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UK government to simplify corporate carbon trade scheme

LONDON, Dec 5 (Reuters) - The British government will simplify its costly and complex scheme for corporate carbon emissions reduction and will review its effectiveness in 2016, after which it could be scrapped, the UK Treasury said on Wednesday.

The so-called Carbon Reduction Commitment (CRC) was devised under the previous Labour government to reduce the carbon footprint of businesses, which are responsible for around 10 percent of UK emissions, through energy efficiency improvements.

Businesses have criticised the scheme as being too bureaucratic and costly and for overlapping with other government policies and the European Union's emissions trading scheme.


"The government will simplify the Carbon Reduction Commitment energy efficiency scheme from 2013, providing very significant administrative savings for businesses in the scheme," the treasury said in its half-yearly budget statement.

The mandatory scheme forces UK businesses using more than 6,000 megawatt hours of electricity a year to monitor usage and report their emissions annually. A performance league table ranks companies according to their energy efficiency.

The government will abolish the league table to simplify the scheme, it said in the statement.

"A full review of the effectiveness of the CRC will be held in 2016, and the tax will be a high priority for removal when the public finances allow," it added.

In a letter to UK finance minister George Osborne last month, the Confederation of British Industry asked the government to "draw a line" under the scheme, saying businesses wanted to see it scrapped.

Earlier this year, Osborne said the government could abolish the scheme in favour of an alternative environmental tax if it did not manage to reduce the CRC's costs.

"The CRC is bad law," said Michael Hutchinson, head of the environmental group at law firm Mayer Brown.

"The rules are impenetrable to most ... it doesn’t guarantee emissions reductions, it can punish growth and anecdotal evidence suggests that serious questions need to be asked about the level of compliance," he added.

The CRC is aimed at cutting Britain's greenhouse gas emissions by 4 million tonnes and corporate energy bills by 1 billion pounds ($1.6 billion) a year by 2020.

By Nina Chestney - nina.chestney@thomsonreuters.com