KPMG Welcomes Simplification of the Carbon Reduction Commitment Energy Efficiency Scheme

Michelle Remo, “Big 4″ observer
March 28, 2012 /

As new simplification proposals designed to ease the administrative burden around complying with the Carbon Reduction Commitment Energy Efficiency Scheme are announced, KPMG has released the fifth in a series of white papers on the CRC.

This paper discusses the results of their survey of administration costs of the scheme, their views on the simplification proposals and highlights some lessons learned from conducting audits of participant’s compliance with the scheme on behalf of the Environment Agency.

The proposals announced today by the Department of Energy and Climate Change (DECC) are the result, in part, of research conducted by KPMG on the administrative cost of complying with the CRC. The findings of that research have been published in full on the DECC website and are also summarised in the KPMG white paper.

Ben Wielgus, lead adviser on the CRC at KPMG in the UK, said: “Our survey suggests total administrative costs of £97 million across all 2,779 participants in year one and £172m for all of phase one. But we expect these costs to drop as participants become more efficient at complying with the scheme. On average this means that participants are paying £15,500 a year for administrative costs of the scheme (although this varies significantly) and it adds about 5 percent to the cost of carbon for businesses.”

In terms of reducing emissions, the KPMG survey suggests that the CRC is having some positive results but that simplification of the registration and footprinting phases would be particularly welcome.

Sixty percent of respondents said they were paying more attention to energy/carbon as a result of the CRC. Around half said the scheme will lead to them reducing their footprint. Still, around half said they understand their energy usage better as a result of the scheme. Approximately two thirds of CRC participants said they spent less than 40 percent of their carbon management time on the CRC. This indicates that many CRC participants are already measuring and reporting their carbon footprints for other purposes.

Ben Wielgus concluded: “Considering the costs for allowances, administration of the scheme and the predicted energy savings made as a direct result of the CRC, the scheme will be a net cost to participants. However, the Chancellor announced in his March 2012 budget that even if the CRC is scrapped, the revenue raised would be replaced by some form of new environmental tax.

“DECC’S latest impact assessment shows that taking allowance costs out of the equation indicates participants will save twice as much in energy costs as the administrative costs of the scheme, making it net saving for business.”

 

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