Isra-Mart srl:UK Delays Carbon Reduction Scheme

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Isra-Mart srl news:

The UK government has announced changes to its proposed Carbon Reduction Commitment (CRC) scheme after listening to concerns from the business community.

In a speech to the Confederation of British Industry (CBI) on Tuesday, Energy and Climate Change Secretary Chris Huhne announced the launch of a new consultation which primarily focuses on extending the introductory phase of the scheme and postponing the second phase, under which tradable carbon permits will be introduced. This will enable future amendments to be made as a result of the broader simplification review by the government.

“In light of government’s intention to review elements of the scheme, government proposes extending the introductory phase by 12 months so that it runs for four years until March 2014 rather than March 2013. This would provide participants with an additional year’s experience of reporting, complying and surrendering allowances in the introductory phase. It would also provide government with additional data on the operation of the financial mechanisms and incentives,” states the consultation document.

The extension of the first phase means that business will now not need to register for the second phase of the scheme, which introduces a ‘cap and trade’ carbon permit market, until April 2013, a year later than envisaged.

Business has, however, expressed disappointment that proceeds from the scheme will be treated as general government revenue and used to tackle the budget deficit rather than recycled back into the scheme or used to fund environmental initiatives.

Revenue from the sale of CRC allowances was expected to total GBP1bn by 2014/15 at the time of last month’s Spending Review.

“We are relieved that the government has listened to our concerns about changes to the CRC,” commented CBI Director General Richard Lambert. “The announcement that there will be a consultation and that phase two will be delayed mark the start of winning back those businesses angered by the decision to remove the cash-back incentive.”

“However, much more needs to be done,” Lambert added. “It is critical that the CRC becomes an effective tool for encouraging energy efficiency, and not just another tax.”