Carbon Reduction Commitment ‘could stamp out demand’ for renewables

SmartestEnergy, the UK's largest purchaser and supplier of electricity from the independent generation sector, warns that the government's proposed Carbon Reduction Commitment (CRC) could stamp out demand for renewable energy from the business sector.

The Carbon Reduction Commitment (CRC), due to come into effect in April 2010, will initially target around 5,000 UK businesses which consume over 6,000 MWh of electricity every year.

This is likely to increase to cover around 20,000 companies in the future. Businesses affected by the CRC will be required to install efficiency measures to reduce their emissions.

However, under the current CRC framework, businesses seeking to buy electricity from a dedicated renewable supplier will not be able to use this towards meeting their CRC targets.

The CRC rules state that all electricity purchased by affected businesses will be measured as ‘grid average’ and cannot be counted towards lowering their carbon emissions. The scheme assumes there is no difference between electricity generated at a coal power station and that generated by a wind‐farm or small hydro plant.

While increasing energy efficiency is a vital step in reducing emissions it must not be done in a way that hinders demand for renewable electricity.

The government claims the renewable energy sector plays a pivotal role in its ‘Green New Deal’, simultaneously addressing employment and emissions targets, yet the CRC as it stands will act as a direct disincentive to companies considering purchasing renewable energy.

The independent renewable energy sector should be seen as an engine for economic recovery through job and wealth creation as well as emissions reduction. Demand from the business sector will help the benefits of the industry spread even wider into the community.

Jo Butlin, vice president for retail at SmartestEnergy said: “We believe the Carbon Reduction Commitment is a positive step but must be used to encourage the growth of the renewable industry alongside energy efficiency measures.

“In the UK we have a target to increase the amount of renewable electricity on the grid to 15% by 2020.

“Demand from the business sector is crucial to meeting this target and we are seeing more and more companies asking for an increased share of renewable in their fuel mix.

“Now we need to see a real commitment from government to support the independent generation sector by transforming the CRC to achieve emissions reduction and increased renewable energy development.”

Action inspires action. Stay ahead of the curve with sustainability and energy newsletters from edie