Climate tax cuts for efficient energy intensive firms

Energy intensive businesses can slash their climate taxes by up to 90% if they commit to “stretching” efficiency improvement targets to 2020. The Government’s new voluntary Climate Change Agreements (CCA) […]

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By Priyanka Shrestha

Energy intensive businesses can slash their climate taxes by up to 90% if they commit to “stretching” efficiency improvement targets to 2020.

The Government’s new voluntary Climate Change Agreements (CCA) scheme covers around 9,000 industrial sites across the UK and offers participating businesses cuts on the Climate Change Levy (CCL) charges in return for meeting efficiency goals.

Under the new proposals if a sector meets its efficiency target, it gets an exemption from 90% of the climate tax imposed on electricity usage and 65% on gas and solid fuels.

The new targets are expected to improve overall energy efficiency by 11% across all sectors and cut carbon emissions by 19 million tonnes by the end of the decade. A total of 51 industrial sectors, including steel, aerospace, ceramics, plastics and surface engineering, have signed up to the scheme.

Greg Barker, Minister for Climate Change said he is “impressed” by the commitment shown by the UK energy intensive industry to improving their competitiveness and efficiency.

Ray Gluckman, Chair of the CCA Working Group of the UK Emissions Trading Group (ETG) added: “The ETG appreciates the extensive consultation undertaken by DECC on this important element of climate change and energy efficiency policy. The targets are challenging but provide industry with some degree of certainty over the goals to be achieved over the next eight years.”

Consulting Group NIFES, which advises businesses on energy efficiency, said there are many options available for firms to be more efficient.

Managing Director Anthony Mayall said: “Often saving energy slips off businesses’ radar as they focus on negotiating tariffs and minimising energy taxes but the rising carbon prices will encourage more energy saving measures. Every kilowatt saved makes a UK manufacturing site more competitive in the global landscape and saving energy is used by many of our clients as a source of competitive advantage. There are great opportunities for operational teams to buy into energy saving since much of the spend is on process, an area which is often considered “no go” due to fears of affecting production quality.”