Taxing times for energy

It’s at this time of year, as the tax year draws to a close, that businesses look ahead to what new regulations will mean for their bottom line. For those with responsibility for energy bills, there isn’t much good news unfortunately because the price of energy for businesses is being pushed upwards by additional taxes, including the Climate Change Levy, Renewables Obligations and the Carbon Reduction Commitment (CRC).

According to some sources, these factors will add 0.7 pence per kilowatt hour to the cost of energy from April 2011 and the costs of environmental legislation and taxation will represent around 30% of a commercial energy bill.

Perhaps one of the most disappointing effects of the current economic downturn was that the CRC will no longer recycle the money it gathers from companies not meeting carbon targets. Instead the cash will be retained by government, making what was an incentive scheme, another form of taxation. In effect, participants in the scheme will be charged £12 per tonne of carbon emitted.

Sensible energy managers will already be carefully shopping around to find the best deals from suppliers, and working on their purchasing strategy in the long-term to keep energy costs down. However, it is more challenging to find ways of addressing that CRC carbon tax.

One of the most important steps to take therefore is to look hard at building energy efficiency. Buying cost effectively is no good, if that energy is wasted in the operation of the business premises. Building controls offer the best place to start providing you ensure that they are being used to monitor and manage in conjunction with metering.

Controls can play an important part in helping the occupants of a building be more efficient. For example, setting controls to revert to automatic settings if they are switched to manual override can ensure that occupants do not have to remember to switch them back. Steps such as these are virtually cost-free and with regular reviews, the building controls can be used as the backbone of a long-term energy efficiency strategy.

Although the CRC has not been introduced in its original form, one important element remains and that is the league table which will highlight those companies that are performing well in reducing their carbon emissions. There is no doubt that the UK’s largest businesses are much more aware of their Corporate Social Responsibility, of which carbon emissions play an important part – and where they lead, others will follow.

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