The government is set to axe the carbon reduction commitment (CRC) as part of a purge on green tape. It plans to scrap the tax and replace it with another based on the climate change levy (CCL).
Treasury has also indicated that it will consider tax-funded incentives for energy efficiency.
The government is consulting on streamlining a raft of overlapping environmental taxes and policies. If successfully implemented, business will welcome the move, seen by many as long overdue.
George Osborne announced plans to reduce the so called alphabet soup of environmental policies and taxes in July. The government now seeks views from businesses on which policies to ditch and how to construct a clearer landscape that incentivises energy efficiency.
The consultation notes that current policies can lead to businesses investing in renewables over energy efficiency. Treasury wants to correct that and the consultation states that it may subsidise energy efficiency measures “subject to strict value for money criteria”.
Detail of the design of such incentive programmes will likely be published pending the outcome of the consultation, but the document moots options including feed-in tariffs (FITs) for energy efficiency, as well as tax relief, competitive funding and supplier obligations.
See the consultation here.