Carbon reduction incentives could ease ‘complex’ policy landscape, says DECC

UK businesses are operating within a "complex" energy policy environment and need to engage with Government over the potential introduction of new financial incentives to stimulate carbon reductions, a DECC official has claimed.

Speaking at a climate change event held by the Food and Drink Federation (FDF) in London today (10 November), DECC’s deputy director of industrial energy use Paul van Heyningen said that opportunities for businesses to become more energy efficient often aren’t being met because of “barriers to information and finance”.

Van Heyningen said: “One thing that we are hearing from the public is that the political and policy landscape is complicated. It’s true that there are a lot of different policies that have developed organically over time and businesses now have a large number of different policies to hold in mind.

“We feel that UK business can play a significant role in reaching carbon reduction targets. One of the things we’re interested in hearing from businesses is where financial incentives would have the most impact, in terms of stimulating the uptake in measures to save energy and reduce carbon. We could do it through a tax relief or grants, but we want to hear what businesses think.”

Overlapping policies

Van Heyningen was speaking a day after The Treasury closed its consultation of proposals to boost investment in energy efficiency by streamlining carbon reporting and tax requirements for businesses. The Treasury proposed a move away from the current system of overlapping policies towards one where a business would face just one tax and one reporting scheme.

For example, The Treasury suggests replacing the carbon reduction commitment (CRC) and the Climate Change Levy (CCL) with a new energy consumption tax, based on the CCL. It also proposed the creation of a single reporting framework, designed “through the prism of the Energy Savings Opportunity Scheme (ESOS)”.

Van Heyningen said DECC will be providing its formal response to the consultation as part of the Budget in March next year, detailing potential incentives that can be put in place to deliver a simpler and more stable environment for business.

Van Heyningen also referred to the fifth carbon budget, which will be advised upon by the Committee on Climate Change (CCC) next month before being decided by the Government in June 2016. Van Heyningen wants DECC to work closely with businesses to reach ambitious decarbonisation targets, “by providing incentives and simplifying and streamlining policies”.

As a current example, Van Heyningen explained that DECC and BIS have been working in collaboration with the eight most energy-intensive industries to produce roadmaps to model a number of different pathways to decarbonisation. “The next step is to build on this very effective collaborative approach to develop action plans that will build consensus on what actions companies and industries can take to reach decarbonisation targets,” Van Heyningen said.

Budget cuts

Also speaking at today’s event was the FDF’s director general Ian Wright, who warned that the UK was entering “uncharted territory” in terms of energy and climate policy, due to a Conservative Government that has “a very different agenda than that of the coalition”. 

Wright brought up this week’s revelations that Defra is one of four key departments that have agreed steep budget cuts over the next four years, as part of Chancellor George Osborne’s austerity drive. “The whole issue of climate change policy is in the melting pot at the moment,” Wright said. “As a consequence of the public spending review, Defra has accepted a new 30% cut in its budget.

“The fixed costs of that organisation is around 20%, so a 30% cut is effectively reducing them to between a third and a half of its previous activities – it is going to be a very significant change. There will be a very profound impact on our climate change policy from those changes.”

The FDF’s event took place at the same time as Energy Secretary Amber Rudd appeared in front of the Energy and Climate Change Committee (ECCC) to present information on DECC’s annual accounts. Rudd said it was “difficult to say” whether or not the UK would hit its 2020 renewable energy targets, after a leaked letter revealed there could in fact be a massive shortfall.

Matt Mace


Action inspires action. Stay ahead of the curve with sustainability and energy newsletters from edie