Following Wednesday's spending review, companies will no longer see financial rewards from the CRC Energy Efficiency Scheme. The revenue raised by carbon allowance sales will no longer be recycled back to organisations performing well in the scheme, but will be used to support public finances including environmental schemes. The cost of allowances – currently £12 per tonne of CO2 – will in future be decided through the budget process.
Some have hailed the CRC Energy Efficiency Scheme as a new carbon tax on larger companies and public sector organisations.
Rachel Cooper, energy consultant for global energy management specialist Schneider Electric, believes the best way for businesses to prepare for the scheme is to accurately monitor and manage energy usage.
"The good news is organisations will not need to purchase allowances for 2011-2012 until 2012. This allows organisations to prepare for the start of the scheme by ensuring that they understand their emissions usage and are taking action to monitor and reduce. Furthermore, if they monitor and manage their usage effectively they will know what the financial implications will be assuming that the cost of allowances remains the same for 2012.
"The bad news is they will be paying significantly more than anticipated for the energy that they produce through this tax."
Cooper continued: "The mechanics of the scheme are unknown at present. We do know that organisations will need to report on and pay for their energy usage. Organisations should therefore act now to ensure that their data management is efficient and effective. They should also review energy saving projects in light of this change as this may make projects more attractive to the organisation with improved return on investment. If organisations act quickly, they will reduce their risk in relation to the scheme and benefit from lower fuel bills."
Cooper is also pleased to hear a consultation is being launched next month to simplify and clarify the CRC: "Schneider Electric recently commissioned a report on The Future of Energy Management in the UK and a number of experts in the energy field were growing increasingly disheartened with the government's approach to lowering carbon emissions.
"The reports main author, Vilnis Vesma, has been active in energy management for many years and is unimpressed by governmental pronouncements and interventions. He believes many of the initiatives are "complex, burdensome, and either ineffective or arguably counter productive."
For further information and a detailed copy of the report, please visit www.schneider-electric.co.uk/energy-report.