EEF continues to support the government’s commitment to increase energy efficiency and reduce emissions in the ‘large non-energy intensive’ sector. However, we are still not convinced that the proposed Carbon Reduction Commitment (CRC) scheme is an effective method to achieve these objectives and fear that the scheme may have an adverse impact on manufacturing. Market forces and existing policies already provide a powerful price incentive to invest in energy efficiency measures.
In response to Defra’s consultation EEF argued that businesses have faced significant energy price inflation over the past few years and are already subject to two further energy price signals – the pass-through of the EU ETS carbon costs by electricity suppliers and the Climate Change Levy (CCL). The exclusion of large CCA organisations with at least 25% of their total energy use emissions covered by CCAs is welcomed. In addition we argued that EU ETS sites should also excluded from the scheme.
EEF recommended that the government give further consideration to that the proposed ‘top down’ approach to identify a UK parent organisation as it appears to have gaps (i.e. accounting for shareholder value in subsidiaries and an organisation’s legal structure).
EEF supported the proposals to adopt the options of a sealed bid auction, deferred payment by 12 months and an introductory fixed price sale set at option A (£8/tCO2), to the scheme. We believe the adoption of these measures, can to some extent, avoid placing significant financial pressure on organisations.
In order for 2008 to be set as the qualification year, EEF stressed that the organisations be provided with knowledge of CRC promptly to be given a chance to input into its design, as well as determine if they are participating. The advertising/promotion of the CRC should be carried out as soon as possible, in order to allow organisations adequate time to set up Monitoring, Reporting and Verification (MRV) systems.