July 4, 2009

By Jonathan Leake

The boys in green are coming as the Environment Agency sets up a squad to police companies generating excessive CO2 emissions.

The agency is creating a unit of about 50 auditors and inspectors, complete with warrant cards and the power to search company premises to enforce the Carbon Reduction Commitment (CRC), which comes into effect next year.

Decked out in green jackets, the enforcers will be able to demand access to company property, view power meters, call up electricity and gas bills and examine carbon-trading records for an estimated 6,000 British businesses. Ed Mitchell, head of business performance and regulation at the Environment Agency, said the squad would help to bring emissions under control. “Climate change and CO2 are the world’s biggest issues right now. The Carbon Reduction Commitment is one of the ways in which Britain is responding.”

The formation of the green police overcomes a psychological hurdle in the battle against climate change. Ministers have long recognised the need to have new categories of taxes and criminal offences for CO2 emissions, but fear a repetition of the fuel tax protests in 2000 when lorry drivers blockaded refineries.

The central unit, based in Warrington, Cheshire, can call on the agency’s national network of hundreds of pollution inspectors, many of whom will soon be trained in CO2 monitoring.

It will also be able to demand energy bills from utilities without the companies under investigation knowing they are being watched.

Perhaps most worrying, for managers will be the publication of an annual league table ranking companies by performance in cutting emissions. The government hopes the potential shame of a lowly placing will drive organisations to greater energy efficiency.

Mitchell predicted the unit would audit about 1,200 businesses a year. The first stage would be a desk study of their energy bills and activities, followed by a visit when numbers do not add up. “The inspectors will carry warrant cards giving them powers of entry to collect evidence. We will also have access to company accounts with suppliers,” he said.

The CRC was designed to force medium-size and large companies to pay attention to energy efficiency. Under the scheme they will have to use their energy bills to calculate the carbon dioxide generated by their activities. For each tonne of CO2 emitted, companies will have to buy a carbon allowance, with the money being paid into a central pool. At the end of each reckoning period, they will get a payment from the fund.

The least energy efficient will get back less than they paid in, with the surplus going to those that have performed best. The gains and losses will be small at first but the system is designed to ratchet upwards, so business finds it increasingly expensive to ignore energy efficiency.

Initially the allowances will cost £12 per tonne but from 2013 they will be sold through auctionso the price is likely to rise. Eventually thousands of big private and public sector groups will feel compelled to spend serious money on energy efficiency — or face even bigger bills.

The government-funded Carbon Trust said a main aim would be to halt the rise in emissions from such companies. This was predicted at about 17% between 2005 and 2025.

The government has argued that the £5m-plus annual costs of administering the commitment will be met by a charge on the companies and that they will be dwarfed by the savings. John Sauven, director of Greenpeace, said: “We must be able to enforce these new rules. We saw how the absence of enforcement led to chaos with the new rules on energy efficiency in building standards.”

Read at: http://business.timesonline.co.uk/tol/business/industry_sectors/public_sector/article6639289.ece

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