Does saving energy cost money?

With all the enthusiastic talk about the savings that can be made by reducing energy usage, it’s easy to overlook the fact that many energy-saving initiatives require substantial capital investment. If that’s what’s holding you back, we have some good news for you. On the other hand, not saving energy may not only cost you money in fuel bills, but could also land you with a sizeable fine. We give you the inside information to help you stay on the right side of the law.

If yours is one of the 5,000 or so companies covered by the Carbon Reduction Commitment scheme (CRC), then reducing your carbon footprint is not an option, it’s the law. And if you fail to comply, your company could be fined, you personally could be fined, and you could even go to jail. If that’s something you’d rather not think about, you’d better be sure you’re up to speed on the details of the CRC – and fast.

Firstly, you need to establish if your company is affected by the scheme. If it is, you should already have been notified by the Environment Agency but – to put your mind at rest – you will come within the scope of the scheme if your organisation consumed more than 6 Gw-h of electricity in 2008 (that’s an annual electricity bill of £500,000 or more a year) and you are on a half-hourly metering tariff. That means businesses and organisations such as supermarkets, water utility companies, hotel chains, banks, local authorities, and government departments. And it doesn’t matter if you use electricity, gas or oil: all forms of energy are included except transport fuels.

The CRC works as a carbon trading scheme, which might sound at first like a ‘Get Out of Jail Free’ card that lets you buy your way out of trouble instead of taking practical steps to reduce your carbon emissions. However if you are an affected company, firstly, your name and your carbon reduction performance will be published in a league table; so if you fail to perform well, you will be ‘named and shamed’. Secondly, if you do perform well, you will get back not only what you have spent on carbon allowances but also up to an extra 10%. if you are at the other end of the performance league table, you will only get back 90%. or in other words you will lose 10% of what you’ve paid.

As the scheme continues, the bonus and the deductions – the carrot and the stick – will both grow, until the best performers get their money back and a 50% bonus while the bad boys only get back 50% of what they have paid. But if you simply decide not to bother, the penalties are even more severe.

Simply failing to register for the scheme if you are liable attracts a fine of £5,000. Then there’s another £500 a day to pay until registration takes place. Once you’re registered, if you’re late filing your annual report on your carbon performance there’s another similar fine to pay. And it’s not just your business which has to suffer the consequences. Even individuals within the organisation can be fined up to £50,000, with the possibility of up to three years’ jail – as well or instead – if they submit false or misleading statements, or falsify records or reports. Failing to comply with the scheme, or preventing inspections, will also land you with a fine.

This is not just a way to raise cash or fill up the prisons. The UK is the first country in the world to have a legally binding long-term framework for cutting carbon emissions, and with an estimated 40% of the UK’s annual 560m tonnes of CO₂ emissions coming from industry, you can see why it’s businesses which are being targeted. The government expects the CRC will reduce the UK’s CO₂ emissions by at least 4m tonnes a year by 2020. By 2050, the aim is to have cut emissions to 20% of 1990 levels.

If your organisation is one of those that’s affected by the act, hopefully you already have plans in progress – or at least in place – to reduce your emissions, as the scheme came into force in April this year.

One of the first things you will need to do is find out what your carbon emissions actually are, so that you know when you have made a reduction. That means measuring, recording and eventually reporting the figures to the environment agency. Then you’ll want to start taking steps to cut your emissions. After all, you will need to make energy savings of up to 5% just to cover the cost of administering the CRC scheme within your company.

One of the most effective ways to get your carbon emissions under control is to find a partner able to identify areas of energy wastage and suggest ways of reducing or eliminating them. Some of the first places to look for the biggest losses and the easiest savings are drives, motors, and the pumps, fans and controls of HVAC systems – all areas of expertise for a company such as ERIKS, for example.

The Carbon Trust is offering sizeable loans with only minimal conditions, for businesses willing and able to reduce their carbon footprint. ERIKS can help at every step of the way, from identifying where savings can be made to making the loan application on your behalf.
- Interest free loans
- Loan amounts from £3,000-£100,000
- 1-4 year repayment period
- Qualifying companies: 250 staff, less than £35m turnover, 12 month minimum trading history
- Funded project must reduce CO₂ emissions by at least 2 tonnes per £1,000 of loan.