Government to scrap CRC, moots subsidies for energy efficiency

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London_SunsetThe government has hinted that the carbon reduction commitment scheme is set to be scrapped as part of a cull of business energy taxes.

HM Treasury is aims to streamline a raft of overlapping environmental taxes and policies. If successfully implemented, business will welcome the move, seen by many as long overdue.

George Osborne announced plans to reduce the so called ‘alphabet soup’ of environmental policies and taxes in July. The government now seeks views from businesses on which policies to ditch and how to construct a clearer landscape that incentivises energy efficiency.

The consultation notes that current policies can lead to businesses investing in renewables over energy efficiency. Treasury wants to reverse that and the consultation states that it may subsidise energy efficiency measures “subject to strict value for money criteria”.

Detail of the design of such incentives will be published pending the outcome of the consultation, but the document moots options including feed-in tariffs (FITs) for energy efficiency, as well as tax relief, competitive funding and supplier obligations.

Earlier this year a government-commissioned review of the CRC scheme suggested it had broadly achieved its objectives. The research concluded that the scheme initially frustrated many firms with its complexity, design changes and costs, but ultimately achieved carbon savings in line with its impact assessment.

However, it stated that increasing energy costs have done more for energy efficiency advances than any other factor.

The Treasury consultation also hinted that the energy savings opportunity scheme (Esos) could become more central to energy efficiency policy. Treasury suggested it was open to conversations around incentivising measures recommended by Esos audits.

See the consultation at: http://bit.ly/1LiP9vw

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