carbon tax

CRC: Dead man walking?

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Industry lobby groups are calling on the government to kill off the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme.

The recent consultation by the energy and climate department (DECC) on reforming the CRC focuses on ways to keep it intact while simplifying its rules and requirements. Among the myriad options there seems to be a handful of frontrunners.

But in their consultation responses, trade associations including the manufacturers’ organisation EEF, the British Retail Consortium (BRC) and the British Property Federation (BPF) argue the CRC cannot be revived. (more…)

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Conflicting objectives

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Conventional wisdom among climate policymakers holds to the idea that greenhouse gas mitigation, energy efficiency, and renewable energy targets will combine to deliver the EU’s 20% emissions reduction goal for 2020 relative to 1990, with a higher 30% target still on the table.

But the reality is that there is a long-standing and unresolved tension at the heart of the EU’s 2008 20/20/20 energy and climate package. And the bloc’s roadmap for 2050 (ENDS Report, March 2011), aimed at cutting emissions by at least 80% relative to 1990, has brought matters to a head. It’s not just about whether to go for 30% or a near offer, but about how the three elements work together, or do not.

The European Commission is deeply concerned that a renewed drive for energy efficiency, together with a continuing surge in renewable energy investment across the EU, will undermine carbon price signals in phase III of the EU emissions trading scheme (ETS) from 2013. Already in Germany, the power sector is battling low profitability from its conventional power plants which must now power down inefficiently when renewable electricity is available. These utilities are struggling to find the cash to invest in the vast amount of new low-carbon plant needed to decarbonise its grid, not least in back-up and baseload plants. (more…)

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Climate change agreements revisited

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Latest thinking by the energy and climate department (DECC) over climate change agreements (CCAs) smacks of blue-sky thinking. It has floated ideas not only to reform but even potentially to scrap the instruments. The government should be careful before reinventing this particular wheel.

Last December, DECC organised a closed workshop including representatives of sectors covered by CCAs to discuss their future. It released a report on the meeting last week.

There is general consensus that CCAs need reform. The voluntary agreements to cut emissions now signed with 52 industry sectors have various shortcomings. These include difficulties with monitoring and benchmarking of progress and an uneasy mixture of absolute and relative targets in different agreements. (more…)

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DECC is chasing its own tail on CRC simplification

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I think the energy and climate department (DECC) is wasting its time trying to simplify the CRC. There’s no doubt the scheme is extremely complicated, and I’ve every sympathy with energy managers who’ve had to get to grips with it.

But surely its complexity is an inevitable result of trying to create a sophisticated mechanism to encourage energy efficiency among a variety of organisations without putting an undue cost burden on them. At least, that was the idea until last month’s spending review when the Treasury ripped the guts out of it by turning it into a carbon tax. (more…)

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Talk is cheap – but so is energy efficiency

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The last time energy efficiency was a high profile issue was during the notorious oil shocks of the 1970s and the three-day week. But here we are again.

This time round, the ‘trinity’ of rising energy costs, supply concerns and climate change policies is providing a new imperative that will be harder to ignore or forget.

The new ENDS special report on energy efficiency shows how far a wide range of both large and medium sized companies have gone on their energy efficiency journey – and how they are reaping rewards in lower energy bills and greater competitiveness.

As the report explains, there is still a huge amount to be done. (more…)

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Trading away the future

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2010 has been a bad year for the climate.

Not just for climate treaty negotiations – few expect a deal in Cancún in Mexico this December after the failure in Copenhagen last December. But also for the carbon markets that ultimately depend on strong policies.

Huge interests are at stake. Pioneering investors feel let down and are warning they could go to the wall. The uncertainty could go on until Cancún, or even longer.

This is on top of uncertainty over the post-2012 status of the UN clean development mechanism. The CDM’s future is further clouded by European Union proposals to stop many types of UN offsets from entering the EU Emissions Trading Scheme after 2012.

Why should we worry? There are several reasons. (more…)

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CRC RIP?

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On Friday, the Committee on Climate Change was supposed to advise the government on how tightly it should cap carbon emissions under the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme when full cap-and-trade is introduced in 2013. 

Except that it didn’t. It said the emissions trading phase should instead be scrapped to make the scheme simpler. The ENDS Report explores the committee’s recommendations in a recent article. (more…)

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Britain’s energy challenge

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Energy policy in the UK is at a crossroads, and the decisions made now will reverberate for decades. At least 43 gigawatts of new electrical generation capacity, equivalent to half of Britain’s current total, will be needed by 2020, as all but one of its nuclear plants are retired and coal-fired power stations closed to meet EU air pollution standards.

A staggering £200bn of investment will be needed not only to maintain energy security against price spikes as North Sea resources dwindle and energy imports grow, but also to deliver the largest single contribution to a low-carbon economy. (more…)

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Simplify the CRC but don’t drop the cap!

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The air has been thick ahead of the summer parliamentary recess with talk of a fundamental review of the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme. Some are even calling for it to be scrapped altogether.

The smart money, though, is on simplification, mooted as a possibility by energy and climate secretary Chris Huhne in his July annual energy statement. That is something most businesses would welcome wholeheartedly in principle. There is much less agreement on how. (more…)

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‘One in, one out’ – bonfire of the vanities or Pandora’s box?

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The coalition government made great play of the need to cut red tape and costs from new regulation, both before and after the general election. It believes legislation should be periodically reviewed under a sunset clause to make sure it’s worth keeping.

The basic mantra is that any new legislation with cost and time implications will have to be balanced by reductions somewhere else – deputy prime minister Nick Clegg’s so-called “One in, one out” principle. New regulations are to be screened by a ‘star chamber’, the Reducing Regulation Committee, headed up by business secretary Vince Cable.

In principle, that sounds like common sense. Business often complains that innovation is stifled by over-complicated, often overlapping and sometimes counterproductive regulations.

But will it really work for environmental measures, such as energy and climate change regulations and taxes? (more…)

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About this blog

The ENDS Carbon & Energy Efficiency blog provides news and comment for carbon and energy management professionals in business and the public sector, covering the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme and other carbon and energy management and regulation issues. The blog is part of the ENDS Report Carbon & Energy Efficiency channel.

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