HR & Management

Why management of carbon emissions must be "business as usual"

6 min read

18 October 2007

In the last year, climate change has become one of the most urgent political and business issues. Thankfully, we have largely managed to move the debate beyond the science and the impact of human action to focus on how we develop the right responses to limit the damage.

In partnership with the Carbon Trust.

All businesses, regardless of size, have a key role to play in creating these right responses: SMEs account for nearly half of annual CO2 emissions from business, or around 17 per cent of CO2 emissions from all sources in the UK.

If we are to make a successful transition to a low-carbon economy, we need to make the management of carbon emissions part of “business as usual” activity. Companies are spending millions on wasted energy and needlessly emitting hundreds of thousands of tonnes of carbon into the atmosphere. Many UK companies are setting a good example by substantially reducing their carbon emissions, but we still have a long way to go.

Our overall aim is to enhance the competitiveness of SMEs by reducing their energy bills and enabling them to grow commercial low carbon businesses. In the UK, 80 per cent of CO2 emissions from business and industry are from companies with energy bills over £50,000, and for this reason, SMEs with an annual energy spend in excess of this amount are eligible for our free on-site energy surveys which identify energy-saving opportunities and provide practical advice on taking action. 

Our work with SMEs makes up 40 per cent of our customer base and in terms of funding, around £90m of support has been provided to SMEs over the past three years to help them cut both their energy costs and carbon emissions. This funding has supported a range of services including interest free loans, site surveys, research grants, online tools and bespoke information specifically for small businesses with energy spends of less than £50,000. 

Of the 5,000 on-site energy surveys the Carbon Trust conducted last year, two thirds of them were for SMEs and 70 per cent of the business-related calls taken by our dedicated advice line were from SMEs. 

There are many other ways in which SMEs can take action to reduce their carbon emissions. These can be as simple as turning down the heating by one degree or could involve investing in more energy efficient equipment such as boilers. Our research has highlighted that an average office-based business wastes £6,000 per year by leaving equipment on at weekends and bank holidays. By reducing their energy consumption, businesses not only cut their carbon emissions but can save money too.

If we are to reach the scale of response needed to tackle the issue effectively, not only do we need to communicate the high costs of inaction but also explain that from action new business opportunities will emerge. As business seeks to reduce its carbon emissions, a demand for new technologies and services which help it to do so will grow.

The Carbon Trust is already heavily involved in accelerating the development of low-carbon innovations. These technologies can vary from new ways of generating electricity to better insulation for buildings, but they will all play their part in reducing the UK’s carbon emissions. Not only this, the businesses which grow around these technologies will also drive the economy forward, creating wealth and jobs.

The need for businesses to take steps to cut carbon emissions has never been greater. But companies should see the move to a low-carbon economy as an opportunity to save money, to make money and to change the world for the better.

Saving energy and reducing carbon emissions

Businesses with energy bills of more than £50,000 per year on one site can benefit from a free on-site energy survey which involves a specialist consultant carrying out a review of energy use and producing a practical action plan to identify energy saving opportunities. The Carbon Trust has worked with thousands of companies to identify savings of up to 30 per cent on their energy bills and recommendations include many no or low cost actions that pay for themselves immediately or within a few months.

Interest-free energy efficiency loans

SMEs can apply for an interest-free energy efficiency loan to replace existing equipment with more energy efficient models. Loans of between £5,000 and £100,000 are available to SMEs which are able to save at least £1,000 a year on their energy use as a result of the new purchase.

Enhanced Capital Allowance

Enhanced Capital Allowances (ECAs) are a straightforward way for a business to improve its cash flow through accelerated tax relief. The ECA scheme for energy-saving technologies encourages businesses to invest in energy-saving plant or machinery specified on the Energy Technology List (ETL) which is managed by the Carbon Trust on behalf of Government. The ETL currently includes over 6,000 products which meet published energy saving criteria. 

Tom Delay is chief executive of the Carbon Trust.