Magazine article Public Finance

Change of Climate

Magazine article Public Finance

Change of Climate

Article excerpt

Climate change is fast becoming a major issue for the public sector. In fact, it has the potential to touch almost every area of public sector operation. For example, it could include councils' roles as social housing providers; as regulators via building control and planning; and as community leaders and 'place shapers'. For hospitals, it could cover everything from procurement and energy consumption to building infrastructure.

While public sector bodies are generally strong supporters of all things environmental, they will soon be subject to new rules on carbon emissions, which will be introduced via legislation and are likely to be backed by tough sanctions.

Far from being another rod for the back of public sector organisations, however, these planned rules could help them to increase their influence over climate change in their area, and earn some revenue into the bargain.

The proposals are set out in a consultation paper published in November by the Department for Environment, Food and Rural Affairs, the Welsh Assembly Government, the Northern Ireland Administration and the Scottish Executive.

The consultation, which closes on January 31, is a result of the government's self-imposed target to reduce carbon emissions by 20% by 2010. It makes proposals affecting large commercial and public sector organisations, which together account for 15 million tonnes of carbon emissions.

Local authorities, hospitals, universities and central government departments are included in the group of large non-energy intensive organisations to which these new rules would apply.

The main proposal is an energy performance commitment (EPC), which would operate on a similar basis to the EU emissions trading scheme as a 'cap and trade' regime. This would mean that those covered by the scheme would be required to purchase allowances corresponding to their emissions from energy use and then surrender them to a co-ordinator.

It is proposed that after two or three years, when the price of allowances would be fixed, the overall cap would be set by the government, with individual organisations setting their own limits within this.

There would be a 'carrot and stick' approach, with which the public sector is familiar. Organisations reducing their carbon footprint would be rewarded with a rebate and ranked higher in an emissions reduction league table. Those seen as being carbon inefficient would experience negative publicity from being at the bottom of the league and receive less of a rebate. …

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