The Future of UK Energy Efficiency Schemes
December 8, 2015
In the last article I discussed the origins and benefits of the Environment Agency’s Energy Savings Opportunity Scheme (ESOS), the deadline of which was the 5thDecember 2015.
Running alongside ESOS is a major review and overhaul of UK energy taxes, within which ESOS fits. Neatly entitled “Reforming the business energy efficiency tax landscape”, HM treasury has asked organisations and individuals to comment on the current energy tax landscape and suggest methods to improve it. The consultation ended at the start of November 2015 and the results are due in the 2016 budget.
What will come out of this?
There are a series of recommendations within the document and one thing that is for certain is that any organisation who emits excessive amounts of energy will be taxed in one form or another. This review considers the interactions between business energy policies and regulations, including:
- Climate Change Levy (CCL)
- Carbon Reduction Commitment Energy Efficiency Scheme (CRC)
- taxes on other fuels – e.g. heating oils
- Climate Change Agreements (CCA)
- mandatory greenhouse gas (GHG) reporting
- Energy Saving Opportunity Scheme (ESOS)
- Enhanced Capital Allowances (ECAs)
- Electricity Demand Reduction (EDR) pilot
It has been widely recognised that there are too many policies and regulations that all aim to achieve a single goal – energy and carbon reduction.
So what for the future?
The 2016 budget will reveal the answer and my view is:
A single energy tax related to the Climate Change Levy (CCL) will be introduced. Secondly all organisations will be required to produce a single reporting system based on ESOS.
These are muted in the consultation document and realistically provide a way forward for simplification. ESOS is with us for the next 12 years and this will, in my opinion, be closely linked to the single reporting system. Smarter companies will (in 2016) put together a plan and start to consider these tax implications for their business and supply chain. Others will wait and be reactive rather than proactive.
It is imperative that businesses act now and act quickly as the regulations will only become more stringent over time and there are probably significant energy savings that you can already make within your company. Carrying on in a business as usual sense will not guard you against rising energy prices and help you save money by identifying and unlocking the potentially lucrative opportunities.
The Climate Change Levy (CCL) is a tax on energy delivered to non-domestic users in the United Kingdom. Its aim is to provide an incentive to increase energy efficiency and to reduce carbon emissions.
Dr Stephen Finnegan firstname.lastname@example.org is a Lecturer at the University of Liverpool, a business advisor on ESOS and an editorial board member on sustainability for RICS
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