The Department for Energy and Climate Change has revealed plans to carry out sweeping reforms of business energy efficiency tax incentives and reporting procedures, including the potential abolition of the Carbon Reduction Commitment (CRC) scheme.
The plans build on a government announcement during the summer budget confirming that a review would take place, and since then government has consulted with DECC, the Treasury, HM Revenue & Customs and the Department for Business, Innovation & Skills (BIS) to review existing schemes.
The resulting consultation document, launched yesterday to gather feedback on potential policy changes, highlights several perceived weaknesses and unnecessary complications in the current framework while suggesting proposals to address them.
Central to the proposals is an apparent overlap in policies and the proposed abolition of the current CRC. A single reporting framework would be adopted in its place, designed to remove policy overlapping and streamline the way in which businesses report carbon usage.
In abolishing the CRC the government would move towards a single tax, moving a revenue raising element into an energy consumption tax based on the Climate Change Levy. The Climate Change Levy has already been tinkered with by the current government, including the removal of an exemption for renewable energy firms much to the ire of the green economy.
While DECC states that it is open to establishing new incentives, the department does not offer any scope for discussion and instead opens the floor to consultation respondents. Any proposals would need to be “simple, meet strict value for money criteria and be more effective than other options”, and also funded through increases in tax.
The impact of the new proposals is expected to be minimal however the HMRC, DECC and the Environment Agency could be affected through reform of the policies.
Justifying the consultation, exchequer secretary to the treasury Damian Hinds said that encouraging businesses to adopt increased energy efficiency was vital to the UK meeting its environmental objectives.
“It will help the UK decarbonise cost effectively and ensure security of energy supplies, but it also has the additional benefits of boosting business productivity, and supporting growth and competitiveness,” he added.
Prospective respondents to the consultation are prompted to offer feedback online here.