Brammer: Don't let CRC 'tax' halt energy-saving investment

Recent changes made to the CRC energy efficiency scheme should not deter investment in energy-saving equipment such as variable speed drives (VSDs) and high-efficiency electric motors, Brammer has urged.

While some of the immediate financial incentives to increase energy efficiency have been removed, the energy-saving and productivity benefits achievable through more energy-efficient equipment still provide a more than adequate incentive to maintain investment into energy saving technology.

While broadly welcoming the proposed establishment of the Green Investment Bank, Brammer is also calling on the Government to do more to assist companies affected by the CRC to make these key capital investments, the MRO products and services suppliers added.

“The CRC is now effectively a tax on business, rather than the incentive scheme to reduce CO2 emissions as it was originally conceived, but the opportunities still exist for many manufacturing companies to significantly reduce their energy costs and carbon emissions,” said Jeremy Salisbury of Brammer.

“This is especially true for many small to medium sized organisations facing potentially increased costs as a result of the changes made to the CRC scheme. Irrespective of other considerations, actions such as reducing leakage from compressed air systems, fitting VSDs to motor driven applications and replacing inefficient motors will, in virtually all applications, deliver significant cost savings year-on-year.

“And while the financial incentive to become a ’leader’ in the CRC scheme is no longer there, companies that continue to invest in energy-efficient products will undoubtedly reap the benefits from reduced energy costs and decreased levels of CRC taxation.

He continued: “Currently most organisations in England and Scotland affected by the CRC do not qualify for loans from the Carbon Trust towards energy-efficient equipment purchases as they are too large.

“But arguably support should be made available as these companies are larger users of energy - and therefore the ones with the greatest potential to reduce their energy usage and carbon emissions.

“Businesses which cut their energy costs are likely to be more competitive, securing and creating jobs in the long term, while the environmental benefits of a lower overall industrial carbon footprint are well documented.

“A variety of funding options are still open to help businesses achieve this - the Enhanced Capital Allowance Scheme provides 100% first-year capital allowances on investments in energy-saving equipment against taxable profits of the period of investment for products on its Energy Technology Product List.

“Meanwhile, interest free loans of up to £100,000 from the Carbon Trust are still available to SME businesses in England and Scotland and to organisations of all sizes in Wales and Northern Ireland towards energy saving projects.”