Wednesday, 27 October 2010

So the 20th October 2010 has passed and the coalition government has delivered a spending review that will affect everyone. All of us can expect to fork out more money for much less with a series of spending cuts and tax rises spread across all aspects of our life. The government is aiming to claw back £83 billion over the next four years and you, me and every business in the UK is going to pay for it.

In terms of its energy policy, there has been a major change for organisations affected by the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme - it is no longer government neutral. The government has decided to change the terms of the multi-billion pound scheme and keep all the revenues raised from it, rather than re-distribute the money back to participating organisations who successfully reduce energy. It is estimated that the introduction of the “stealth tax” (as some are calling it) will raise £3.5 billion for the treasury by 2015.

Before the announcement, organisations that made efforts to reduce their energy consumption could expect to be rewarded for their efforts, so the change is likely to upset a large number of organisations participating in the scheme. Energy reduction is still the best way to lower fixed costs and over a short period of time, the initial capital outlay can easily be recouped through energy savings.

With the government’s austerity measures likely to see half-a-million public sector workers out of work by 2015 and with some business leaders estimating the private sector likely to see similar levels of job cuts, I believe that reducing energy use is vitally important to the survival of many organisations and the recovery of the economy as a whole.

Despite organisations no longer receiving rewards through the scheme for their efforts, the savings achievable through investing in energy saving equipment speak for themselves. However with the current financial frailty of the economy, finding spare cash for the initial capital outlay may be hard for some businesses to swallow. We might end up seeing organisations do the bare minimum because they simply can’t afford to outlay huge sums of money in order to take advantage of the huge range of energy saving technology that exists on the market.

What do you think about the changes to the CRC Energy Efficiency Scheme and how they will affect business?


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