Budget 2016: Mandatory GHG reporting retained
A single energy and carbon reporting scheme is to be introduced from April 2019, while the carbon reduction commitment (CRC) is to be scrapped.
The obligation for listed companies to report greenhouse gas (GHG) emissions, which the government had threatened to end, is to be retained. Responses to the government’s consultation on energy efficiency tax reform revealed widespread support for mandatory reporting among the business community, which claimed it was a key driver in energy efficiency investment decisions.
Last week, executives from companies including Aviva, BT, M&S, National Grid and organisations such as IEMA and the Aldersgate Group signed an open letter to the Independent newspaper calling for mandatory GHG reporting, which was introduced in October 2013, to be retained.
In its response to the consultation, which was released today, the Treasury states: ‘It is important to maintain this reporting in order to provide data transparency for investors and establish London as a centre of global green finance.’
The planned single reporting framework, the details of which the government said it would consult on later this year, integrates the existing compliance and reporting requirements of climate change agreements (CCAs), the energy savings opportunity scheme (ESOS) and the EU emissions trading scheme (EU ETS).
It would apply to all organisations covered by ESOS, as well as many large public and third sector organisations. The Treasury stressed that the scheme would be designed to minimise the administrative burden for participants by aligning data collection and reporting requirements and deadlines.
In his budget speech, chancellor George Osborne said that the CRC would close after the 2018-19 compliance year.
The Treasury confirmed the detail of the changes in a document published alongside the budget. It said organisations would have to report under the CRC for the last time by the end of July 2019, and surrender of allowances for emissions from energy supplied in the 2018-19 compliance year by the end of October 2019.
The government plans to recover the revenue lost from the CRC by increasing the main climate change levy (CCL) rates from April 2019. It also said it would rebalance the CCL rates for different fuel types to encourage companies to use less gas, moving to a ratio of 2.5:1 (electricity: gas) from April 2019. The current ratio is 2.9:1.
Discounts on the levy for organisations covered by climate change agreements (CCAs) will increase from April 2019, the document states, and there will be no change in the eligibility criteria for CCAs until at least 2023.
Commenting on the announcements, Nick Blyth, policy and engagement lead at IEMA, said: ‘We are pleased to see government retain mandatory carbon reporting. In scrapping the CRC, the chancellor’s approach to replacing the revenue raised from CRC allowances in a “fiscally neutral way” by simultaneously increasing the CCL could be a concern as that such a tax may be difficult to make effective.’
Julie Hirigoyen, chief executive of the UK Green Building Council, said: ‘While we support the chancellor’s desire to streamline the business energy tax landscape, this must not come at the expense of ambition. Effective regulatory drivers and reporting frameworks can reduce the burden on businesses, cut their energy costs, and ensure their long-term survival.’
Stephanie Pfeifer, chief executive of the International Investors Group on Climate Change (IIGCC), which represents investors managing more than £13trn, also welcomed the retention of mandatory reporting of GHG emissions, saying the issue had been a ‘central concern’ of its investor members.
Senior energy policy adviser at manufacturers’ organisation EEF, Richard Warren, said: ‘Manufacturers will be enormously pleased to finally see the back of the CRC energy efficiency scheme, a vastly overcomplicated tax that has had a negligible effect on energy efficiency improvements in industry.’
Although EEF would have liked to see the government completely relinquish the revenue stream attached to the scheme, it welcomed the government’s commitment to make changes to the CCL in a revenue neutral manner, he added.
David Symons, WSP|Parsons Brinckerhoff environmental director also welcomed the abolition of the CRC, but added: ‘The only surprise is that it’s still around until 2019.’