DECC examines proposals for Climate Change Agreements
The Department for Energy and Climate Change has recently published its report on the prospects of Climate Change Agreements which outlines the most and least popular proposals in tackling the green issue.
The Report summarised a meeting of key stakeholders to look at the industry’s views and ideas on developing policy issues.
60 people attended the event.
The first suggestion was to have a competition whereby bids would be made on the amount of carbon savings a sector expected to make over a given period. It was felt that whilst this would increase carbon savings because of the competitive element involved, it would be too likely that this approach would favour larger organisations that are better placed to develop high quality bids.
The second suggestion was to close Climate Change Agreements and have no Climate Change Levy discount, but not require relevant sectors to purchase allowances in the Carbon Reduction Commitment Energy Efficiency Scheme. Having no CCAs or CCLs would allow for simplicity but if everyone had to pay the full level of CCL without discount then this could have a significant financial effect on those sectors that are most energy reliant. This idea was felt to be likely to cause more harm than good.
The next suggestion was to create carbon reduction strategies for the CCL discount. Sectors would have to propose their carbon reduction strategy and in return they would receive a CCL discount. This was an idea favorable to the attendees of the meeting. This would give responsibility to the industry and as a result would be likely to create good long-term practices and investment. However, the issue of equality of proposals across the industries was raised and making sure that each sector has an equally challenging proposal to implement could cause problems.
The most favored idea was the last one put forward. The current CCA scheme would continue but in a modified form. It would continue but with changes such as an 80% tax break to energy intensive industries providing that they meet the energy efficiency targets set. The benefit of continuing with CCA’s is that the industry is already aware of their existence and how they work and the initial implementation was based on full proposal and consultation, so there is certainty that the scheme can deliver. The only drawback remaining is that it would create a more complex system that is heavy on resources which will undoubtedly have financial effects.