The UK government’s CRC Energy Efficiency scheme, which came into effect a year ago and has significant implications for data centre energy management, came under criticism from UK businesses this week.
The CRC scheme obliges large energy consumers to buy ‘allowances’ for their carbon emissions. Initially, the revenue raised by these allowances was to be given back to companies that successfully reduced their emissions by way of an incentive.
But in its comprehensive spending review last year, the UK government decided that this revenue would instead be kept by the Treasury.
Earlier this week, the Confederation of British Industry (CBI) said the scheme is now ‘untenable’.
"We now have a carbon reduction scheme that doesn’t encourage companies to reduce carbon emissions, and actually adds to the cost of doing business," said Rhian Kelly, the CBI’s director for business environment. "Without a proper incentive the scheme lacks credibility and has lost businesses’ trust."
The CBI called on the government either to revert the scheme to its original form, or to replace it with a full carbon cap-and-trade scheme that allows businesses to buy and sell their allowances.
"If the government does not restore the original incentive in the CRC, it should scrap the scheme and consult on a more simplified mechanism to encourage energy efficiency across the business community," the group said in a statement.
There is some sympathy for this argument among energy managers, according to a poll backed by energy provider npower. It asked 70 energy managers at UK business what they thought of the scheme, and found that 45% believe it should be scrapped altogether.
Roughly the same proportion (43%) want financial incentives to be reintroduced to the scheme.
Just under a third of respondents (29%) believe that in its current form, the CRC scheme will not help to reduce the UK’s carbon emissions.
In July, business included in the scheme are obliged to produce a detailed report of all their energy consumption and allowance purchases for the year ending today. According to npower poll, 89% of energy managers are confident they will meet this deadline. The remaining 11% face a £5,000 fine, and a subsequent £500 fine for every day after the deadline that passes before they submit their report.
If they fail to produce a report 40 days after the deadline has passed, their emissions will be assessed by the government and they will be obliged to pay for double the relative allowances.