U.K. Reduces Emissions Reporting Burden to Save $437 Million

The U.K. will make businesses report emissions on fewer fuels than initially proposed, as it seeks to shave 272 million pounds ($437 million) off the costs of a carbon reduction program.

Public and private sector organizations will have to report emissions from only two fuels, electricity and gas, compared with 29 originally covered by the CRC Energy Efficiency initiative, the Department of Energy and Climate Change said today. The government in March had proposed cutting the number to four.

The CRC, or carbon reduction commitment, makes it mandatory for about 5,000 businesses and public sector bodies using more than 6,000 megawatt-hours of electricity a year to report their annual emissions and buy allowances from the government to cover their carbon output. Participants had criticized the program for its complexity and costs, which KPMG estimated in December 2011 to be about 30,000 pounds to 36,000 pounds per participant. The government consulted on proposals in March to reduce the costs.

“We have listened to the concerns of business and radically simplified the scheme in order to cut down on administrative costs and red tape,” Energy and Climate Change Minister Gregory Barker said today in a statement. “The scheme will now be more flexible and light-touch, saving participants money and helping them to save energy”.

Next Year

As well as cutting the fuels covered, the government implemented most of its March proposals to simplify the program including dropping a performance league table. The reforms will deliver a 55 percent reduction in costs saving about 272 million pounds for participants, the government said today. Most proposals take effect from next year. The government will review the program in 2016.

“Many U.K. businesses have struggled to come to terms with some of the technical complexity of the CRC scheme,” Jane Southworth, legal director at law firm Eversheds LLP, said. “Businesses are likely to welcome these reforms as they will help to make the scheme far more user friendly,” she said, while noting that the plan to review the program in 2016 made the initiative’s long-term future more uncertain.

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