A Green Deal for businesses?
DECC has today published a new consultation on the Green Deal, a government initiative which will invest £14bn in energy efficiency from October 2012.
Although the domestic market is the main beneficiary of the green deal, there are some benefits for businesses too.
The consultation says that every British business will be able to install energy-saving measures like insulation with no upfront cost; the repayments will be made from the savings the business makes on its energy bills.
While help with eenrgy efficiency is likely to be welcomed by many businesses, there is a flipside: the cost. The money to pay for the Green Deal has to come from somewhere and the consultation also includes an analysis of what impact the Green Deal will have on on business energy prices and bills:
As the graphic shows, while policy will mean an eventual reduction in energy bills for domestic customers, it will lead to an increase for businesses.
The consultation emphasised that while it’s important that businesses play their part in the transition to a low-carbon economy, it’s vital that they remain competitive too. So before the end of the year, the government will be announcing a package of measures to help energy-intensive businesses.
I asked our director, James Constant for his take on the Green Deal consultation:
“Any help to enable businesses to reduce their energy overheads and protect the environment is to be welcomed, however this should not be at the expense of increasing the transparency of the market and fair pricing for businesses.
“For too long domestic customers have been the sole focus of market improvements and businesses have been left to suffer in hopeless silence; as a way to raise business energy up the agenda this move is welcomed, but there shouldn’t a sting in the tail of price rises to support the benefit for the few who are able to make use of the energy efficiency measures being proposed.
“It would be far better would be to increase market transparency, encourage innovative new suppliers to enter the market and make smart meters and active energy management the cornerstone of business energy efficiency. This would not only reduce unnecessary energy costs, but also boost businesses’ cashflow with accurate billing.”
Should George Osbourne announce breaks on green tax for businesses?
Could there be a break on green tax inside George Osborne's red briefcase? Image by HM Treasury via Flickr
George Osborne could announce tax breaks for businesses with high energy consumption in his growth review or ‘mini-Budget’ next month.
Businesses which use large amounts of energy could stand to benefit from exemptions on the new carbon levies which have been blamed for driving up business energy prices.
According to Jim Pickard at the FT, the tax breaks could take the form of free allocations of credits in the EU Emissions Trading Scheme or an exemption from the carbon floor price.
This break could be coming at just the right time; as we reported recently, businesses in energy-intensive industries have said that energy prices could drive them – and the jobs they provide – abroad in a bid to keep their costs down.
On the one hand, this is a positive move: it makes sense to provide extra support for businesses at a time when the UK seems to be becoming a less competitive base, and it’s encouraging that an MP in a position of influence recognises this.
On the other hand, we have to tackle climate change and green levies of this kind were meant to play a big part in helping the UK meet the ambitious carbon reduction targets we signed up to earlier this year.
How do you feel about the proposed tax breaks? Is your business likely to benefit? And how do you think the government should be tackling climate change?
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