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CSR 2010: Construction firms hit by changes to Carbon Reduction Commitment

Businesses are demanding clarification about changes to the Carbon Reduction Commitment Energy Efficiency Scheme, which will now see its £1bn annual revenue go directly to the Treasury rather than participants.

The change to the mandatory scheme, which is aimed at cutting emissions and improving energy efficiency in the private sector, will come into force from April 2012 but a further announcement from the Department of Energy and Climate Change is not expected until next month.

Among the businesses already signed up to the scheme are Balfour Beatty, Laing O’Rourke, Bam Construct, Morgan Sindall, Skanska, Bovis Lend Lease and Interserve as well as steel contractor Severfield Rowen, housebuilder Taylor Wimpey and major developers, including Land Securities and St Modwen.

Major public sector clients such as the Highways Agency and Network Rail will also have to participate in the scheme.

The British Property Federation estimates that up to £3.5bn due to be recycled to participants, had the system remained the same, will instead be kept by government.

The CSR document said: “The CRC Energy Efficiency scheme will be simplified to reduce the burden on businesses, with the first allowance sales for 2011-12 emissions now taking place in 2012 rather than 2011.

Revenues from allowance sales totalling £1 billion a year by 2014-15 will be used to support the public finances, including spending on the environment, rather than recycled to participants. Further decisions on allowance sales are a matter for the Budget process.”

Climate change minister Greg Barker said: “This hasn’t been done lightly but against the background of the unprecedented deficit, we’ve had to allocate proceeds of the CRC to support public finances, including the environment. The CRC will continue to drive improvements in energy efficiency in the UK. I now want to hear from business on how we can simplify and improve the scheme.”

BPF chief executive Liz Peace said: “The coalition said they wanted to simplify the complexities of the CRC and they have certainly found a novel way to do that. This will not however “remove the burden on businesses” as they claim, but ensure that the CRC will cost the wider business community almost £3.5bn more than it would have.”