61% of major energy users surveyed by Utilitywise were unaware of the Government’s recent carbon consultation. This is alarming.
Carbon schemes are imperative in the drive to improve energy efficiency. They also act as an important way for energy intensive businesses, like manufacturers, to receive valuable cost relief on their energy bills. If major energy users affected by carbon legislation are in the dark that a review is even underway, they have no chance to feedback their views. That’s why we’ve written a White Paper on the future of carbon compliance, to ensure end users can better understand the impact so they can forward plan for the changes ahead.
The consultation, officially called ‘Reforming the business energy efficiency tax landscape’ was launched on 28 September 2015 with a simple aim. The scope was to simplify and improve the effectiveness of the carbon schemes in operation. This included the Carbon Reduction Commitment (CRC), Energy Savings Opportunity Scheme (ESOS) and Climate Change Agreements (CCAs). It was widely recognised that many of the schemes overlapped and may have lost their purpose through constant revisions over the years. As a result, the review was very much welcomed by industry and key participants.
So what else is the government proposing? On the 16 March, the Chancellor of the Exchequer, George Osbourne presented his Budget to Parliament. There were four clear outcomes. One of the biggest changes is the abolishment of the CRC. From the end of the compliance year 2018-19, the CRC will be no more.
Is this cause for celebration? Well the CRC was ranked the least effective scheme by our survey respondents so it could well be.
How else did the government respond? It appears the government is still keen to continue protecting energy intensive industries by keeping the CCA scheme in place. It will also increase its value to participants by raising the discount on the Climate Change Levy. This will be effective from April 2019.
So as an energy intensive business, what must you do to ensure you prepare for this change? First of all, our advice is get your CCA management in order. Effective management of your CCA will be critical to reap the rewards. We reported last year that around 48.5% of businesses had to buy carbon allowances. This cost a whopping £24.6 million in buy-out fees and is not necessary with ongoing, proactive management. If you haven’t got a CCA at the moment, talk to us about how you can obtain one.
With the CCA scheme holding even more credibility as your route to efficiency and carbon savings, you need to get on board and you need to do it now.
To read more about the changes to the carbon schemes, download our White Paper – The future of carbon compliance here