UPDATED: Davey attempts to save CRC with 12-week consultation

Energy secretary Ed Davey has claimed that new proposals to simplify the Carbon Reduction Commitment (CRC) and cut red tape will save businesses millions - as he tries to save the unpopular scheme.

Launching a 12-week consultation today (March 27), against a backdrop of business despondency, Mr Davey said “we have listened to businesses’ concerns about the CRC and have set out proposals to radically cut down on ‘red tape’ to save businesses money”.

This follows an announcement made in last week’s Budget announcement that the CRC would be scrapped and replaced with a less cumbersome green tax system – if it government failed to simplify it within six months.

Under the changes, DECC says that businesses will see their administrative costs cut by almost two-thirds, resulting in savings of about £330m up to 2030.

However, many large businesses say they would rather see the complex mandatory trading scheme scrapped altogether and replaced with a new system.

Global environmental consultancy WSP Environment & Energy director David Symons, says the Government needs to stop “tinkering” with CRC and instead focus on helping companies reduce their energy bills.

He said: “Global energy costs are likely to continue climbing and the more that the Government can do to help businesses become more efficient, the more it will help make it become more resilient.

“The Government would do better to really make sure that companies use CRC as an opportunity to cut costs and to fund new measures such as Green Deal.”

It also follows disappointment from businesses that no decision has been reached on whether the Government intends to introduce mandatory greenhouse gas (GHG) emissions reporting.

Mr Davey said: “The benefits of the scheme are clear though. It will deliver substantial carbon savings helping us to meet carbon budgets, and it encourages businesses to take action to improve their energy efficiency”., the consultation includes proposals to reduce the amount of reporting required by businesses and the length of time participants will need to keep records.

Key proposals for the simplification package include: a shortening of the CRC qualification process and a reduction in the amount of reporting required by businesses.

In addition, the largely unpopular PLT could be axed – instead placing metrics in government guidance. Plans were also mooted for the adoption of new emissions factors for the CRC which align it with greenhouse gas reporting processes – despite the fact no decision was reached on this today.

The consultation is set to run for 12 weeks from today (March 27) and businesses are invited to comment on the proposals. Following on from this legislation for CRC will be amended by April 2013.

Carys Matthews

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