Carbon-Cutting Incentive under Attack as Electricity Bills Soar; North East Organisations Have Just Weeks Left to Declare Their Annual Electricity Usage for a New Government Carbon Reduction Scheme Which Has Been Slammed as Little More Than a Tax on Business. PETER MCCUSKER Reports
Byline: PETER MCCUSKER
LEADING business organisations have opened fire on the Government in recent days over the raft of carbon reduction legislation.
The penalties resulting from two primary pieces of legislation - the EU Emissions Trading Scheme and soon-to-be introduced Carbon Floor Price - have been slammed for possibly driving larger UK energy users overseas.
Stan Higgins, chief executive of the North East Process Industry Cluster, said: "A huge chunk of energy intensive industries will leave the UK as a result of the proposals."
But the impact of a further scheme - the Carbon Reduction Commitment - on other businesses is just starting to emerge.
CRC is a levy for businesses and public sector bodies which is designed to ensure organisations save energy to help the Government achieve its international CO reduction targets. It was introduced in April 2010 and is applicable to organisations which have a half-hourly metered electricity consumption greater than 6,000 MWh.
In practical terms, it is estimated to affect organisations which have an annual electricity bill of over pounds 500,000 a year, and more than 5,000 UK businesses are expected to fall within its remit.
One of those affected in the region is Northumbrian Water, which says the CRC scheme will add an extra 9% to its annual electricity bill.
John Mowbray, director of corporate affairs at Northumbrian Water, said: "The introduction of this new tax will increase energy costs for the company by an estimated pounds 3m next year, with further increases of pounds 1.5m anticipated by 2014/15."
A second company, Vertu Motors of Gateshead, has made strenuous efforts to cut its emissions in recent times, with its electricity bill falling by 14% in the last year.
But with an annual electricity bill of pounds 1.6m, it has put aside pounds 140,000 to meet its CRC levy in April next year.
Its purchasing director, Elaine Cole, said: "This is a punitive tax on business. What was originally conceived as a trading scheme which would encourage organisations to cut costs has turned into a revenue generating exercise for the Government." Cole said complying with the scheme also involves time-consuming work and she has had to set aside three days in July to ensure all of the paperwork is completed.
When it was first proposed, the Government suggested that companies who cut their electricity use would be able to trade any excess credits, thus reducing the cost of the levy, but in last year's Comprehensive Spending Review it abandoned this aspect of the scheme, allowing it to retain all of the revenues generated.
Mowbray added: "Northumbrian Water was surprised by the changes introduced in the Comprehensive Spending Review last year which changed the emphasis of the Carbon Reduction Commitment from an incentive scheme to a form of taxation without any real discussion. …