CRC, EU ETS, ESOS, Climate Change Levy – the alphabet spaghetti of overlapping environmental taxes, levies and reporting obligations on businesses grow every year.
Many think that the current system is too complicated, and a distraction from improving energy efficiency. So it is good news that the Treasury is considering a much simpler system.
HM Treasury has released a consultation on reform of the energy efficiency tax landscape. The consultation is available here (https://www.gov.uk/government/consultations/consultation-reforming-the-business-energy-efficiency-tax-landscape) and closes on 7 November 2015.
The headline proposals are below.
Energy Consumption Tax
The Treasury proposes replacing the CRC Energy Efficiency Scheme and the Climate Change Levy (CCL) with a new single energy consumption tax (based on the CCL). Stakeholders are asked to comment on several issues, including:
- How to best design a single tax to improve its effectiveness;
- Should rates vary across businesses;
- Whether different approaches are needed for different businesses.
The government is considering using the Energy Savings Opportunity Scheme (ESOS) as the primary tool for energy reporting. The consultation asks a number of questions on reporting, including:
- Should reporting be mandatory;
- Should reporting require board level approval;
- Should reported data be publically available;
- What data should be collected through the reporting scheme (e.g. GHG emissions, renewable energy proportion and actions taken to meet any audit recommendations)
- Does a streamlined report enable market actors have access to transparent, reliable and comparable information in order to support financing and investment in efficient and low carbon measures.
The Treasury is also consulting on incentives for energy efficiency and carbon reduction, and the simplest way to enable businesses to access decarbonising incentives.
The results and corresponding reforms are likely to be announced in the 2016 Budget.