Big businesses unaware of looming emissions bill

By Fiona Harvey, Environment Correspondent
Published: March 12 2009 02:00

A group of 5,000 businesses - from banks to hotel chains - are largely unaware they will soon have to pay £660m a year for their greenhouse emissions, as the government today sets out details of the plan.
All companies with an energy bill of £1m a year or more will be forced from next April to report their energy usage, and to buy carbon credits to cover the resulting greenhouse gases, under a complex and little understood new regulation called the Carbon Reduction Commitment.
Retailers, banks, hotel chains and other service sector businesses, as well as hospitals and local authorities, will have a year's grace to try to cut energy usage. But from 2011 they will have to pay £12 for each tonne of carbon they emit, according to the 84-page guidelines on the scheme, published today by the government.
Altogether, the companies are likely to spend about £660m a year on allowances, with the smallest companies covered likely to spend about £30,000. For the biggest it will be millions. However, the money will be returned at the end of three years, when the companies will be judged on their success in cutting energy usage.
Those at the bottom of the emissions reduction league table will forfeit 10 per cent of the sum they paid, while those at the top will have the sum paid returned with a 10 per cent bonus, in order to provide an incentive to improve energy efficiency.
Neil Bentley, director of business environment at the CBI employers' organisation, warned that although the CRC had "sound objectives", it was "going to come as a bit of a shock" to most businesses.
He said: "The levels of awareness and preparedness among businesses are very low. It's going to be an uphill struggle for the government to raise awareness, and to ensure that this is not going to become a bureaucratic nightmare."
Joan Ruddock, minister for climate change, said that rather than imposing a new cost and administrative burden on businesses, the CRC would help companies to save money by making them more aware of their energy efficiency. She estimated companies could save a total of £1bn on their energy bills through the scheme by 2020.
"We feel that people have been made aware" of the rules, she said.
She said the administrative burden would be small because the regulation relied on the size of the company's electricity bill, covering only those with bills metered by the half-hour. Such companies would find it easy to measure their use, she said.
The companies involved represent 10 per cent of greenhouse gas emissions.
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Copyright The Financial Times Limited 2009