In place of that, the company has to assume the energy from renewable sources has the same carbon footprint as the grid average.

BT’s Chief Sustainability Officer Dr Chris Tuppen said that the ruling seriously undermined the financial viability of BT’s proposed wind farm.

Without the [ROC] subsidy the business case does not stack up at all, but with the subsidy we can’t count the carbon, Tuppen, said. Therefore it substantially increases the risk attached to the project. It by no means helps the situation and does threaten the project.

If the company proceeds it will seek ROCs to be issued against it, which it will then be able to sell on to energy companies. This will provide BT with a revenue stream to help cover its costs. But again this would mean that BT would not be able to count the energy in its carbon reporting and would instead have to attach a fictitious carbon emission to the energy from the wind farm.

Tuppen further continued that this would make the project more unattractive over time as the government tightens the carbon caps imposed under the CRC and introduces new carbon reporting rules. Carbon reporting guidelines are going to be published in October and there is a provision in the Climate Change Bill to make those mandatory from 2012, he said, adding that under the current rules, BT’s reported carbon footprint would appear far higher than it should given at least a quarter of its energy would come from its own wind farm.

The company intends to see the rules changed to allow it to claim ROCs from the new project and also cut its carbon emissions at the same time, or alternatively see a second subsidy scheme which is free from the regulations.

BT’s desire is echoed in those from the Renewable Energy Association, which has also urged the government to scrap those parts of the CRC’s reporting rules that effectively create a disincentive for firms to invest in building their own renewable energy capacity.

In 2008, Asda, B&Q, Dalkia and the Co-operative Group joined BT in writing to Department for Environment, Food and Rural Affairs on the same issue.

However, a spokeswoman for the government said that it was very unlikely that it would change the regulations, adding that the rules were in place to stop double accounting.

The government is working closely with business to resolve some of these issues, explained a spokesman at the Department of Energy and Climate Change. However it is important for the integrity of the Renewable Obligation scheme that emissions are properly accounted for.