CBI calls for scrapping of penalties for carbons

System for excessive emissions is now 'discredited' and treated as just a tax

The CBI is calling on the Government to overhaul the penalty system for excessive carbon emissions, branding its handling of the £1bn-a-year carbon reduction scheme as dishonest and "discredited" and demanding that it is scrapped.

The UK's so-called Carbon Reduction Commitment scheme was announced with great fanfare in 2007 and formed the central plank in the Labour government's attempt to clamp down on corporate Co2 emissions.

The scheme was originally intended to persuade Britain's 3,000 biggest carbon emitters, with annual electricity bills of £500,000 upwards, to become more energy efficient by charging them for any emissions generated above a given level.

The proceeds from those penalties, estimated to be about £1bn a year, were to be returned to those companies who had made the biggest strides towards reducing their carbon footprint, providing an incentive for them to become more energy efficient.

However, the CBI and other detractors from the CRC scheme argue that it was in effect killed by the present Government's October 2010 Spending Review. This contained a clause stating that the proceeds from the CRC would no longer be recycled to the greenest companies, but would instead be pocketed by the Government.

John Cridland, the CBI's director general, argued yesterday that the move changed the CRC's status from being an incentive to a tax.

"The Government has snaffled all the receipts, so it's a tax. And if it's a tax, call it a tax. As an incentive scheme, CRC has a huge bureaucracy around it," he said. Mr Cridland said we should scrap the CRC scheme to get rid of the "rigmarole, the regulation, the league tables" surrounding it.

He stressed that the Government should still look to raise about £1bn a year from carbon emissions, but by taxing the companies' energy consumption directly, through an extension of the existing Climate Change Levy. The change should be made in tandem with mandatory carbon reporting, the CBI said.

"The CBI supports the original objective behind the CRC: to secure emissions reductions and promote energy efficiency.... However, removing the recycling element has undermined the scheme."

A spokeswoman for the Department of Energy and Climate Change said: "We have engaged extensively with stakeholders to gather opinion on the CRC. Following on from this, we are looking into how to simplify the scheme and we will publish proposals on this shortly."

The CBI's call to scrap the CRC was part of a broader set of pre-Budget proposals it is announcing today.

These include asking the Government to consider £500m-worth of tax cuts, through measures such as a new capital allowance for various infrastructure projects not already covered by such allowances, making equity raising by small and medium-sized companies tax deductible, and reducing the increase in air passenger duty from its proposed level of 8 per cent to 5 per cent.

Mr Cridland also expressed a degree of optimism about the global economy, saying there "is every prospect that things are beginning to pick up".

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Are you passionate about sale...

Ashdown Group: Graduate Developer (Trainee) - City, London

£25000 per annum + benefits: Ashdown Group: A large financial services company...

Ashdown Group: Marketing Assistant - Financial Services Sector - London

£20400 per annum: Ashdown Group: An established and highly reputable organisat...

Recruitment Genius: Financial Services Graduate Training Scheme

£20000 - £100000 per annum: Recruitment Genius: We are a successful and establ...

Day In a Page

War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border
Doris Lessing: Acclaimed novelist was kept under MI5 observation for 18 years, newly released papers show

'A subversive brothel keeper and Communist'

Acclaimed novelist Doris Lessing was kept under MI5 observation for 18 years, newly released papers show
Big Blue Live: BBC's Springwatch offshoot swaps back gardens for California's Monterey Bay

BBC heads to the Californian coast

The Big Blue Live crew is preparing for the first of three episodes on Sunday night, filming from boats, planes and an aquarium studio
Austin Bidwell: The Victorian fraudster who shook the Bank of England with the most daring forgery the world had known

Victorian fraudster who shook the Bank of England

Conman Austin Bidwell. was a heartless cad who carried out the most daring forgery the world had known
Car hacking scandal: Security designed to stop thieves hot-wiring almost every modern motor has been cracked

Car hacking scandal

Security designed to stop thieves hot-wiring almost every modern motor has been cracked
10 best placemats

Take your seat: 10 best placemats

Protect your table and dine in style with a bold new accessory
Ashes 2015: Alastair Cook not the only one to be caught in The Oval mindwarp

Cook not the only one to be caught in The Oval mindwarp

Aussie skipper Michael Clarke was lured into believing that what we witnessed at Edgbaston and Trent Bridge would continue in London, says Kevin Garside
Can Rafael Benitez get the best out of Gareth Bale at Real Madrid?

Can Benitez get the best out of Bale?

Back at the club he watched as a boy, the pressure is on Benitez to find a winning blend from Real's multiple talents. As La Liga begins, Pete Jenson asks if it will be enough to stop Barcelona
Athletics World Championships 2015: Beijing witnesses new stage in the Jessica Ennis-Hill and Katarina Johnson-Thompson heptathlon rivalry

Beijing witnesses new stage in the Jess and Kat rivalry

The last time the two British heptathletes competed, Ennis-Hill was on the way to Olympic gold and Johnson-Thompson was just a promising teenager. But a lot has happened in the following three years
Jeremy Corbyn: Joining a shrewd operator desperate for power as he visits the North East

Jeremy Corbyn interview: A shrewd operator desperate for power

His radical anti-austerity agenda has caught the imagination of the left and politically disaffected and set a staid Labour leadership election alight
Isis executes Palmyra antiquities chief: Defender of ancient city's past was killed for protecting its future

Isis executes Palmyra antiquities chief

Robert Fisk on the defender of the ancient city's past who was killed for protecting its future
Berlusconi's world of sleaze: The astonishing lifestyle once enjoyed by Italy's former PM

Berlusconi's world of sleaze

The astonishing lifestyle once enjoyed by Italy's former PM
Disney plans galactic domination with endless Star Wars spin-offs

Disney plans galactic domination with endless Star Wars spin-offs

Films and theme parks are just the beginning. Disney believes its control of the now decades-old franchise can bring in merchandise and marketing millions for years to come
Could the golden age of the gaming arcade ever be revived in the era of the Xbox?

Could gaming arcades be revived?

The days when coin-ops were the only way to play the latest video games are gone. But a small band of enthusiasts are keeping the button-pushing dream alive
Edinburgh Fringe 2015: The 'tampon tax' has inspired a new wave of female comedians to reclaim period jokes

Heard the one about menstruation?

Yes, if you have been at the Fringe, where period pieces are taking centre stage