Green Tape or Gift-wrapped?

Does the recent CRC review hint at a further government environmental policy shift?

In July 2015 a review of the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme was undertaken by the government’s environmental advisors. In this post we analyse the findings from the review and consider how these may relate to emerging government policy applied to companies.

The research focussed on phase 1 (April 2010 – March 2014) of the CRC scheme and considered its successes, failures and assessed the scheme’s cost effectiveness and administrative efficiency. The research found that many participants felt that the scheme had imposed a significant administrative burden, particularly at the beginning when it was complicated to understand. That said, satisfaction in the scheme has grown over time as it was simplified.

In terms of the future, and how current users of the scheme would like to see it improve, the main conclusion was that the government should install clearer strategic overview of energy efficiency policy. Overall there was a general view that there had been too many successive changes to the scheme, including changes between the design and implementation phase. Consistency and simplicity seem to be the key characteristics desired by businesses.

It is very often the administrative burden of such schemes that are cited by clients as being the most negative effect, rather than the actual additional cost of any ‘taxes’. Some have suggested that the scheme should now be run more like a traditional tax, given that revenue raised from allowances is no longer recycled into participating organisations. A key resource in driving improved corporate performance is the organisational / leadership skills of senior management. If their responsibility for delivery of CRC was to be removed (to reduce admin costs) then the scheme benefits are likely to be slashed.

In an era when the removal and simplification of energy / carbon policy is being cited as necessary for the economic growth of the nation, there is the risk that efficiency drives in administration could be brought in at the expense of the original intent of the scheme. In our experience if any true change in energy efficiency is to happen within an organisation, this needs to be driven from the top.

Conversely there is hope in the broad consensus that bringing a combination of carrots and sticks into any future iterations of the CRC would drive carbon reductions. The cost of CRC could be used to invest in energy efficiency measures, though this would require additional shake up of how the scheme is funded and administered, something that we are unlikely to see happen given the above views on simplification.

This government makes a point of heralding common sense strategic planning as part of their ethos – exemplified by George Osborne’s ‘fixing the roof when the sun is shining’ analogy. Our fears are that, should the responsibility for CRC be downgraded, the people carrying out those roof repairs won’t be suitable for the job and, if the CRC is scrapped entirely, the repairs are just being postponed because of affordability. Our view is that businesses can’t afford not to tackle their carbon emissions