Carbon Reduction Commitment: carbon trading or a carbon tax?

Trewin Restorick

Trewin Restorick questions the wisdom of the "mind-blowingly complicated" CRC scheme

BusinessGreen, 07 Sep 2010
There are less than six weeks before organisations need to register for the Carbon Reduction Commitment (CRC).

Almost 1,600 organisations have registered, which is about half the number now expected by the Environment Agency.

The scheme is mind-blowingly complicated with new rules appearing all the time. For instance, in early August the agency decreed that even insolvent firms and those in administration have to register!

DECC has realised the degree of complexity and has belatedly asked for suggestions on simplification.

The difficulty in implementing the CRC has strengthened calls for a simple carbon tax to be introduced rather than trading schemes, which would be a break with the long-running preference amongst policy-makers.

A recent report by the Policy Exchange noted that trading schemes are wide open to lobbying by vested interests and that the pricing signal of the CRC is too small to have an impact, and builds in complexity.

The report also called for the axing of Feed-in-Tariffs estimating that as well as being socially unjust they are costing £460 per tonne of carbon saved.

Personally, I feel that a carbon tax would be a far simpler and more effective solution than trading schemes which, while excellent in principle, are a nightmare to administer.

What is clear though is that the CRC has forced the issue of carbon measurement and reduction up boardroom agendas largely because of the reputational issues linked to the league tables and this element needs to be retained.

Food versus fuel

Another area where policy is struggling to deal with the complexity of our global economy is around land use.

A 30 per cent rise in the price of bread has caused food riots in Mozambique. Wheat prices are soaring largely because Russia has suffered an extreme heat wave and associated fires, causing the world's third largest producer to impose an export ban for the second year running.

The rising price of wheat has called into question the wisdom of the EU's biofuel targets introduced in an attempt to wean us from our dependence on oil.

The UK has to meet a compulsory target ensuring that 10 per cent of our transport fuel comes from renewable sources by 2020. To hit this target production capacity is being developed that could guzzle one-fifth of our total wheat production.

The Renewable Transport Fuel Obligation always seemed a crazy piece of legislation to me. We did some research on the issue around the time it was introduced and even our cursory inspection highlighted the problems it would create around land use.
As with many environmental issues, far more effort should be placed on reducing consumption and waste in the first instance and, as Global Action Plan is constantly discovering, there are huge and cost-efficient savings to be made in this area.

The greenest Government ever?

There are an increasing number of worrying signs that the recession will stop money being invested in initiatives that will help us to hit our carbon targets and enable us to deal with the impact of more extreme weather events.

In the past week alone Shropshire Council has announced that it is planning to save £225,000 a year by stopping its weekly collection of food waste, just at a time when the Government has committed to a huge increase in Anaerobic Digestion.

There are rumours that house builders are being successful in their lobbying efforts to soften the carbon neutral targets around new builds due to costs.

Another report suggested that the Government will not be investing in the Seven Barrage and the Met Office has highlighted the need for water companies to invest heavily in drainage systems that can cope with extreme rainfall at a time when their budgets are being heavily squeezed.

The Coalition Government entered power setting out the ambition to be the " greenest government ever". The results of the Comprehensive Spending Review on essential environmental investments will test the validity of this statement.

Another award night, another highly commended

On Wednesday, a group of us headed off for the Charity Times Award event at the Hilton Hotel in Park Lane.

Our partnership with Sky had been short-listed for the best corporate/charity partnership of the year. We went more in hope than expectation as we were up against some of the UK's largest and most well-known charities.

All charity award nights are totally incongruous and this one was no exception. There aren't many events where you get pseudo razzmatazz music followed by the opening speaker making comparisons between some of the current Government’s policies and Stalin!

Fortunately the host for the night, Ruby Wax, correctly identified the absurdity of the whole thing.

She joyously trampled on slightly the wrong side of the line of bad taste, most notably by congratulating the Alzheimers Society on remembering that they had entered one award.

We ended up with the bitter-sweet satisfaction of coming second (again!) by which point I had downed sufficient alcohol to be dragged into the forced jollity.

The night ended up with colleagues and 4 straws downing a goldfish bowl-sized mojito at 3am. The next day was not pretty.

Trewin Restorick is chief executive of environmental charity and advisory body Global Action Plan