All stick no carrot: CRC scheme changes create 'stealth tax'

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All stick no carrot: CRC scheme changes create 'stealth tax'

Microscope contributor
by Billy MacInnes

The government has been urged to review changes to the carbon reduction commitment (CRC) scheme announced last week to prevent it becoming a "stealth carbon tax" on business.


When it was initially introduced, CRC adopted a 'carrot and stick' approach by pledging to redistribute funds accrued from the sale of carbon credits back to top performing businesses in the scheme. 


But changes announced in the Comprehensive Spending Review last week suggest that £1bn raised from allowance sales in 2014-15 will be poured back into public finances instead of going to scheme participants.


Chris Smith, sales and marketing director at on365, said the meaning of CRC should be changed to 'Corporate Restraining Charge' because it had become "a tax and not an incentive to reduce carbon emissions. Corporate environmental responsibility is now measured in pounds sterling with the carrot to encourage businesses to participate being replaced by a stick".


Rob Tanzer, technical support manager at Emerson Network Power's Chloride Business, agreed that "the carrot's been taken away" from the CRC scheme to be replaced by a "one-dimensional tax on inefficiency".


But UK data centres and the high tech industry still had a "huge incentive to cut energy costs by investing in increased efficiency" and he pointed out companies had the ability to offset investment in energy efficient equipment against tax. "Business needs to make smarter use of the incentives that remain," Tanzer added.


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