The government’s Clean Growth Strategy plans to establish an Industrial Energy Efficiency scheme to help large companies install measures to cut their energy use and their bills.
The UK Government has unveiled how more than £2.5bn will be spent on low-carbon innovation, while a “package of measures” will support British business to improve its energy efficiency by at least 20% before 2030.
The long-delayed Clean Growth Strategy, published on Thursday 12 October 2017, sets out how the Government intends to meet the fifth carbon budget, which seeks to limit the UK’s annual emissions to 57% below 1990 levels by the year 2032.
Central to this plan, alongside a commitment to develop innovative clean energy technologies and processes, is how the government intends to assist in improving the energy productivity of UK firms – just 7,000 of which make up the majority of the country’s energy usage.
With this in mind, the strategy outlines the government’s plan to establish an Industrial Energy Efficiency scheme in order to help large companies install measures to cut their energy use and their bills.
The document illustrates that UK industrial firms pay the second highest electricity prices in Europe, with policy costs driving those bills upwards. Therefore, by incentivising large firms to cut consumption, the government says UK industry can become more competitive while driving down overall energy use and emissions.
What might this mean for businesses?
On face value, the government’s Clean Growth Strategy establishes an ambitious vision regarding how it plans to continue cutting carbon emissions, combat climate change, and drive economic growth and prosperity.
To achieve this, British industry will need to play a pivotal role – as the strategy clearly emphasises – with the government challenging businesses to deliver energy efficiency improvements of at least 20 per cent by 2030.
This should be a welcome challenge for organisations up and down the country, especially considering the government’s offer of substantial financial support in the form of a proposed Industrial Energy Efficiency Scheme.
However, how this Industrial Energy Efficiency Scheme will work, as well as what measures businesses may need to take to comply with any policies designed to drive down energy consumption, has so far not been clearly laid out.
What kind of policies could we expect?
Given the ambitiousness of the Clean Growth Strategy, and considering the fact that the UK is already behind on meeting its legally-binding decarbonisation targets, it’s expected that the “package of measures” introduced will include new legislation aimed at improving energy efficiency.
For instance, the strategy commits to reviewing and potentially reforming the Energy Savings Opportunity Scheme (ESOS), which has made it mandatory for all large UK organisations outside the public sector to carry out comprehensive assessments of energy use at least once every four years.
It has been mooted, most notably by the thinktank Policy Exchange at the end of September, that extending ESOS to cover public institutions such as the NHS, defence and education would create a larger and more cost-effective energy saving potential.
Policy Exchange has also proposed a number of other approaches to drive up energy efficiency investment, including a recommendation that business rates be linked with Energy Performance Certificates (EPC) to incentivise landlords.
Climate Change Agreements, which offer discounts on the Climate Change Levy for businesses that vow to improve their energy efficiency, have also proved a “weak driver”, the thinktank’s recent report argued, suggesting that the discounts be made more stringent and tied to sector deals as part of the industrial strategy.
Such legislation changes may not be unlikely if the government is serious about ensuring that businesses reach the goal it has set of achieving 20% energy efficiency improvements by 2030.
The SMS view
As an expert energy management provider, we are dedicated to helping British organisations reduce energy consumption through improved energy efficiency and by helping them better understand their usage and costs.
With environmentalism central to our ethos, we are also passionate about decarbonisation, of which energy efficiency – a measure that is relatively cost-effective and easy to implement – is set to play a much greater role in the context of the government’s new Clean Growth Strategy.
We therefore welcome the government’s ambitious plan, and see the introduction of more comprehensive energy efficiency regulation as an opportunity for British businesses, both public and private, to save money and improve performance and productivity.
As such, we will be on hand to support British organisations with any new energy efficiency obligations or compliance that the UK government may bring in, just as we do now for our satisfied clients with ESOS Phase 2 and Minimum Energy Effiency Requirements (MEES).
However, we believe solely complying with regulation – by its very nature – is the very minimum any modern, forward-thinking organisation can do when it comes to energy efficiency. Indeed, energy saving measures are today increasingly seen not as an obligation, but a major strategic investment good for both the environment and profitability.
For progressive, energy-conscious organisations such as these, we provide practical guidance and support to rationalise energy usage and maximise efficiency.
In doing so, we can help set clear and realistic objectives for efficient energy though our comprehensive energy assessment surveys made possible by our bespoke, sophisticated software, and the knowledge and expertise of some of the most experienced energy consultants in the county.
Significantly, we are able not only manage the project for you, but also offer financing, meaning you only pay when your business starts saving money.
If you’d like to find out more about our energy and environmental management services, call us today on 02920 893 811 or email us and we’ll get back to you.