Under the Government’s Carbon Reduction Commitment (CRC) scheme, announced last May, from next year every organisation that consumes more than 6,000 megawatt hours of electricity in 2008 or about £500,000-worth will now buy carbon allowances.

The mandatory cap and trade scheme will affect 5,000 large companies and local authorities in Britain and is aimed at slashing the country’s total carbon emissions by an extra 1.2 million tonnes a year by 2020. (Source: The Times, March 31, 2009)

However, in a struggling financial climate, can UK businesses afford the time and expense in delivering what may be viewed as ‘another layer of bureaucracy’? 

Unfortunately, in the UK’s recently launched economic rescue package, there appears to be “negligible” spending on green measures – as campaigners claimed in a report published today.

According to Andrew Simms from the New Economic Foundation, only 0.6% of the promised £120m government stimulus package to offer businesses the incentive to create and deliver a low-carbon economy was delivered. 

Compared with the £775m bonuses paid to staff at the Royal Bank of Scotland and £2.3bn handed to the car industry, the environmental sector has been short changed.

Gordon Brown has claimed that around 10% of the stimulus package is directed towards “environmentally important technologies”, thus this figure not only conflicts with the amount of 0.6% offered, it also does not meet the proposed funding targets by Lord Stern, a target of 8% of Gross Domestic Product annually in green stimulus spending.  (Source: guradian.co.uk – March, 30 2009)

As businesses are driven by the new CRC target to invest in carbon saving measures, it appears that the UK green stimulus package is not doing the same.  In fact Boris Johnson was seen to be halving his Environmental team in London this week, setting the tone for difficult environmental times ahead.

But is the CRC really compromising the bottom line of businesses, or in fact creating financial savings through less energy consumption over time?  It appears that the financial impact of the CRC scheme will grow in the longer term, with an introductory phase due in April 2010, under which all allowances will be sold at a fixed price, and from April 2013, allowances will be allocated through auctions, with the number of credits available being reduced over time.

The proceeds of these auctions will be paid back later to businesses (based on their performance during that year) and ranked in a league table based on carbon reduction actually achieved. (Source: The Times, March 31, 2009)

Leading scientists from the Tyndall Centre for Climate Change Research claimed this week that the level of carbon budgets for the UK, recommended by the Committee on Climate Change (CCC) last December were too weak to limit the temperature rise to 2C and stop dangerous climate change.

Following new evidence which emerged from a major climate conference in Copenhagen last month, warning that climate change is likely to be worse than expected and will hit us harder and faster; the scientists claim that the Committee’s report was based on “naively optimistic” assumptions and scenarios. The report recommends a 34% cut by 2020 but the scientists stress that a minimum reduction of 42% (the Committee’s most stringent scenario) must be made through cuts in the UK, rather than buying offsets abroad. The UK must lead by example, maintaining its reputation as a leader in climate change policy on the international stage.

The Tyndall scientists say the committee’s report is “inevitably and significantly compromised” because it focuses on limiting temperature rise to 2C above pre-industrial levels, which the EU defines as dangerous. The Committee was forced to use “highly optimistic and sometimes unclear assumptions” to hit the 2C target, they say.

Another criticism of the report was its claim that GHGs would peak at 2016, despite little evidence to map this trend, which the Tyndall centre felt would more realistically be at 2020. But could this be too late for the 2C target? The CCC argues however, that the 2016 peak was supported by a number of studies and based on an assumption that a global deal to tackle climate change would be reached in 2009.

The report, commissioned by Friends of the Earth, will be presented to the Environmental Audit Committee this week. The proposals are backed by more than 90 Labour MPs – including four ministerial aides – in a parliamentary petition; and hope to encourage the government to adopt more stringent carbon budgets in its decision later this month.

Andy Atkins, Friends of the Earth’s executive director, said:

“This advice from one of the world’s leading climate research centres cannot be ignored. If we are to play our part in avoiding dangerous climate change, the government must commit the UK to cutting its greenhouse gas emissions by at least 42 per cent by 2020 without buying pollution ‘offsets’ from abroad. The UK has one of the best renewable energy potentials in Europe. Investing in green power and cutting energy waste can create tens of thousands of jobs and help lead this country out of recession.”

This reference to a solution which includes investment in GHG mitigation and green jobs comes in a week which has seen Shell announce that it will pull out of renewable energy projects due to their weak economics, and the closure of the Low Carbon Buildings Programme (a government grant programme which supports investments in renewables) angers environmental campaigners.

On a more positive note, further details on the UK’s first national emissions trading scheme – the Carbon Reduction Commitment (CRC) – were announced this week. The Scheme captures hotels, schools, banks and over 5000 other organizations and is expected to reduce over 4MtCO₂ per year by 2020.

The implementation of initiatives to help the UK meet the targets set out in the Climate Change Act were never going to be easy, and this is just the beginning. In such depressing economic times, we’re all looking to the Government to inspire us with some confidence and motivation to drive the green revolution.

The Government’s response to the Committee on Climate Change’s recommendations is expected later this month.