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Lord Teverson: Why UK businesses need to get smart on energy usage

Lord Teverson

28th February,2011

A new Carbon Connect report argues that the private sector can save cash, carbon and safeguard the UK’s future fuel security by adopting energy efficiency measures to reduce UK energy demand

Faced with rising energy costs and the imminent closure of many of our fossil-fuelled power stations, the time has come for UK businesses to get smart about their energy usage. With the growing need for the private sector to demonstrate their environmental credentials, alongside the introduction of carbon taxation schemes, surely, investment in energy efficiency is a no-brainer.

Yet energy efficiency has long been the neglected cousin of energy policy; less glamorous than renewable energy supply and rarely understood for its virtues. But with the potential to lower bills and improve the national security for energy supply, we need to wise up to the benefits. Moreover, if, as a nation, we are to meet our commitment to cut UK greenhouse gas emissions by 80 per cent by 2050, we really have no option.

Positively, promising signals are starting to emerge. The Coalition Government’s Green Deal, already set to tackle the energy efficiency of our homes, could possibly help the private sector in a similar way. Meanwhile, the current consultation on electricity market reform represents a once in a lifetime opportunity to make energy efficiency as popular as renewable energy supply and for the UK to reap the rewards - both economic and environmental.

But to achieve this, we have to transform how we view and approach the issue of energy efficiency. Until now, it has been considered acceptable for business to throw away energy. This must now change.

For starters, business could do more to avoid energy use in the first place. This is easier than you may think, and can involve small, simple changes to everyday activities, like using video conferencing facilities rather than travel. And where this is not possible, energy saving solutions such as lighting controls, variable speed drives and voltage optimisation units can be used. A growing body of evidence confirms that these technologies provide the most cost-effective means with which to reduce our national carbon emissions.

And many of these solutions have payback periods of less than a year, requiring relatively little upfront capital. In addition, according to the Carbon Trust, typical savings for a large organisation are in the region of 15 per cent on annual energy bills.

But although easy in principle, change is always difficult to implement. So Government must lead from the front.

Indeed, to help government guide business, one of the report’s key recommendations is that the Department of Energy and Climate Change introduce an ‘Energy Management Hierarchy’. This idea is based on a similar concept as the waste hierarchy and advocates a more coherent structure for the management of our energy resources. However, business leaders must be prepared to drive these changes from within also.

To this end, the report suggests that businesses appoint an ‘energy champion’ at board level. Individuals at levels of such seniority will find it easier to make the business case for energy efficiency investments and push for the implementation of more environmentally sound corporate policies. What’s more increasing scrutiny of environmental performance among large corporates means that a demonstrable commitment to saving energy could significantly bolster a company’s reputation.

But make no mistake; the benefits of energy efficiency are not just for large businesses with the economic clout to foot the bill. Tackling the energy usage of the UK’s 4.8 million small businesses is of equal importance given that these organisations are responsible for around 45 per cent of total business energy consumption.

The case studies in the report demonstrate the rewards available to SMEs who can make the leap. For example, the Cavan Bakery in Hampton Hill, Middlesex used the Carbon Trust 0 per cent loan scheme to buy new and more efficient ovens, from which it has cut its gas consumption by 75 per cent, enabling it to counter rising energy costs and ride out current financial strains. The Bakery is now looking to source some energy-efficient vans.

This, alongside a whole host of evidence gathered through the parliamentary inquiry suggests that we must establish a comprehensive framework to tackle the energy efficiency of SMEs under the Green Deal. And by expanding the stimulus to the Carbon Trust’s hugely successful 0 per cent business loan scheme we can ensure that support in this sector remains strong.

Successfully tackling energy efficiency is contingent on the buy-in of both government and the private sector. And whilst the challenge of adapting to major changes in the UK power sector will not be an easy one, the benefits of achieving this goal should not be underestimated. I urge business leaders and government alike to rise to this challenge and help achieve an energy secure future for all.

Lord Teverson is a Liberal Democrat Peer and Chair of the Carbon Connect report 'Energy Efficiency: The Untapped Business Opportunity'.

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