Category Archives: Carbon Reduction

100225 CRC the new Tax

article written for RICS Commercial Property Journal

CARBON REDUCTION COMMITMENT (CRC) and the Property Market

The full name of the CRC is the Carbon Reduction Commitment Energy Efficiency Scheme.  This monolithic bureaucratic structure, conceived originally as a carrot and stick mechanism to promote better behaviours and greater energy efficiency, is a monumentally inefficient means of taxing owners of properties and/or businesses in occupation.

But wait! Do we not already have a tax on ownership or occupation of commercial properties?  Do we not also have other measures built in to the transaction process to measure buildings (EPCs)?  What about the Climate Change Levy already imposed on fuel bills?  Surely there must be a more efficient way of levying a tax on the emissions of CO2.

The key concept of CRC is that it is meant to drive better behaviour through the potential adverse impact on corporate reputation if businesses failed to improve relative to their competition or their customers’ expectations.

This concept is a noble one and it has more than half of its merits founded in good economic principles.  For example, the intangible value of a brand is (simplistically) the surplus of share price after capitalising net assets.  For some brands this can be a very large number and anything that put reputation at risk would be aggressively managed by the company’s board.

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