New carbon trading legislation confuses businesses

A compulsory carbon trading scheme for 5,000 UK businesses will launch today, amid widespread confusion about its complex rules and a bonanza of extra fees for environmental consultants.

By Rowena Mason, City Reporter (Energy)Published: 12:08AM BST 01 Apr 2010

Under the Government's scheme, an array of businesses from supermarkets to office blocks that spend more than £500,000 per year on energy must conduct an audit of their carbon dioxide emissions.
They must register by September and will next year be ranked in a league according to how much energy they have saved or spent, with financial rewards and penalties dependent on their position. They will also have to buy allowances at a fixed price of £12 per tonne to cover their emissions.

Business groups have been heavily critical of the scheme, called the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme, arguing that its excessive complexity will be extremely costly.
Analysts from PricewaterhouseCoopers believe the scheme is likely to add 6pc to affected companies' energy prices next year. The worst performing may have to pay an extra 20pc on their bills by 2015, while the best may save 6pc over the next five years.
A survey by RWE npower found around half those businesses affected do not understand how to buy allowances to cover their emissions or how to forecast future targets.
Another big complaint among companies was that those who have already spent money on reducing their carbon emissions in the past may not score well, because the scheme only looks at future efficiency savings.
However, the scheme will benefit at least one section of the market. Environmental consultancies and the big energy companies have begun to offer advisory services to help smaller companies understand how to comply with the new legislation.
PwC estimates that the cost of meeting the legislation will be about £25,000 per company and one big six retail supplier said the number of inquiries about consultancy work connected to the legislation had risen five-fold in the last month alone.
"There is a degree of understandable confusion among many UK businesses about what the energy efficiency legislation will mean for them," said Kanat Emiroglu, managing director of British Gas Business, which offers a management service. "Often there isn't one single individual within the business who is tasked with monitoring the CRC."