Big businesses hit by a carbon stealth tax

GREEN energy campaigners were horrified yesterday as the government quietly introduced a shock £1bn stealth tax on firms’ carbon emissions.

Amid a spending review which was generally positive for the cleantech industry, the coalition said it would scrap plans to “recycle” contributions to the Carbon Reduction Commitment (CRC) energy efficiency scheme back to the organisations performing best on the emissions scale. Instead, the money raised will be poured back into Treasury coffers to support the public finances.

The CRC, introduced in April, is designed to target the UK’s largest businesses and public sector bodies by forcing them to purchase carbon allowances if they use over 6,000 MWh of electricity per year.

However, the original scheme acted as an incentive to big firms to improve their energy efficiency record, since revenue raised from the allowances was set to be recycled back to organisations on a declining scale based on their carbon performance.

Industry figures yesterday warned that scrapping plans to recycle revenue back to organisations would turn the scheme into a stealth tax and would no longer incentivise firms to try and reduce emissions.

Roman Webber, Deloitte’s UK renewable energy head, said the measure came as a “big shock” to the industry. “It was unexpected and may turn a previously revenue neutral scheme into a carbon tax,” he said.

Stephen Robertson, director-general of the British Retail Consortium, said he was “surprised and dismayed” at the move, which he said would hit retailers particularly hard since they use a lot of property.

City organisations which operate from expansive properties designed to accommodate large numbers of staff will also be adversely affected. Many firms have already put in place schemes to bring down their carbon emissions, including installing solar panels or greenery on rooftops.