Carbon Reduction Commitment to Bring Cash Flow Problems: KPMG

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KPMG has warned that UK businesses participating in the upcoming Carbon Reduction Commitment (CRC) may experience a major cash flow impact because of the scheme. The consultancy firm advised its clientele to begin appraising their CO2 emissions soon, so that they will be knowledgeable of their emissions and can prepare to go through the Commitment smoothly.

The CRC will be incorporated into legislations via the forthcoming Climate Change Bill and will come into effect from October next year. Around 10,000 organizations excluded from the EU emissions scheme will be part of this new Commitment that also includes the public sector.

KPMG also asserted that firms purchasing green electricity will also be part of the CRC, which will have all organizations that spend over £500,000 on electricity. It has been estimated that the Commitment will result in yearly reductions equaling around 4.4 million tonnes of CO2 emissions. Another important thing is that the government will promote names of big achievers and will also demote the worst performers by naming them in a ‘hall of shame’.

Although the whole program will be ‘revenue-neutral’, the government will disburse rebates long after firms will have to buy emissions allowances, which may suck some cash flow.