The Government’s changes to the Carbon Reduction Commitment Energy Efficiency scheme (CRC), announced in the Spending Review, mean that the scheme will be redesigned. The result is that the participants’ cost for each carbon emission will not be reimbursed to top performers. Instead, all monies will go straight to the Treasury, generating £1bn a year.
Alan O’ Brien, Chief Executive for Sabien Technology commented: “CRC participants were not expecting this. Many of the 3,000 plus participants will need to revisit their CRC strategies as the cost implications become apparent.
“In one fell swoop the cost of the CRC has rocketed. For example, one of the UK’s largest retailers is claiming the CRC cost for their organisation has now increased from £10m to £20m a year. Some of the early action metrics that organisations have invested in become less important as participants accelerate the implementation of energy efficiency technology.”
Previously the scheme was revenue neutral for the treasury and the cash would have been redistributed among UK businesses and local authorities who demonstrated the greatest reductions in carbon emissions and their position in the league table.
“There is no doubt the CRC is now a tax burden. Many of the participants will need to revisit their cash flow forecasts, budgets and timelines to deliver the energy efficiency initiatives. Minimising these unexpected financial impacts is a priority.
“The need to reduce energy consumption will now be firmly in the sight of the finance directors, with increasing pressure and demand being placed on the energy managers to deliver cost effective initiatives to reduce emissions. Organisations will now need to re-budget in light of the CRC changes and begin to source proven technologies that deliver the greatest level of savings with the quickest paybacks.
“Many of the UK energy efficiency technology providers, us included, will benefit from the changes as participants require proven technology and services to reduce these unbudgeted costs” claims O’Brien.
“Our technology, which consistently delivers double digit reductions and quick paybacks, combined with our track record and expertise, puts us in a good position to capitalise on the demand created by the Government’s changes,” he continued.