‘No silver bullet’ efficiency policy to suit all firms

There is “no silver bullet policy” for energy efficiency schemes to suit all businesses in the UK as different sized firms have different preferences. That’s the conclusion from new research […]

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By Priyanka Shrestha

There is “no silver bullet policy” for energy efficiency schemes to suit all businesses in the UK as different sized firms have different preferences.

That’s the conclusion from new research by the Carbon Trust for DECC, which looked at the attitudes of businesses to a range of potential energy efficiency incentive policy options within the industrial and commercial sectors.

It found several factors influenced businesses’ preferences, including the complexity of a scheme, the “sophistication and capability” of the firm to estimate future savings and its trust and willingness to work with a third party. The research suggested many projects are not implemented due to a “complex” mix of barriers even though some of the efficiency measures offer “attractive payback periods and rates of return”.

For many small firms, energy efficiency was not a priority compared to staying in and growing their business and energy was an “insignificant cost” for those that were least engaged. They also did not know what energy efficiency measures to implement now if their required three-year payback period was achievable and had the perception that financial savings would be quite small.

Medium and large businesses, however, said they were committed to energy efficiency but that it wasn’t a top priority. Although they had more capital available, it wouldn’t necessarily be used for efficiency measures and many said they had “in-house expertise” so didn’t need external support.

James Rawlins, Associate Director at the Carbon Trust said: “Our research found that while most medium-sized and large businesses would respond positively to an incentive scheme designed to encourage energy efficiency, there is no silver bullet policy that will suit all businesses. Businesses in different circumstances prefer different types of incentive scheme.

“For example, an important factor in determining business preferences was whether or not they were capital constrained with regard to energy efficiency investments – for businesses that are capital constrained, incentive options that are structured to take away the need for upfront investment tend to be most popular.”