UK Energy Policy Overview

The following reviews the key policies, at the UK level, affecting SMEs and their buildings. This starts from national climate change policies and moves down towards buildings and then appliances:

Climate Change:

The Climate Change Act – The Act created a legally binding target to reduce the UK’s greenhouse gas (GHG) emissions by 80% of 1990 levels by 2050. In order to make this more tangible, the Act lays out that targets are set every 5 years and must not be exceeded, the first 5 years being from 2008-2012. The Committee on Climate Change advises on where budgets should be set. Read more here . There is also a page on buildings and industry here.

The Low Carbon Transition Plan – This was published in 2009 and lays out how the UK will achieve its intermediate 2020 target of reducing GHG emissions by over a third of 1990 levels. A huge proportion of the savings are anticipated to come from the power and heavy industry sectors, suggesting, by 2050, a wholesale move over to power generated from renewable, nuclear and carbon captured fossil energy sources. For workplaces, a 13% reduction in emissions on 2008 levels is planned. As well as through the policies outlined below, support for low cost grants and loans in relation to energy efficiency and renewable energy are proposed. It is anticipated that energy bills will increase by 15-17% for businesses using a ‘medium’ amount of energy. Read more here.

Energy Use/Generation:

Climate Change Levy and Agreement (CCL and CCA) – The levy is a tax on all fossil sources of energy (oil, gas, coal etc). This varies for different fuels from 1.17p/kg for everything other than gas which is between 0.15-0.96 p/kWh and electricity which is 0.43 p/kWh. Income from this is recycled back to business through a cut in National Insurance. The CCA is an agreement made with energy intensive industry organisations whereby the CCL is cut by 80% if agreed efficiency targets are met. See here for more on the Levy, and here for more on Agreements.

CRC Energy Efficiency Scheme – This started in April 2010 and applies to large public sector and private commercial organisations who had at least one half hourly meter settled on the half hourly market in 2008 and use energy above a certain threshold. It is similar to a cap-and-trade scheme whereby organisations are given an allowance of emissions equal to current use and can either purchase more allowance if emissions increase or sell them on if emissions are reduced. All money raised in the scheme is recycled according to emission reductions. There are also incentives to install efficient equipment through the early action metrics element. See here for more.

Building energy certificates – there are currently two types. Display Energy Certificate (DEC) – these apply to public sector buildings of more than 1000m2 in useable floor area and must be displayed publically. Renewed annually, they are based on actual energy use. Energy Performance Certificates (EPC) give the theoretical energy performance of a building based on its design. Renewed every 10 years they must be shown on sale and lease renewal. See here for more details.

Building Regulations Part L 2006 (Part J in Scotland and Part F in Northern Ireland) – The Building Regulations set out minimum specifications in order to achieve basic performance standards. Part L deals with the energy efficiency requirements of new build and renovation/retrofitting/extension of existing buildings. This has recently been under consultation and the new regulations take force on the 1st of October 2010. More can be found out here.

Renewable Heat Incentive – This is due to start in April 2011 and aims to encourage the uptake of renewable heating technologies, such as Combined Heat and Power (CHP) plants, ground source heat pumps, solar thermal and biomass boilers amongst others. It will work by paying those who install these technologies, per unit of heat produced (with no limit on the size of system). Exact tariff levels are yet to be finalised, but keep up to date here.

Feed-in Tariffs – Much like the RHI above, the feed-in tariff (FIT) will pay those who install renewable electricity generating systems, per kWh of electricity generated. Renewable generation systems up to a capacity of five megawatts are eligible. For more info - tariffs.

Technologies & Appliances:

Air Conditioning Inspections – As of January 2009, all air conditioning systems over 250kW must be inspected by an energy assessor, and by January 2011, all systems over 12kW must be inspected. This is to be repeated at least once every 5 years. “Having your air-conditioning system inspected by an Energy Assessor is designed to improve efficiency and reduce the electricity consumption, operating costs and carbon emissions for your system”. See here for more details.

Condensing boilers – as of April 2005 almost all gas fired boilers being replaced or installed had to be condensing boilers, and as of April 2007, the same applied to oil fired boilers. Each boiler must have a minimum efficiency of 86% for gas and 85% for oil. A condensing boiler must be installed unless here is sufficient reason why not. An assessment can be carried out by a registered installer on the type of boiler you will be required to have. See here for more information.