New TUC report says government energy strategy failing business and costing millions a year
Written by Mark Sait
Posted on February 25, 2015
UK businesses are struggling with unnecessarily high energy bills costing millions of pounds annually according to a new TUC report.
The report, ‘Money to Burn’, advises that the responsibility lies with the government’s failing energy efficiency strategy at the same as it is promoting ‘supplier switch’ as a solution.
According to the report, there has been stagnation since 2007 in efforts to improve UK commercial energy efficiency, with the Committee on Climate Change confirming there has been “little progress” in the sector.
Supporting the report, Allen Creedy, honorary Chair of the ‘Energy, Water and Environment Policy Unit’ for the Federation of Small Businesses says:
“It’s important to remember that switching will save the average small and micro business only £50-£100 a year. So it’s a travesty, when energy efficiency can save a typical business £400-£800 in the first year just by behavioural change.
“Hitting our carbon emissions targets and keeping UK businesses profitable means recognising that reducing consumption is as important as energy price. Government and regulation is too focussed on switching, and the current Competition and Markets Authority investigation into the market is only looking at the market for the sale of energy.
“Money to Burn underlines the urgent need to improve energy efficiency in offices, supermarkets, hotels and other commercial businesses but it excludes new buildings and energy intensive manufacturing industries.
“It says that although there are many examples of businesses seriously improving their building’s energy consumption, “this often happens despite, rather than because of, help from good government schemes”.
That has been our experience at SaveMoneyCutCarbon, working with a wide range of companies and organisations. The complexity and confusion embedded in a range of policy measures are often a driver of inactivity rather than positive change.
TUC General Secretary Frances O’Grady argues:
“Clamping down on the ‘Great British Energy Waste’ is a win-win for businesses, the government and the environment. Even small businesses can save far more from energy efficiency measures than switching suppliers.
“Better energy regulations backed by access to finance, a one-stop shop for energy advice, and encouraging green workplaces would all help tackle this pointless and expensive frittering away of energy.”
The report argues that policy must focus on five different areas:
- Regulation
- Tax incentives
- Access to finance
- Information gathering and dissemination
- Greening the workplace
Regulation
Minimum energy performance is an example of how a straightforward, effective regulatory system could be improved. The report points out the recent positive moves putting commercial pressure on landlords to improve Energy Performance Certificate ratings.
However, it argues that lack of enforcement could hamper progress and that the government should consider how regulations could be made more effective.
The report says:
“[The government] should look into increasing the initial mandatory Energy Performance Certificate standard to a level higher than a grade E grade and set a pathway for future rises to give industry certainty. It also needs to improve enforcement of EPCs.
“As many commercial leases must be registered with the Land Registry, it should investigate the possibility of requiring EPCs to be noted on the Land Registry. This would improve enforcement because the lease would not be legal, valid and binding and commercial activities could not commence (or continue) until the EPC had been issued and registered.
“The government should also consider extending the requirement for public buildings to issue a Display Energy Certificate to commercial buildings.”
Tax incentives
The current cumbersome Enhanced Capital Allowances system should be simplified, learning from better methods in The Netherlands and the US, which provide simpler lists of products, or focus on the overall energy efficiency of a building.
Access to finance
The report points to the large scale programmes funded by the KfW in Germany and underlines that current UK policy is only delivering a small proportion of the capital required to improve UK commercial energy efficiency.
The TUC says that the Green Investment Bank does not have the powers it needs to borrow and that these powers should be granted as soon as possible.
It also argues that the Green Deal might well be a better fit for the commercial sector than the domestic sector, where it has not been a great success, as businesses are used to making up-front investments for the delivery of returns over a longer payback period.
Information gathering and dissemination
This area is something that SaveMoneyCutCarbon has long advocated and is practicing through our Learn&Save initiative. Knowledge and power go together in more ways than one.
The report points to the US model that gives direct assistance to a business to improve its commercial energy efficiency through the provision, on a single website, of practical tools to make basic changes.
It suggests as a first step that all audits conducted as part of the Energy Saving Opportunities Scheme (ESOS) should be published – and that ESOS should be extended to smaller businesses.
Greening the workplace
The report suggests that the government establishes an Office of Resource Management to encourage behavioural change at work and encouraging the entire population to think differently about how we use energy at home.
Again, this is a cultural shift that SaveMoneyCutCarbon has actively promoted in its work with companies and organisations, supporting energy efficiency schemes that help to benefit staff at home, and making the link to more effective energy-saving behaviour at work.
The report argues that inclusive collaboration between staff, unions and management would help to accelerate the cultural, behavioural and structural changes needed for effective energy efficiency.