The Carbon Reduction Commitment (CRC) is here until at least 2016, but the coalition government has pledged to simplify the scheme and abolish its Performance League Table, which is used to rank large organisations according to their energy efficiency.
Chancellor George Osborne has in the past criticised the CRC, which was established by the previous Labour government, claiming that it is “cumbersome, bureaucratic and imposes unnecessary cost on business”.
In the March budget statement, Osborne said that the government would seek major savings in the administrative cost of the CRC for businesses.
“If those cannot be found, I will bring forward proposals this autumn to replace the revenues with an alternative environmental tax,” he said at the time.
However, Osborne failed to give any more information about of how the scheme would be simplified during yesterday's Autumn statement, claiming that details would be published by the Department of Energy and Climate Change.
“A full review of the effectiveness of the CRC will be held in 2016 and the tax will be a high priority for removal when the public finances allow,” he said.
The news received a tentative welcome from IT industry and business campaigners, who have been fighting to get the CRC scrapped over the last couple of years – though some believe that the plans do not go far enough.
“We need a firm commitment now to scrap the scheme when public finances allow, and to replace it with a more coherent approach to business energy efficiency,” said the CBI Director-General John Cridland.
The CRC has been accused of being particularly damaging to data centres, which though energy-intensive play a vital role in decarbonising societies by supporting the digitisation of goods and service that were once delivered as physical entities, as well as through transport avoidance and smart grids.
“While the CRC remains it has, we hope, been mortally wounded,” said Kate Craig-Wood, MD of IT hosting company Memset.
“The Treasury website tells us that they intend to scrap the league table – ridiculously complex and fundamentally pointless since it compares apples with oranges – and the CRC as a whole is coming under review in 2016. I hope that it will be canned at that point and replaced with something more sensible.”
Craig-Wood described the CRC as a “truly cretinous piece of legislation,” highlighting that data centres are now very mobile as, with the advent of cloud computing, organisations no longer need to "lift and shift" servers to move their applications and data.
“Under the CRC it becomes a lot simpler to off-shore one's energy intensive operations than actually becoming more efficient – not something that would be good for the environment overall,” she said.
Instead, Craig-Wood (together with Britain's high tech trade association Intellect UK) advocates an expansion of the Climate Change Levy. This would be more fair, she claims, because it would cause small increases in energy costs for all businesses, not just large energy-hungry ones.
“But therein lies its political un-palatability,” added Craig-Wood.