Inside Track

EEF welcomes the government consultation on changing certain aspects of the CRC Energy Efficiency Scheme, as a first step in unravelling the complex, confusing and costly, broader climate change policy landscape.

Commenting, Gareth Stace, Head of Climate & Environment said “this extended window in the run up to the second phase will allow government to make more strategic changes to the wider climate change policy landscape, rather than tinkering around the edges in a piecemeal fashion. If government doesn’t address the issue from a more macro level, then we are in danger of increasing complexity, not reducing it, both for CRC and other climate change policy measures.

“Government now has the chance to get it right and act upon its rhetoric of certainty, simplicity and transparency in order to accelerate the move to a low carbon economy, by sending the right signals to manufacturers and to the market. To this end, government should look to the forthcoming consultation for reform of the Climate Change Levy as inestimably linked to any changes made to CRC.

“Manufacturers believe that government must view any new climate change measures and taxes in the totality of the many costs pressures on business and must not be seen in isolation.”

EEF previously expressed concern that allowance revenues from the CRC Energy Efficiency Scheme, projected to be up to £1 billion a year, will be used to support the public finances rather than recycled to CRC participants. We said in the strongest terms that it sent a worrying signal about how the government intends to engage with the private sector going forward.

EEF welcomes the government decision on the dropping the requirement for organisations who are not required to register as participants to make information disclosures. Saying, “This is a logical step towards simplification. Companies have wasted valuable time and thousands of pounds, just proving to the Environment Agency that they are not caught by CRC. This was bureaucracy gone mad.

“Overall, this consultation should be seen as the start of CRC simplification, not the end.”

So another voice has been added to the many that are calling for the CRC Energy Efficiency Scheme to be simplified. However, this is not just any voice, but the influential voice of the Committee on Climate Change (CCC). Its report published today, echoes what various groups, including EEF, have been saying for sometime now, that the scheme is "very complex". The first casualty could be the intended ‘cap and trade’ element, which the CCC recommends should be scrapped. This is music to my ears, as I believe this part of CRC will merely add unnecessary costs and complexity burden onto businesses without significant reductions of carbon emissions. Indeed increased costs to manufacturing companies that are still struggling out of a deep recession.

Government must not under estimate the importance of combining a carbon tax with Greenhouse Gas reporting, in driving change within organisations. There should be a greater focus on the reporting element of the scheme, centred on Defra’s carbon reporting guidelines, published last year. This should not be a wasted opportunity for Defra to promote a uniformed reporting methodology across sectors.

The CCC calls for a splitting the League Table into public and private sectors. Of course this is a step in the right direction, but doesn’t go far enough. The government must enable companies to highlight the positive steps they are taking to reduce emissions. This good news narrative must be positioned at the forefront of the table, rather than a focus on absolute emissions. The current narrow focus of the League Table will lead to false results and will not acted as a driver for organisations to become more carbon efficient throughout their operations.

A simple change that government must make as soon as possible, one that would reduce the administrative burden significantly, would be to remove the requirement for organisations not caught by the scheme, to positively prove that they are exempt.

This is certainly one to keep watching and I am pleased to see that the voice of manufacturing is being heard within this debate in today’s Telegraph.