Data centre operators lose out in spending review

Yesterday's comprehensive spending review included a radical change to the CRC (Carbon Reduction Commitment) Energy Efficiency Scheme.

Partner Mark Chester, head of Wragge & Co's Data Centres team, says: "This announcement has huge cost implications for the data centre industry. CRC begins increasingly to look like a tax - not the 'revenue neutral' scheme previously planned. At this stage, it isn't clear exactly how the revised scheme will work in practice and what this will mean for contracts and leases with data centre occupiers."

Two things, however, are certain:

• Recycling payments are scrapped. Revenue raised from the sale of allowances will now be used to support public finances (including spending on the environment) instead of being recycled back to participants according to their position in an emissions performance league table.
• The first sale of allowances is deferred to 2012 (rather than April 2011 as previously planned).

Further details on the sale of allowances are expected in the Budget, so look out for an update from Wragge & Co's data centre specialists then. In the meantime, here is a reminder of the scheme and how it was intended to work.