Climate Bills and a Green Economy

British Businesses Facing a Wave of Green Taxes

Thousands of British businesses will be liable for significant fines and charges under a new government “green tax” scheme.

August 10, 2010

London Telegraph - Companies that fail to register their energy use by next month will be hit with fines that could reach £45,000 under the little-known rules.

Those that do participate in the Carbon Reduction Commitment (CRC) initiative by declaring their energy use will face charges for every ton of greenhouse gas they produce.

These payments are expected to average £38,000 a year for medium-sized firms, and could reach £100,000 for larger organisations.

Surveys have shown that thousands of businesses are unaware they are supposed to be taking part, or even that the scheme exists at all.

The imposition of new charges and fines will put pressure on firms at a time when economists are warning of a “double dip” recession as companies, consumers and the public sector all cut their spending.

Business leaders criticised the CRC — which was created by Labour but implemented by the Coalition — as “complex and bureaucratic.” One accused ministers of swinging “a big hammer” at companies and questioned whether it would have any environmental benefits.

Under the scheme, any company or public sector organisation that consumes more than 6,000 megawatt hours (MWh) of energy a year – meaning a power bill of about £500,000 – must register its energy use by the end of next month. From April, firms will need to buy permits for each tonne of carbon dioxide emitted. For those using 6,000MWh, that could mean £38,000.

The scheme is intended to create a financial incentive to cut energy use, and those organisations that record the biggest reductions will get bonuses, funded by penalties imposed on those with the worst record.

Of about 4,000 organisations estimated to qualify for the scheme, only 1,229 have registered to date, leaving thousands at risk of fines.

Missing the Sept 30 deadline will mean an immediate £5,000 fine, and £500 for each day after that, up to a maximum of £45,000.

Another 15,000 smaller organisations are also required to register and could be expected to buy permits in the future. If they miss the September deadline, they face fines of £500.

WSP Environment & Energy, a consultancy firm, estimated that a total of 7,500 businesses would miss the deadline.

Greg Barker, the energy and climate change minister, who is overseeing the scheme said yesterday:

“I understand the original complexity of the scheme may have deterred some organisations and I want to hear suggestions as to how we can make the scheme simpler in the future.”

Executives and business groups said that the scheme had been poorly communicated and publicised, leaving many companies in the dark.

One recent survey suggested that 53 per cent of executives had not even heard of the CRC and did not know whether their firm was affected.

The Environment Agency, which will run the scheme for the Government, has refused even to publish a list of the companies that are required to register.

The Coalition is pressing ahead with the CRC despite Conservative pledges to cut red-tape on businesses.

Business groups said the paperwork and costs involved in complying with the CRC scheme could put a significant new burden on companies already struggling in an uncertain economic climate. The Bank of England is expected to underline fears about the economy today with forecasts for faltering economic growth and persistent inflation.

Yesterday, the Chartered Institute of Purchasing and Supply reported a slowdown in British manufacturing exports to Europe.

Bob Jarrett, of the BHF-BSSA Group, a trade body that represents thousands of independent shops, said ministers had not done enough to explain or justify the CRC.

“We’ve only come across this in the last few weeks, and yet the deadline is at the end of next month. The Department for Energy has not given this nearly enough publicity,” he said.