17 June, 2019

Don’t let CRC changes stifle green investment

16 May, 2011

An air of discontentment has resonated within industry over the past few months since the Department of Energy and Climate Change (DECC) announced that the Carbon Reduction Commitment (CRC) energy efficiency scheme would no longer recycle revenue as incentive payments; with all revenue instead to be retained by the Government in order to contribute around £1 billion to help balance the deficit. The CBI has spoken on behalf of the industry in general in calling on the Government to give more encouragement to companies by restoring the incentive element to the scheme. CBI director-general John Cridland said this must be put back in place in order to help companies go green by removing barriers for businesses to grow and create jobs. He added that if this is not on the cards then the scheme should be stopped altogether to reflect concern about energy costs. In its current form, Cridland made the point that it just adds yet another cost to doing business.

Nevertheless, Brammer, the UK supplier of MRO products and services, believes it is important that the changes to the CRC scheme do not deter investment in energy saving equipment such as variable speed drives (VSDs) and high-efficiency electric motors. The company believes that although some of the immediate financial incentives to increase energy efficiency have now been removed, the energy saving and productivity benefits achievable through more energy efficient equipment still provide a more than adequate incentive to maintain investment into energy saving technology. Brammer’s Jeremy Salisbury has said that the CRC is now effectively a tax on business, rather than the incentive scheme to reduce CO2 emissions as it was originally conceived. But, he added, the opportunities still exist for many manufacturing companies to significantly reduce their energy costs and carbon emissions. “This is especially true for many small- to medium-sized organisations facing potentially increased costs as a result of the changes made to the CRC scheme,” said Salisbury. He also made the point that, currently, most organisations in England and Scotland affected by the CRC scheme do not qualify for loans from the Carbon Trust towards energy efficient equipment purchases as they are too large. But, he says, arguably support should be made available as these companies are larger users of energy – and therefore the ones with the greatest potential to reduce their energy usage and carbon emissions.
A number of funding options thankfully are still available to help companies achieve this. For example, the Enhanced Capital Allowance Scheme provides 100 per cent first-year capital allowances on investments in energy saving equipment against taxable profits of the period of investment for products on its Energy Technology Product List. Also, interest-free loans of up to £100,000 from the Carbon Trust are still available to SME businesses in England and Scotland and to organisations of all sizes in Wales and Northern Ireland towards energy saving projects. The bottom line has to be that, regardless of tax burdens of one kind or another, taking positive actions such as reducing leakage from compressed air systems, fitting VSDs to motor driven applications and replacing inefficient motors will, in virtually all applications, deliver significant cost savings year-on-year. It is certainly still worth going green.
Ed Holden
Hydraulics & Pneumatics

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