions of large public and private sector organisations that use more than 6,000 Megawatt hours (MWh) of electricity per year.
Qualifying organisations were required to register as participants by 20 September this year, risking fines of up to £45,000 for late registration.
The new tax may be an incentive to cut carbon, but it raises questions about the equity of taxing medium-size polluters
George Osborne’s spending review this week dealt a shocking blow to participants in a government carbon-cutting scheme for companies and organisations with medium-size energy use, known as the CRC energy efficiency scheme, by turning the scheme into a tax. These 3,000 or so organisations, including councils and NHS trusts reeling from other cuts, find themselves facing a tax on the carbon they emit, while many that invested in energy-efficiency measures encouraged by the legislation are penalised. And yet the biggest polluters will evade the taxman.
The new tax may be considered good news for the environment because it provides a simplified incentive to cut carbon, but it does raise questions about the equity of taxing small- to medium-size polluters. And if the government believes taxing emissions is the most efficient way of achieving carbon reductions – and not just lining the Treasury’s pockets – there are other questions that must be answered.
The CRC was introduced with the promise that it would be revenue-neutral, in that all CRC permit costs would be recycled to participants. So it’s a complete about-face by the government, one which damages its credibility and is likely to breed distrust of future climate change policy interventions.
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CRC News is the online voice for the CRC Scheme (Carbon Reduction Commitment) and Energy Efficiency in Buildings. The site covers Measurement and Monitoring, CRC Legislation, CRC Management, CRC news, Energy Efficiency, Energy Efficiency Consultants News, Energy Efficient Products, Energy Efficient Services, Events. For more information, subscribe to the CRC Compliance RSS feed or subscribe to CRC News by Email. You can also follow us on Twitter@CRC_News_
powerPerfector has been granted a further European trademark for its unique Voltage Power Optimisation technology.
powerPerfector gives energy, cost and carbon savings by efficiently optimising a site’s supply voltage. By optimising the voltage, electrical equipment runs more efficiently and consumes less energy.
‘VPO’ is now a protected term that can only be used to describe powerPerfector, it comes seven months after the company was awarded the trademark for ‘VPO Voltage Power Optimisation®’.
powerPerfector CEO Angus Robertson said: “There are some very good reasons why our technology has been deemed distinct from other companies within the supply management sector and the trademark is recognition of our unique status.
Business groups lined up today to condemn a £1bn stealth tax on companies that have invested in a government scheme to drive down CO2 emissions.
The CBI and manufacturers’ group the EEF both attacked the announcement, buried in the comprehensive spending review, that the Treasury would not pay back money to firms obliged to take part in the Carbon Reduction Commitment (CRC) energy efficiency scheme.
Chris Huhne, energy and climate secretary. Photograph: Christopher Thomond
“Revenues… totalling £1bn a year by 2014-15 will be used to support the public finances, including spending on the environment, rather than recycled to participants,” the spending review said.
Under the scheme, which was introduced earlier this year, companies made upfront payments to the Treasury on the understanding that they would get the money back by reducing emissions.
Steve Radley, EEF director of policy, said: “If the private sector is going to play a greater role in increasing investment and growth it needs clarity. By changing the rules six months after the game has started and landing business with an unsignalled £1bn tax rise, the government has sent an unwelcome signal.”
Richard Lambert, director general of the CBI, said: “This is not going to build trust. I have some cross members out there.”
Lambert said that the CBI had been told by the Department of Energy and Climate Change that the £1bn levy on business was the price demanded by the Treasury for the go-ahead for the carbon capture and storage demonstration facility – which has also been awarded £1bn.
Chris Huhne, the Lib Dem climate secretary, denied the change was a “stealth tax”, saying the old system was too complicated to work as an incentive for carbon reductions, and the money transferred to the Treasury could become part of the coalition’s promised increase in “green taxes” as a proportion of the overall tax take.”There was an awful lot of criticism from businesses of the amount of administration and compliance costs the CRC was imposing, with very litte effect on carbon reductions,” Huhne told the Guardian. One of the problems was that businesses did not know if they would qualify for repayments, so it was not acting as a motivation for investing in carbon reduction, he said.
Businesses, retailers and industry figures have expressed dismay at a decision “sneaked in” to yesterday’s Spending Review which will see the government keep the revenue raised from the Carbon Reduction Commitment Energy Efficiency Scheme (CRC) rather than returning it to participants.
While Chancellor George Osborne announced a series of positive renewables packages as part of the government’s decision to “ruthlessly prioritise” investment in green energy infrastructure, the change to the CRC was hidden in the Spending Review document.
The CRC Energy Efficiency scheme, launched in April is a mandatory scheme requiring large public and private sector organisations to cut their carbon emissions.
This works by charging them for allowances for every tonne of CO2 they emit once they exceed a certain amount of electricity usage. This money was then set to be redistributed among all participants, with those who have increased efficiency receiving the most money.
Richard Lambert, CBI director general, claims businesses signed up to the CRC scheme will be very let down by the government's changes
However, the government has now announced that revenue raised from the scheme will be used to support the public finances (including spending on the environment), rather than returned to participants.
This decision has shocked the industry, with trade bodies claiming it is an environmental “stealth tax.”
British Retail Consortium (BRC) director general, Stephen Robertson, said: “We are surprised and dismayed that the £1 billion per year participating businesses will put in to the Carbon Reduction Commitment scheme is no longer to be recycled to participants but is instead to be pocketed by the Exchequer.
“This is a stealth tax on business which not only goes back on the commitments given in developing the scheme but removes a major source of incentives to reduce carbon emissions.”
“Appalling”
He added: “A tax of this size surely merits a mention in the Chancellor’s speech. It is appalling that the government is sneaking this in, introducing a new burden on businesses that are trying to create new jobs to offset the public sector cutbacks and growing the economy to generate the tax base to pay down the debt.”
The British Retail Consortium (BRC) said yesterday that it was “surprised and dismayed” to find the Government has hidden a £1bn a year environmental stealth tax in the detail of the Comprehensive Spending Review.
Following George Osborne’s speech, it has emerged that the money participating businesses put into the Carbon Reduction Commitment (CRC) energy efficiency scheme will not now be recycled to businesses with good environmental performances. Instead it will go straight to the Government.
Because they use a lot of property, retailers like Marks & Spencer, Tesco, Argos and Boots will be particularly badly hit along with hospitals, universities and local authorities. The CRC was set up at as a revenue-neutral scheme, intended to create incentives for companies to improve their environmental performances. It is currently operating as a data-gathering only exercise but companies are due to put real money into the scheme from April 2011. They were expecting to get money back from October 2011.