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The Low Carbon Economy Ltd

30 Mar 2011 12:03:09

CBI brands Carbon Reduction Commitment "untenable"

CBI brands Carbon Reduction Commitment
The Carbon Reduction Commitment (CRC) is "untenable" in its current form and will not have the desired effect of encouraging organisations to cut their CO2 emissions, according to a leading business group.

Releasing its Back to the Answer: Making the CRC Work policy brief, the Confederation of British Industry (CBI) said the government "undermined" its own initiative with changes introduced in the Comprehensive Spending Review.

Rhian Kelly, CBI director for business environment, said: "We now have a carbon reduction scheme that doesn't encourage companies to reduce carbon emissions, and actually adds to the cost of doing business."

She also claimed that making the changes two weeks after organisations finished signing up meant the coalition effectively "pulled the rug out" from under them. 

Two possible options were said to be available for the government to make the CRC more effective, according to the CBI.

Either the initiative remains in its current form and businesses could purchase allowances at a fixed price, or the scheme is scrapped and the government moves to a full cap and trade system.

The recent Budget confirmed that for the year 2011-12 allowances under the CRC will be priced at £12 per tonne of CO2ADNFCR-1235-ID-800480820-ADNFCR

Discussion Thread  

01 Apr 2011

I can appreciate some of the reasons the CBI have raised this as untenable as a scheme and have no doubt that it is regarded by many organisations as an unwelcome layer of compliance to deal with. Precisely why the CBI beleive the CRC is untenable, though, is not clear, nor is the evidence available to support Rhian Kelly's quote.....it's simply too early.

I hold the view that the CRC scheme is a well founded scheme in terms of the concept but its architecture is fundamentally flawed. When the scheme was being developed by DEFRA I was unable, as a consultee, and as a participant of a meeting held by the British Property Federation to secure an snwer to my question of "What principles is this legislation going to be built upon?" I amplified this by asking for a clear answer to "Does the principle of 'Polluter Pays' apply?", also without a satisfactory and clear response.

Now it strikes me that failing to establish the principles at the beginning or allowing these to be lost somewhere along the line is where many of the unworkable aspects of the CRC emerge from.

I do also believe that the Chancellor made a good call with the Comprehensive Spending Review. By removing the recycling payment mechanism he has removed the risk of a potentially low performing public sector group of CRC participants paying into the scheme for emissions allowances and failing to recover these at the end of each cycle. This would, under the old CRC scheme, have resulted in public sector funds becoming a subsidy for higher performing private sector participants. The current mechanisms are still flawed however because the league table mechanics remain ill conceived.

Perhaps we should not be so hharsh on a government which has recognised a poorly crafed compliance regime and taken a fast decision to try to correct it; after all the previous administration had over a decade to create it and only just did so before they were ousted.

Discussion Thread  


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