Carbon reduction commitment
Reducing energy consumption is now high on the agenda, with the CRC coming into play this month. But will over-weaning bureaucracy make it more complex than necessary? Ed Bedington reports
Most companies keep a close eye on their energy consumption, but from April next year, many of the larger players in the meat sector will have an added incentive to watch, and cut, the electricity they are using, thanks to the government's new plans to cut carbon emissions.
The Carbon Reduction Commitment (CRC) has the potential to add several hundred thousand pounds to operators' electricity bills. Qualification packs will land on the desks of companies throughout the meat industry this month and, for many, this may be the first they know of it.
The CRC is aiming to encourage businesses who use more than £500,000 of electricity a year to reduce their energy consumption - thereby cutting the levels of carbon use. The intention is a noble one, and if effectively applied, could even help businesses to cut their costs and become more efficient. However, many a noble sentiment has been muddied by bureaucratic fiddling, and the question remains - will the CRC simply prove a complex nightmare for our sector?
At first glance, the scheme would be a simple "carrot and stick" operation; the more you cut your use, the less you pay. However, thanks to a layer of bureaucracy which has seen allowance trading and league tables added to the mix, the potential for confusion remains high.
Effectively, the scheme will work thus: once a company has calculated its electricity use and carbon footprint, it is then required to buy one allowance for each tonne of carbon it estimates it will produce in a year, at a cost of £12/tonne. At the end of the year, it is required to hand over to the government the number of allowances it has actually used. If the company has used less, it is free to sell the excess allowances on to other companies who need more.
The government claims this will not only help businesses cut the costs of participation in the CRC scheme, but also make energy efficiency savings on the whole. On top of this, as a further incentive to reduce emissions, all the revenues raised by the annual government sale of allowances will be 'recycled' back to participants.
A league table of participating organisations will reveal which businesses are making the most strides towards cutting energy use - and this will be a key factor in working how much of the allowance revenue is "recycled" back to each company.
Christine Walsh, consultant with Meat & Livestock Commercial Services, said there are issues with the CRC. "It is a complicated scheme that shows the government is trying to do something about the climate," she said. "They are covering their backs. Is it putting an onerous burden on industry? Definitely." However, she agreed the scheme would encourage industry to reduce its energy consumption.
At the moment, the CRC is only likely to affect the larger players in the meat sector, she added: "We are looking primarily at the very big players; three to four large pig players and the large beef companies. Cattle probably over the 500,000 head mark are on the borderline, as are pig plants of 900,000 head per annum."
The inclusion of a league scheme could also pose difficulties for the meat sector, which could find itself competing with other industries, such as the automobile sector, Walsh said.
She makes the point that many of these other industries will be way ahead of the meat processing business when it comes to energy reduction, and the meat sector will be automatically starting towards the bottom of the field, and therefore stands less chance of benefiting from the "recycled" allowance payment. At the moment, she said, while some in the industry are looking at the issue, there was still a proportion which remain in the dark.
Phil Hambling, food policy manager at the British Meat Processors Association (BMPA), said the industry does need to be aware of the new scheme. However, he said it appears that organisations already involved in the Climate Change Levy discount scheme should be exempt, although the details of exemption needs to be worked through with the operators, BMPA and Enviros, an environmental consultancy working on the issue for BMPA, on how to gain the exemption.
Hambling agreed the scheme was less than straightforward. "Anyone coming in cold to this will find it difficult to comprehend," he said.
Regardless of what the final impact will be, he added, this was another example of government thinking. "This is yet another sign of regulation coming in and more needs to be done by the industry to up its game on the environment," he said. "That is why the red meat industry is taking the meat road map so seriously. There's a lot going on behind the scenes and the first draft will be available before the end of the year for industry consultation."
The CRC may well be complicated, bloated and the workings of a feverish bureaucrat's mind, but regardless, it is on its way and this, along with further legislation on the horizon, needs to be on everyone's radar.
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