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A report released by Carbon Retirement today shows that the UK Carbon Reduction Commitment Energy Efficiency Scheme (the CRC) will be largely ineffective at reducing net carbon emissions.
It shows that 87%[1] of CO2 saved by participants will not translate into net emission reductions because of an overlap with the European wide emissions reduction policy, the EU Emissions Trading Scheme (EU ETS). Carbon Retirement’s report reveals that this will amount to over 90million tonnes[2] by 2020.
The CRC is a Government policy requiring non energy-intensive businesses using more than 6,000MWh per year of electricity to increase their energy efficiency[3].
The overlap between schemes, however, means that any reduction in participants’ electricity usage under the CRC scheme will increase CO2 emissions elsewhere in Europe. 70% of participants current energy usage is electricity[4].
Electricity providers in the UK require “pollution permits” (EU allowances) equating to their emissions under EU policy. Increased energy efficiency under the CRC reduces demand on electricity providers in the UK and means that the EU allowances they would have purchased to cover their emissions are available to be bought and used by heavy industries to pollute elsewhere in the EU.
This means that the more successful the CRC is in driving energy efficiency in the UK, the more allowances will be available to heavy industry in Europe.
In this report, Carbon Retirement suggests two practical and comprehensive ways that the CRC and EU ETS could be more closely linked to ensure absolute emission reductions[5].
The Department for Energy and Climate Change (DECC) have acknowledged this overlap in their current consultation and are asking stakeholders to respond[6]. Carbon Retirement is calling for all businesses covered under the CRC to include the need for an adequate resolution to this issue in their response to the open consultation.
Ben Wielgus, of KPMG's Climate Change & Sustainability practice, said,
With the shift in the CRC to an effective levy on carbon emissions, we find CRC participants in the difficult situation of paying for carbon emissions three times – once through the CRC, once through the climate change levy (CCL) and once through cost of carbon charged by their electricity companies through energy bills.
The Committee on Climate Change has stated that 70% of the emissions covered by the CRC are also covered by the EUETS and a significant proportion emissions in the CRC are covered by CCL as well. We welcome recent consultations by Government that consider the interactions of these schemes and seek to simplify the legislative environment in which business and the public sector operate, and look forward to working with stakeholders on this important initiative."
Jane Burston, Founder of Carbon Retirement, said,
Encouraging businesses to be responsible with their carbon footprint by paying for their emissions is a positive thing, but the credibility of the CRC hinges on whether it is actually doing anything to reduce emissions.
The overlap between the two schemes undermines both the businesses that are compliant under the CRC and European climate policy.”
[1] Committee on Climate Change (2010), The CRC Energy Efficiency Scheme – advice to Government on the second phase, p 17 click here for full report.
[2] Carbon Retirement (2011), Maximising the efficiency of the CRC, Click here to view report.
[3] DECC (2011), CRC Energy Efficiency Scheme, Click here for more information.
[4] Committee on Climate Change (2010), The CRC Energy Efficiency Scheme – advice to Government on the second phase, p 10 click here for full report.
[5] Carbon Retirement (2011), Maximising the efficiency of the CRC, Click here to view report.
[6] DECC (2011), CRC priority areas for simplification – reducing the overlap between schemes, Click here for and scroll down for consultation guidance.
For more information or media enquiries contact Emily Haynes, Carbon Retirement:
e) emily.haynes@carbonretirement.com,
t) 020 7183 0188,
m) 07886 273 222.
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