Innovative Energy Consultancy Ltd
Innovative Energy Consultancy Ltd

How to reduce the impact of ‘green tax’

Look closely at your recent energy bills and you’ll notice a new cost has been added – the Feed-in Tariff (FiT).  This, along with the Renewables Obligation (RO), is a government-led initiative which aims to drive down the UK’s carbon emissions.  Whether you’ve got ‘green’ tendencies or not, all businesses have to share the cost of these schemes.

IEC MD Mike Jones says: “The energy sector is becoming increasingly regulated and I can’t see that the situation will change in the foreseeable future. The government wants to build the demand for green energy and encourage businesses to create less CO2.  All businesses are being affected to a greater or lesser degree.

“The issue for business energy consumers is two-fold.  Firstly, it’s about understanding the schemes and the implications.  Secondly, it’s all about reducing the impact – and that, ultimately, means a constant focus on the root of the issue, to use less energy.”

The difficulty is that for many businesses the cost of energy is just one of a number of priority issues.  That’s why IEC works with most clients on an ongoing basis to ensure the financial impact of any regulatory measures is minimised.

“Our role is to ensure energy consumption is as low as it can be in relation to operating requirements.  That has an immediate impact on energy bills.  However, ultimately, it’s also the best way to safeguard a business against the financial impact of the FiT and RO schemes, and any other regulatory measures that may be introduced in future,” says Mike.

The introduction of the Feed-in Tariff and Renewables Obligation measures follow hard on the heels of the new Climate Change Agreement (CCA) scheme which went live on April 1st 2013.  The CCA enables eligible businesses to claim a rebate of 65% on the climate change levy element of their bills in return for meeting pre-agreed emissions reduction measures.  The government also runs the Carbon Reduction Commitment (CRC) scheme for larger businesses which also targets energy reduction.  (It’s easy to get confused about all these schemes – take a look at our quick guide to the Feed-in Tariff, Renewables Obligation, CCA and CRC – or call us!)

Mike says: “While there’s no choice about having to foot the bill for the Feed-in Tariff or Renewables Obligation, there is choice when it comes to the CCA and the CRC.

“The CRC really only applies to larger companies in energy-intensive industries. When it comes to the CCA it’s worth investigating whether the 65% rebate would give a reasonable return on investment in terms of the time and energy required to manage the achievement of the targets and the reporting.

“What I would always emphasise, however, is that all these initiatives are based on your company’s energy consumption.  So if you want to reduce cost the best solution is to keep your energy use down to a minimum.”

For further information, guidance or advice, please get in touch.  Or read our quick guide to the Feed-in Tariff, Renewables, Obligation, CCA and CRC.

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