By Rupert Redesdale
It has been a running complaint amongst energy managers that there is a great deal of duplication of work linked to meeting the reporting obligations of the Carbon Reduction Commitment (C
RC) and Green House Gas emissions (GHG). The Chancellor announced last summer that he is looking to wrap all the energy taxes into one simplified energy tax regime. In practice this means CRC, GHG, CCAs, ESOS (bizarrely even if it is not a tax), may all be reported through the Climate Change Levy (CCL) as one lump sum to directors at a specified time.
The reason carbon has not been mentioned is that it does not need to be reported if CCL is used, but it would be easy to work out using a standard conversion factor.
The EMA has been assisting Treasury with its thought-process and has presented a simple five page reporting methodology. The reporting form can be made simple because in essence this is simply a tax. The EMA proposal suggested that tax should cover the use of electricity and gas in each of the sites a company owns and uses. If other greenhouse gases are used this could be reported as an addition. The purpose of the reporting is simply to make Boards aware of their energy use and therefore do something about it.
There are a number of questions that arise from this approach. Should road fuels be included in the report? Should heating oils also be included in the report? Should ninety per cent of energy use be reported which would leave companies the ability to ignore the tricky small scale last ten per cent? Should companies be forced to implement suggested energy saving measures as part of the process? The answers from the EMA are yes, no, yes, no. You may have different views but do not worry, there will be a consultation later in the year.
The idea that Boards, when faced with a stark reminder of how expensive energy is, should hopefully make them undertake energy efficiency measures.
The new tax regime should be finalised in 2017 with implementation at the beginning of 2018. The easy question to answer is whether it will reduce the bureaucracy. The only question that will be difficult to answer is that as ESOS is mandated by the EU, as part of the Energy Efficiency Directive, will it still be relevant to the UK by then? The EMA’s view on this is yes, no, but not necessarily in that order. Whatever happens, the next steps will be outlined in the Spring Budget on 16th March.