CRC changes have torpedoed business confidence, says CBI

The government’s bid to be the ‘greenest ever’ is being undermined by the changes it has made to the CRC and uncertainty over the planning process, according to the CBI. […]

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By Kelvin Ross

The government’s bid to be the ‘greenest ever’ is being undermined by the changes it has made to the CRC and uncertainty over the planning process, according to the CBI.

The business organization warned that the government’s changes to the CRC had removed an important incentive for businesses to improve energy efficiency. And Westminster’s subsequent decision to delay the second phase of CRC has not allayed concerns among businesses about how the scheme will work.

The CBI also called on the government to tackle a raft of planning applications awaiting approval and to ensure the transition to its new Major Infrastructure Unit is smooth.

It highlighted 37 energy infrastructure projects awaiting a decision, inherited from the previous government. These include wind farms, nuclear and gas-fired power stations, which are essential for delivering a balanced and sustainable energy mix.

The CBI said that without confidence and certainty in areas such as planning, the CRC and electricity market reform, investment needed for low-carbon buildings and infrastructure will not be unlocked, endangering the UK’s ability to meet climate change targets.

CBI director-general designate John Cridland said: “Changes to the Carbon Reduction Commitment and the planning system have created a mood of uncertainty among investors.

“An effective planning system is at the heart of building the low-carbon infrastructure needed to transform our economy. Meanwhile, businesses that take steps to cut their emissions should be rewarded, not penalised. That’s why the CRC needs changing to ensure it is an incentive for action.

“This government has great green ambition, but we need to see swift action if it is to fulfil its green promise.”

On last week’s publication of the government’s electricity market reform, Mr Cridland said: “We’ve been leading the calls for electricity market reform because it is crucial to unlocking the £200bn of private sector investment needed to replace our ageing power plants, secure supply and meet climate change targets.

“These proposals could help, but the Emissions Performance Standard shouldn’t be included, since it duplicates existing policies. Instead, ministers should focus on getting the detail right on policies that could work, such as guaranteed electricity prices through ‘contract for differences’ and capacity payments.The government must support all low-carbon technologies while letting the market determine which are most effective.

“Changes of this scale will not be cheap, so it’s vital that we build the most cost-effective mix of energy sources. Energy costs have a disproportionate impact on manufacturers and steps must be taken to support the British economy in the long term.”