NCPA - National Center for Policy Analysis

British Business Facing a Wave of Green Taxes

August 12, 2010

Thousands of British businesses will be liable for significant fines and charges under a new government "green tax" scheme, says the Telegraph.

For instance:

  • Companies that fail to register their energy use by next month will be hit with fines that could reach about $70,500 under the little-known rules.
  • Those that do participate in the Carbon Reduction Commitment (CRC) initiative by declaring their energy use will face charges for every ton of greenhouse gas they produce.
  • These payments are expected to average about $59,500 a year for medium-sized firms, and could reach about $156,500 for larger organizations.

Surveys have shown that thousands of businesses are unaware they are supposed to be taking part, or even that the scheme exists at all.  The imposition of new charges and fines will put pressure on firms at a time when economists are warning of a "double dip" recession as companies, consumers and the public sector all cut their spending.

Business leaders criticized the CRC -- which was created by Labor but implemented by the Coalition -- as "complex and bureaucratic."  One accused ministers of swinging "a big hammer" at companies and questioned whether it would have any environmental benefits:

  • Under the scheme, any company or public sector organization that consumes more than 6,000 megawatt hours (MWh) of energy a year -- meaning a power bill of about $783,000 -- must register its energy use by the end of next month.
  • From April, firms will need to buy permits for each ton of carbon dioxide emitted.
  • For those using 6,000MWh, that could mean about $59,500.

The scheme is intended to create a financial incentive to cut energy use, and those organizations that record the biggest reductions will get bonuses, funded by penalties imposed on those with the worst record, says the Telegraph:

  • Of about 4,000 organizations estimated to qualify for the scheme, only 1,229 have registered to date, leaving thousands at risk of fines.
  • Missing the Sept. 30 deadline will mean an immediate fine of about $7,800, and about $780 for each day after that, up to a maximum of about $70,500.
  • Another 15,000 smaller organizations are also required to register and could be expected to buy permits in the future. If they miss the September deadline, they face fines of about $780.
  • WSP Environment & Energy, a consultancy firm, estimated that a total of 7,500 businesses would miss the deadline.

Source: James Kirkup, Harry Wallop and Louise Gray, "Business facing a wave of green taxes," Telegraph (UK), August 10, 2010.

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