Changes to the Carbon Reduction Commitment energy efficiency scheme will cost businesses £3.5bn

Businesses are accusing the government of introducing a green stealth tax following changes to its Carbon Reduction Commitment (CRC) energy efficiency scheme announced in yesterday’s comprehensive spending review.

The scheme, which started in April, is a mandatory emissions trading scheme that affects both public and private energy users such as supermarkets and healthcare trusts.

It has been revealed that funds raised by a levy on firms’ energy consumption will not now be given back to those who cut their bills the most but will instead be pocketed by the government. It could amount to £3.5bn over the next four years.

The British Property Federation has urged government to clarify its plans. Liz Peace, chief executive said: “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 £3.5bn more than it would have”.

Peace urged the government to clarify urgently how the revised Scheme will function, “as people are making decisions today upon it”.

David Johnston, commercial real estate partner at law firm Berwin Leighton Paisner said it’s a retrograde step. “Those that have led the way on carbon reduction are now being penalised. The industry recommends that new legislation on sustainability should blend a ’carrot and stick’ approach to encourage property owners and managers to make the UK’s existing property stock to meet CO2 targets. It seems the Government is now removing the carrot at a time when businesses are facing increasing uncertainty and pressures on costs”.