Taking the next steps
April 1st 2009

The announcement of major investment in low carbon technologies in the Budget shows that the drive to improve energy efficiency and reduce emissions is here to stay,says Alan Aldridge,executive director of the Energy Services and Technology Association (ESTA)

While most commentators on the Budget were focussing what consultants PriceWaterhouse- Coopers described as the 'eyewatering' levels of debt the country is running up, the Chancellor had some encouraging statements to make about low-carbon economy too.And, in the middle of the Budget statement was the commitment to reducing carbon emissions by 34% below 1990 levels by 2020.And Alistair Darling pledged this would be achieved by domestic action alone, without any use of carbon offsetting.And, if the Copenhagen summit at the end of the year results in a global deal to reduce emissions, the Government has promised to revisit – and tighten – that target.

Ed Miliband, the Energy Secretary, said that the UK is on target to achieve the 2012 target but there is still a long way to go – and a great deal further if we are to reach the 2020 target.

The low carbon economy is a central aspect of the Government's new industrial policy. Early in March Lord Mandelson launched the Low Carbon Industrial Strategy and the Budget provided the opportunity to put some financial clothes on the bones of the vision statement.

While a significant part of the funding will go to 'decarbonising' the energy supply through investment in renewables, nuclear and Carbon Capture & Storage (CCS), the first priority remains energy efficiency.The new measures should go some way to 'priming the pump' and getting more organisations involved.

The Budget allocates £65 million over the next year to achieve a 'step change' in the energy efficiency of schools, hospitals and other public sector organisations.All public sector organisations will be eligible to apply for interest-free loans to install energy efficiency technologies as well as some advice to drive projects forward. Interestingly, these groups are precisely those public sector areas most affected by the Carbon Reduction Commitment, so it may serve as a useful way of helping prepare for the start of this scheme early next year.

There will be an additional £100 million of interest-free energy efficiency loans for small and medium businesses over the next two years.This will help save around 140,000 tCO2 and save businesses £23 million, according to the Government.How to engage the SME sector has remained a bit of a mystery to Government and their agencies.The initial focus of activity was on the major users, first the energy-intensive sectors through the Climate Change Agreements and the EU Emissions Trading Scheme,and now the large non-intensive users through the Carbon Reduction Commitment which begins next year.

But for the UK to become a really low carbon economy, the people who do not have vast energy bills but still overall make up a large proportion of overall energy demand must also be included.The new measures attempt to bring those groups into the process of reducing emissions.For many smaller businesses, the main barriers to investment have been time and funding.Hopefully, the additional incentives now being offered will encourage more to make the changes to business practice needed to ensure that reductions in emissions are made.Once the process is underway, most organisations discover that it soon pays back initial investment and that continuing savings are achieved.

For the UK to achieve its dream of a low carbon future, everyone has to be involved. So the consumers that can be drawn into the process of saving energy the better.

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