The Minister explained the over-burdensome nature of the original CRC order and we agree with her. This simplified scheme is to be applauded, although there are a few concerns about the reduction of benefits as a consequence. Nevertheless, it is right that the Government proceed with the scheme. Despite cost-effective energy efficiency savings being available, the Carbon Trust reported as far back as 2005 that organisations’ emissions were not being reduced. Indeed, they have remained constant for the past 20 years, due to a lack of awareness at board and senior management level, a lack of financial incentives to reduce emissions and a lack of prestige associated with efficiency activity.
Generally, energy costs tend to be only 1% or 2% of operating costs for business. While I can confirm acceptance of the order today, I want to ask the Minister about one or two concerns arising from this simplified scheme. Since the scheme began in 2010, it has drawn considerable criticism for being too complex, burdensome, difficult to understand and costly to administer. It is good that the Government are bringing in a more practical scheme, but has something been lost in the translation?
While the memorandum explains that considerable savings will be made—a 55% reduction in overall administrative costs—it does not explain what percentage reduction in efficiency improvements and carbon emission reductions may result from the simplification. For example, it says that there is a reduction in fuels from 29 to two and that the scheme will cover only emissions generated from the consumption of electricity and gas. This is still important, but will the Minister confirm that the scheme will still capture a major percentage of the efficiency improvements targeted by the original scheme?
On this benefits side of the equation, there is a loss from the original scope of the order. The impact assessment puts this at around £183 million. The Secondary Legislation
Scrutiny Committee also commented on this in its 33rd report. It is not clear from the Minister’s department’s reply to the questioning on the validity of the order, when set against such loss of benefits, whether this is due to double counting of benefits as a result of reducing the overlaps between CCL, CCA and EU ETS instruments. Will the noble Baroness explain whether this loss of benefit is per phase or a loss for the total scheme to 2039?
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This also seems to contradict another assessment in the memorandum that there is no significant change in the impact on simplification measures. I should be grateful if the Minister could clarify the impact of the loss of benefits and the effect that that will have on our carbon emission reductions. The memorandum also explained that in December 2010, when the impact assessment was published, the devolved Administrations’ decision to retain the schools CRC scheme participation was still pending. In February this year—last month—all devolved Administrations confirmed that their schools would continue to participate in the CRC scheme and that only English schools would be withdrawn from it. Will the Minister explain the rationale behind this decision to withdraw English schools, and the difference or added benefits that that will bring? I understand that the memorandum talks of it having an effect on the revision of the baseline of the CRC. That I well understand, but will it lead to any difference between the energy efficiency of English and devolved Administration schools?
Overall, the necessity and benefits of the CRC scheme are well recognised and supported by respondents to the consultations. I confirm agreement to the order and look forward to its start in May this year.