Does going green have to cost the Earth?
When I say ‘low-carbon economy’, what comes to mind? For many businesses, the first thought may well be ‘higher costs’.
Certainly, we see the impact of policies to drive the transition away from fossil-fuel dependency result in far higher energy bills. And we know from talking to our customers that these costs are a major source of concern, especially for those competing internationally.
But in a speech earlier this month, the CBI’s Director-General John Cridland made a case that “greening the economy and growing the economy can go hand in hand”.
Of course, for many large energy consumers, reducing carbon emissions via increased energy efficiency and more effective energy management are essential to negate the rising costs of a key commodity.
In our own Twenty Per Cent Imperative report, we illustrate how most businesses can realistically cut their energy bills by 20% with relative ease. This could save British businesses around £4-billion a year.
Some sectors are taking steps to increase efficiency further still. For example, UK retailers have set themselves a target to reduce emissions 25% from 2005 levels by 2020. And the cement industry is aiming to reduce their emissions 80% by 2050.
But Cridland was keen to emphasise that for energy-intensive businesses, efficiency savings are staring to reach their limits. “Many firms are struggling to stay competitive on the global stage, as prices go in a different direction to their international counterparts.”
While wholesale energy costs in the UK are among the lowest in Europe, once you add on the policy elements, power prices for heavy industry amount to around 50% higher than our mainland EU15 counterparts. This “real problem” is causing some industries to consider shifting production elsewhere.
It will certainly be interesting to see how closely the Conservative government will stick to current climate change goals if the UK population decides to vote in favour of a break with the EU. Certainly, if we all pursue the same carbon reduction targets, it creates a more level playing field, at least in Europe.
But for those exporting to Russia, Asia, America and further a field, higher energy costs are harming business.
Of course, diminishing carbon reduction targets could also be dangerous. With dire warnings of the impact of climate change to our economy (not to mention our planet), that may cost us far more in the long run.
What businesses need now is clear, practical and intelligent support to use less energy and reduce costs. And for us at npower, that has become a major driver in the way we serve the majority of our larger business customers.
Our Twenty Per Cent Imperative Report sets out five key areas for businesses to focus on to reduce energy costs by a fifth:
- Make the business case for an energy-saving programme, including identifying return on investment.
- Invest in renewable and embedded generation such as onsite renewables or CHP and biomass to enhance security of supply and reduce costs long-term.
- Recover and recycle energy by gaining greater understanding of your business’s energy journey.
- Don’t underestimate the value of training, behavioural change and a shift in working patterns to support energy savings.
- Look at external financing options such as Energy Performance Contracts to unlock the full range of efficiencies.
You can download a free copy here. With the cost of energy only going in one direction, going green really is the only way to stop it costing the Earth.
Wayne Mitchell is Director of Markets & Innovation for npower Business Solutions
This is a sponsored article.