The government is cutting the bureaucracy associated with the Carbon Reduction Commitment Energy Efficiency Scheme (CRC) in a move that it says will saves businesses millions of pounds

But environmentalists fear that it increases the likelihood that the scheme will be axed in a review this autumn.

Chancellor George Osborne has described the scheme was ‘cumbersome’ and ‘bureaucratic’ and has said it imposes an ‘unnecessary’ cost on business.

He proposed to ‘seek major savings in the administrative cost of the commitment for business’.

‘If those cannot be found,’ he added, ‘I will bring forward proposals this autumn to replace the revenues with an alternative environmental tax.’

The government says that under its proposals, participants’ administrative costs will be cut by almost two-thirds, equivalent to about £330 million of savings up to 2030.

The CRC is a mandatory UK-wide trading scheme that covers large business and public sector organisations responsible for 12 per cent of UK carbon emissions.

It requires businesses to report on and pay a tax on the energy they use, and ranks businesses in a performance league table that gives them a further reputational incentive to improve their energy efficiency.

The lighting industry is a particular beneficiary of the CRC, because lighting is a fast and cost-effective retrofit option to reduce energy use.

The CRC is expected to deliver carbon savings of 21Mt of CO2 by 2027.
The package proposed is designed to retain the energy-saving and reputational benefits of the CRC, but reduce the bureaucracy involved in taking part.

Energy and climate change secretary Ed Davey said: ‘We have listened to businesses’ concerns about the CRC and have set out proposals to radically cut down on red tape to save businesses money.

The formal consultation will run for 12 weeks. After this, the government will amend the legislation for CRC by April 2013.

The simplification package will include:

• Shortening the CRC qualification process.
• Reducing the number of fuels covered by CRC from 29 to four.
• Reducing the amount of reporting required by businesses.
• Reducing the length of time participants have to keep records.
• Removing the requirement on sites covered by Climate Change Agreement or EU Emissions Trading System installations to purchase CRC allowances.
• Adopting new emissions factors for the CRC that will align it with greenhouse gas reporting processes.
• Removing the detailed metrics of the performance league table from legislation and placing them in government guidance.

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