When we first started building what would become CA ecoGovernance in 2007, a Carbon Tax with league tables -a first in the world - was about to be introduced in the United Kingdom. This Carbon Reduction Commitment - CRC for short - meant that a large number of very large companies would have to measure their carbon footprint accurately and pay £12 for each tonne of Carbon they released in the atmosphere - no small thing considering many of them would end up paying millions. Similar legislation was in the pipeline in France, where tax was planned at 17 Euros per ton in 2009.
In the following year, the UK Carbon market remained curiously quiet, and the reason for this can be found in an approaching banking crisis. Late in 2007, both the European Central Bank and the US Federal Reserve quietly injected billions of dollars into the collapsing banking market, but it was like trying to stop an avalanche with a shovel. In December 2008, the US officially fell into recession, promptly followed by most of Europe.
Facing times like these, it is no wonder UK companies simply ignored the carbon tax. The only organisation that didn't forget was the UK government, who in 2010 simplified the Carbon tax by taking away the carrot. Carbon Reduction Commitment was to be a straight tax with no back payments, so more money for the struggling government and none at all for the struggling companies. No wonder that the UK industry found this unpalatable. Perhaps for that reason, parliamentary elections that same year saw the old government fall and a new coalition government enter office.
New ministers decided to get educated about what to do with the unpopular tax, but after two years of deliberation, instead of promised decisions, ministers announced this April they needed more time.
This was the final blow for many who had invested and waited, and as a result of the government's inability to make up their minds, some of the big players got together. UK National Grid, Asda, Marks & Spencer, Phillips and Sky wrote to the deputy Prime Minister to demand a clarification to the situation.
His response was delivered last week in form of the annual Queens Speech: "My government will propose reform of the electricity market to deliver secure, clean and affordable electricity and ensure prices are fair. A draft bill will be published to reform the water industry in England and Wales," stated the Queen eloquently.
To put this into context, large parts of the UK are currently in official draught, meaning household hosepipe bans and restrictions in water use, although it has been raining practically every day for the last two months. Underground reservoirs are apparently still low, even after all that rain. Because of the current weather patterns, many point a finger at UK Water companies for not investing enough money to stop leakages, and this is probably what the Queen is referring to. As for the Carbon Tax, there will be consultations in the UK during May. I'll keep you posted.
What is the moral of this story?
Back in 2008, a whole new industry spawned around the planned tax in the UK and no doubt in France too, but as time went by and the debate dragged on in the UK, the French Constitutional Council actually scrapped the tax just two days before taking effect in 2010. This must have been the end of the road for many. A vicious cull was taking place both in banking and carbon markets, and only the very strongest would survive to tell their tale. Perhaps a natural thing to happen once in a while when things get too hyped up.
What about us, and our CA ecoSoftware group?
We survived and even thrived despite the legal and fiscal spanners thrown into the works, because we adapted. We found silver linings. As an example, there is another way of looking at carbon, and that is to understand that behind a carbon saving lurks energy cost savings, which resonates pretty well with anyone in times of tight purse strings.
And we didn't just look into energy, we also diversified into a suite of products helping businesses manage their sustainability initiatives, data centres, metering and desktops more efficiently - stuff that our competitors just don't have in one offering. Then we talked to customers and partners, and asked them what else they needed. They told us to look into managing water and waste, corporate social responsibility and environmental health and safety and many other things.
All this we can do today, and do them well, according to Verdantix Green Quadrant, respected industry analysts, who rated us as a leader in energy software. And we've got paying customers too. Lots of them. And partners. How about that - from zero to a leader in just four short years. Now, that's what I call INNOVATION.
Well that's it folks. Maybe a little postscript: whilst we've been doing business and others have been going out of business, the Lovely Carbon Legislation is creeping back. Australia introduced it in 2011, and according to some recent polls, a majority of the Americans support a modest carbon tax if it means tax breaks elsewhere. In France, the president who presided over the shelving of the French tax has recently been replaced by a new one, and hopefully like most people, the new president will realize that global warming is a very real threat and not to be dismissed as hype. The Chinese are talking about introducing a carbon tax on fossil fuels from 2013. Even climate skeptics will understand that a tax on carbon is just too tempting an income for governments, and when it comes, we will be ready. Watch this space. It's been an exciting ride so far, and it's just about to get even better.