Businesses set to be hit with raft of new green taxes & fines

Companies which fail to register their energy use by the end of next month will be hit with fines that could reach £45,000 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 £38,000 a year for medium-sized firms, and could reach £100,000 for larger organisations.

Surveys have shown that thousands of businesses are unaware they are supposed to be taking part, or that the scheme exists at all.

Business leaders criticised the CRC 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 organisation that consumes more than 6,000 megawatt hours (MWh) of energy a year – meaning a power bill of about £500,000 – must register its energy use by the end of next month. From April, firms will need to buy permits for each tonne of carbon dioxide emitted. For those using 6,000MWh, that could mean £38,000.

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

Of about 4,000 organisations 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 £5,000 fine, and £500 for each day after that, up to a maximum of £45,000.

Another 15,000 smaller organisations 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 £500.

WSP Environment & Energy, a consultancy firm, estimated that a total of 7,500 businesses would miss the deadline.

Greg Barker, the energy and climate change minister, who is overseeing the scheme said: “I understand the original complexity of the scheme may have deterred some organisations and I want to hear suggestions as to how we can make the scheme simpler in the future.”

Executives and business groups said that the scheme had been poorly communicated and publicised, leaving many companies in the dark.

One recent survey suggested that over half of business owners and managers had not even heard of the CRC and did not know whether their firm was affected.

The Environment Agency, which will run the scheme for the Government, has refused even to publish a list of the companies that are required to register, citing the Data Protection Act.

Many have also criticised the government for its decision to press ahead with the CRC despite pledges to cut red-tape on businesses.

Business groups have said the paperwork and costs involved in complying with the CRC scheme could put a significant new burden on companies already struggling in an uncertain economic climate.