A government decision to simplify rather than scrap the unpopular CRC Energy Efficiency Scheme raises more questions than it answers, according to industry watchers.

The chancellor said in yesterday’s Autumn Statement that the tax element of the scheme would be removed “when public finances allow”. The scheme is to be reviewed in 2016. 

The announcement that the associated Performance League Table would be scrapped came as a surprise to Elizabeth Shepherd, partner at law firm Eversheds. She said: “The Performance League Table was generally considered to be an effective method of encouraging good behaviour as it ranked CRC participants based on their performance against key indicators.” 

It would be the Environment Agency, rather than companies, who would benefit from the removal of an administrative burden, she added. 

Some supported the move, however. Ben Warren, environmental finance partner at Ernst & Young, said despite “placing the importance of reducing consumption through increased energy efficiency in the spotlight and raising the accountability of energy efficiency performance to Board level, [the table’s] current administrative burden appears to outweigh many of the benefits.” 

Warren also said many would see the decision not to scrap the CRC as a happy compromise. “The scheme keeps large organisations focused on reducing carbon emissions, but also brings in much-needed ‘green tax’ revenue to the Exchequer. Finally, it ties in with the government’s increased emphasis on energy efficiency in the Energy Bill,” he said. 

Malcolm Dowden, a consultant at Charles Russell, said: “The decision to reform rather than [replace] CRC may be explained by its current contribution to deficit reduction. Until October 2010 the intention was to repay sums raised by the sale of energy use allowances according to a ‘league table’. Those at the top indicating energy consumption within the allowances bought and improved energy efficiency would recover 100 per cent of the sums spent on buying allowances. Those at the bottom would recover about 10 per cent. The scheme was designed to incentivise improved energy use.”