The CRC Energy Efficiency scheme, a controversial system to control carbon emissions by large organisations in the UK, may be scrapped next year unless "very significant administrative savings" can be identified.

If a consultation into the scheme cannot identify these savings, "the government will bring forward proposals in autumn 2012 to replace CRC revenues with an alternative environmental tax, and will engage with business before then to identify potential options".

The government made the announcement in the full text of yesterday’s budget. It was listed among a number of measures designed to "put the UK on a path to sustainable, long-term economic growth".

First announced in 2007, the CRC Energy Efficiency scheme was designed to curb carbon emissions by exposing high emitters and rewarding low emitters. Originally, the plan was to allow low emitters to sell carbon credits to high emitters, rewarding business for good performance.

In his Comprehensive Spending Review in 2010, however, chancellor George Osborne announced that high emitters would simply be fined, and that the fines would go into the public purse. This prompted criticism of the scheme as a ‘carbon tax’.

Data centre criticism

The scheme has been heavily criticised by data centre co-location providers, which argue that the scheme penalises them for their high energy use, despite the fact that they make the IT infrastructure of their clients more efficient.

Steven Norris, former MP and president of the Data Centre Alliance, told Information Age earlier this year that the CRC Energy Efficiency scheme "is a classic illustration of how if you give a problem to a civil servant, they’ll come up with a costly, bureaucratic method of measuring the wrong thing. What they should be measuring is output.”

The scheme’s first performance league table was published last November, and one of the UK’s largest data centre operators, Global Switch, was ranked joint last.

Global Switch’s managing director Andrew Pike said that he felt the company had been unfairly penalised because the occupancy of its London data centres has been growing recently. This meant the company could not demonstrate a year-on-year reduction in emissions to the Carbon Trust, one of the factors that was built into the scheme ‘early action index’ which affected the overall score.

Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and... More by Ben Rossi