U.K. Should Scrap Second Phase of `Complex' Carbon-Cap Plan, Adviser Says

The U.K. should scrap a plan set to start in the second phase of its carbon-reduction program to cap and auction emissions for large companies and organizations, the government climate adviser said.

The program known as the Carbon Reduction Commitment already is complex, and introducing auctions of a fixed amount of emissions permits in the phase starting in 2013 would make it worse, the Committee on Climate Change said today in a report on its website. The U.K. plan covers companies not included in the European Union Emissions Trading System.

The program covers about 10 percent of U.K. emissions and encompasses 5,000 companies and organizations including Tesco Plc, the country’s biggest supermarket chain, the universities of Oxford and Cambridge, hospitals and local governments. They must pay for their carbon-dioxide emissions starting next year, and the money raised would be redistributed among them based on how well they have done in reducing greenhouse gases.

“Current proposals risk making the scheme unnecessarily complex,” David Kennedy, chief executive officer of the committee, said in a statement. “We are therefore proposing that government modifies its design to make participation in the scheme easier for companies and public-sector organizations.”

The committee also recommended that the government split the organizations into public- and private-sector league tables to avoid channeling money from hospitals and local authorities to retailers and hotel chains.

In addition to the 5,000 organizations that will have to pay for their emissions, another 15,000 have to report their greenhouse gas output by the end of this month. With a week to go, 35 percent of participants may miss the deadline, the consultants WSP Environment & Energy said.

“The Committee is right to look at how the scheme can be simplified for the next phase,” David Symons, a director at London-based WSP, said in an e-mailed statement. “The biggest challenge currently facing CRC is in making sure that those organizations that are already obligated actually do register.”

Participants risk fines of 5,000 pounds ($7,843) for failing to register by Sept. 30. Fines then compound at 500 pounds a day.

To contact the reporter on this story: Alex Morales in London at amorales2@bloomberg.net.

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net.

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