UK Government Moots 2 Year Delay in Carbon Reduction Commitment (CRC) Start

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LONDON -(Dow Jones)- The U.K. government Wednesday proposed plans to delay by two years to 2013 the start of the second phase of the Carbon Reduction Commitment, when emissions of 2,279 large organizations and businesses would start being capped and traded.

The CRC scheme, which aims to cut carbon emissions of large organizations outside of the EU’s cap and trade scheme such as hospitals, schools, firestations and large businesses such as fast-food outlets, is designed to help contribute to U.K. targets to cut domestic emissions 34% by 2020.

“Today, we have published a U.K.-wide consultation on delaying the start of Phase II of CRC. This will mean that participants won’t need to register for Phase II until 2013,” Energy and Climate Change Secretary Chris Huhne told business leaders at a conference in London.

“This will create a window for us to engage in a proper dialogue with participants about what we need to do to improve it. We can also reduce the administrative burden on businesses,” he said.

However, the director general of leading U.K. business organization the Confederation of British Industry, Richard Lambert, said that more still needs to be done.

“It is critical that the CRC becomes an effective tool for encouraging energy efficiency, and not just another tax,” Lambert said.

In October, as part of its comprehensive spending review, the government decided to axe the “revenue recycling” componenent of the scheme which rewards organizations that have performed well.

The move effectively turned the CRC into a carbon tax that is expected to raise up to GBP1 billion a year for the U.K. Treasury.