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UK Government’s Reformed Carbon Reduction Plan

Submitted by on 23 March, 2020 – 4:32 am

The decision by the UK government last week to keep the revenue from the carbon reduction commitment Recycling Energy Efficiency Plan rather than between the parties has outraged many companies and organizations.

Many companies, including Digital Realty Trust, Interxion, Equinix, TelecityGroup, SunGard, Savvis and HP have already spoken about the program recently renovated.

They argue that the government has turned to the CRC in a direct tax on carbon production.

The changes could cause customers to shift their IT services to other countries where they can not be taxed in power consumption and potentially slow down any new data center is based in the UK.

The decision to reform the CRC scheme has met with conflicting reactions.

Although some feel as if it simplifies the complicated nature of the plan above, many are outraged by the decision.

In a report GreenBusiness.com, John Alker, director of policy and communications in the UK Green Business Council, talks about the changes:

The announcement that the government is keeping money from sales of Carbon Reduction Commitment assignment has come from nowhere. You can make the system simpler, but this is something I have to consult with industry before plunging into.

In the same report, the climate minister Greg Barker, blamed the “catastrophic” deficit inherited from the Labour government as reasons for change.

We chose to focus on the positive aspects of the changes that would, arguing that “progressive companies acting to improve energy efficiency will be able to minimize their exposure.”

Daniel Cremin, marketing manager of communications at Climate Change Capital said the overall positive impact the decision would have on the environment:

This is a bold move by the government to stop this and put the focus on business. There will be winners and losers, but it’s a double whammy for the environment – encouraging industry to improve energy efficiency of buildings and not to get funding. ”

In a report in The Daily Telegraph, the energy minister Charles Hendry streamline the review of the CRC.

“Part of what we’re trying to do is respond to the concerns that the system is too complicated. We are reducing the complexity.”

Not surprisingly, companies were not so tolerant. Stephen Robertson, director general of the British Retail Consortium criticized the Treasury for the transfer:

“We are surprised and dismayed that the £ 1bn a year the participating companies are placed in the carbon reduction scheme of commitment is not to be recycled to participants but is to be bagged by the Ministry of Finance.

A tax of this size certainly deserves a mention in the speech of the Chancellor. It is regrettable that the Government is hidden in this, the introduction of a new burden on businesses that are trying to create new jobs to offset budget cuts in the public sector and economic growth to generate the tax base to pay debt.

Steve Radley, Director of Group Policy in manufacturing FEE echoed Robertson’s words:

If the private sector will play an important role in increasing investment and boosting the growth it needs clarity and stability. To change the rules six months after the start of the game and business of landing a tax increase of £ 1bn unsignalled the government has sent an unwanted signal to business.

In a report by eWeek Europe, Richard Lambert, director general of the CBI said the government has turned the CRC scheme just another tax:

Companies that have signed up to the flagship system carbon reduction commitment to energy efficiency will be very disappointed by the unexpected announcement of the government to withdraw the cash incentive back. A regime that was destined to change the behavior of encouraging energy efficiency has become another stealth tax.

In the same report, Kanat Emiroglu, managing director of British Gas Business said the decision was the result of the complicated nature of the regime:

The CRC scheme is a great opportunity – if we can get the right application. The benefit would be enormous – equivalent to 4.4 million tonnes of CO2 savings per year by 2020 – saving businesses £ 1bn in energy every year.

Liam Newcombe, director of energy technology to monitor the software company said Romonet Data Center Knowledge that the new “green tax” would have the greatest impact on enterprise data center:

This change in recycling payments clearly have a substantial impact on the market for data centers in the United Kingdom … There are clear impacts the data center market. Colo providers are likely to have to add a direct “tax CRC” to the customer energy bills often measured power multiplier.

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