Isra-Mart srl: Companies could offset £500m CRC bill with energy savings

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Isra-Mart news:

Basic energy efficiency measures could offset the nearly £500m that businesses are expected to spend this year complying with the Carbon Reduction Commitment (CRC) scheme, new analysis suggests.

Around 2,800 businesses will submit their first CRC reports at the end of this month, and according to government forecasts will spend a total of £715m on carbon allowances and a further £34m on compliance measures.

Department of Energy and Climate Change (DECC) projections show the scheme is expected to drive energy efficiency improvements that will save participating organisations £290m, or around 40 per cent of the cost of the scheme, during the first year.

The figures suggest a net spend on the CRC of £459m, or an average of £165,000 per registered company.

However, a new analysis from consultancy WSP Environment and Energy argues simple energy efficiency measures that can be rolled out at almost zero cost could save companies 10 to 20 per cent on their energy bills – enough to outweigh their annual CRC spend.

"The government has said UK participants could save £290m, which we think is unambitious – it's about three per cent of the energy costs of the participant base," Chris Stubbs, director at WSP, told BusinessGreen. "Ten per cent is an easily achievable number, and if you can save 10 per cent you've basically neutralised the costs of CRC allowances."

The government provoked accusations that the CRC constituted a "stealth tax" last year when it announced it would remove the revenue recycling element of the scheme that would have provided those participants that delivered the greatest energy efficiency improvements financial bonuses.

Responding to the criticism, climate minister Greg Barker last week proposed further changes designed to simplify the CRC, but he reiterated that the government would not reinstate the revenue recycling element of the scheme.

WSP said the decision to ditch the bonuses that would have been on offer through the CRC meant many companies now simply saw the scheme as a cost of doing business rather than an opportunity to save money.

However, he stressed that despite the fact the most energy efficient companies can no longer qualify for financial payments from the CRC, they could still use the scheme to realise huge savings at little or no upfront cost.

For example, he said that installing £500 automated meter readers (AMRs), reviewing the readings, and taking action to prevent wastage, could cut electricity bills by as much as 17 per cent, saving up to £60,000 a year per building.