The mandatory Carbon Reduction Commitment Energy Efficiency Scheme (CRC) will cover all organisations using more than 6,000MWh per year of electricity (equivalent to an annual electricity bill of about £500,000).
From April 2012, participants will buy allowances from the Government to cover emissions in the previous year, meaning companies that reduce emissions year on year will save money.
However, PricewaterhouseCoopers (PWC) warned that investors are underestimating the potential impact of the tax.
"A long-term scenario to 2015 demonstrates that poor [environmental] performers could add nearly 20 per cent to their annual energy costs in five years," said a report from the organisation.
Investors will have to carefully question which companies are energy efficient and which will be hit by large bills, as a significant exposure to companies that are affected by the green tax could impact the performance of their portfolio, it warned.
"The bottom line is that the scheme will cost businesses in year one. Long-term, the scheme is an incentive to encourage low-carbon growth, but it’s a complex one," said David Walters, partner for sustainability and climate change at PWC.
"A growing business has more energy needs. The reality is if you want to avoid additional costs, you need to grow in a low-carbon way."
The PWC prediction opens the door for investors wanting to expose themselves to ethical funds as a way of diversifying their portfolio and reducing the impact of the tax.
Recent Trustnet research showing the strong performance of ethical funds will particularly interest investors that are considering the impact of the carbon-reduction scheme.
Neville White, senior sustainable and responsible investment (SRI) analyst at Ecclesiastical Investment Management, further endorsed the case for ethical investment in light of the green tax.
He told Trustnet: "The responsible investor – retail and institutional – may be encouraged to divert capital into these areas where there is measurable delivery of added value with perhaps a preferential tax incentive."
Performance of portfolios since Jul-06
Source: Financial Express Analytics
The graph shows the performance of a portfolio of ethical funds versus a portfolio of commodity and energy funds that are more likely to be hit by the green tax.