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Removal of payments devalues CRC

27 July 2011

The overwhelming majority of businesses (94%) want to see the financial incentives reinstated in the Carbon Reduction Energy Efficiency Scheme (CRC). While a third of businesses (32%) believe that the removal of recycled payments from the scheme has had a negative impact on plans to invest in energy saving measures.

These findings are from the npower Business Energy Index (nBEI), an annual report tracking business opinion on energy use, energy risk and carbon emissions. It follows the government’s announcement of proposals to simplify the CRC – which do not include plans to reinstate financial incentives.

Added to this, nearly half of the businesses surveyed (46%) felt they had not received adequate guidance from the government on the CRC since it was implemented in April 2010. Changes to the scheme have lead to confusion and disillusionment among businesses, and as the next significant milestone approaches – footprint reporting on 29 July – this confusion continues. The nBEI reveals that many businesses are not confident they will hit the deadline with the correct data.

Dave Lewis, head of business energy services at npower, commented: “The issues businesses have faced since the implementation of the CRC and through its subsequent changes have lead to ongoing confusion. This is concerning as we approach the deadline for footprint reporting on 29 July.”

In terms of the future of the scheme, opinion is divided. The report showed that businesses believed that it is unnecessarily complex and unwieldy, and that it places an unnecessary financial burden on business. Some also stated that they thought it should be postponed completely until the UK’s economic recovery is more secure.

Over a quarter (26%) want it scrapped completely, while over half (52%) wanted there to be no more changes to the scheme. The majority - 82% - required more clarity of what is required of their business.

However, despite the ongoing confusion, many businesses did admit that the CRC was an important piece of legislation and some indicated that there has been a positive impact of the CRC. Of those surveyed, 72% of businesses have invested in energy efficiency measures as a direct result of their participation in the scheme, 62% have installed smart meters and one in five have taken on additional staff to manage their inclusion in the scheme.

Lewis continued: “While it is encouraging to see businesses are investing in energy efficiency measures, it is clear that the removal of recycled payments have meant that perhaps businesses have not implemented as much as planned.

“Although a significant number want to see the scheme scrapped, this is not going to happen and businesses participating in the scheme need to continue to implement energy efficiency measures. It is encouraging to see the government has announced proposals to simplify the scheme, and we will be consulting with our customers on the plans and feeding responses back to DECC.”

The report also revealed ongoing scepticism about the government’s carbon emissions reduction targets – over two thirds (69%) of businesses believe that the target to reduce emissions by 2050 is unrealistic.

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