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CRC revenues will go to Treasury

Following October’s Comprehensive Spending Review, businesses expecting to benefit from up to an estimated £1 billion a year recycled from the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme, are to lose out. Revenues will now go directly to the Treasury rather than to participants in the scheme.

The Spending Review document issued by HM Treasury in October, outlined the change: “The CRC Energy Efficiency scheme will be simplified to reduce the burden on businesses, with the first allowance sales for 2011/12 emissions now taking place in 2012 rather than 2011. Revenues from allowance sales totalling £1 billion a year by 2014/15 will be used to support the public finances, including spending on the environment, rather than recycled to participants. Further decisions on allowance sales are a matter for the Budget process.”

This fundamental change to the CRC scheme, which comes into force from April 2012, will hit business hard at a time when cash-strapped firms can ill afford to lose money. The British Property Federation (BPF) called on the Government to clarify its plans for the scheme as soon as possible. “The coalition said they wanted to simplify the complexities of the CRC and they have certainly found a novel way to do that. This will not however, ‘remove the burden on businesses’ as they claim, but ensure that the CRC will cost the wider business community almost £3.5 billion more than it would have,” said Liz Peace, BPF chief executive. She also criticised the Government for providing scant detail of its full intentions with regard to the CRC league table and how the revenues from the scheme will be collected and used.

The scheme aims to cut emissions and improve energy efficiency in the private sector, via a system of carbon allowances. The Department of Energy and Climate Change website indicates that the Government aims to begin shortly a public dialogue with participants in the CRC on proposals to simplify the scheme. A further announcement is expected this autumn.

For more information go to www.decc.gov.uk

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