Tax incentives help save 6.6 million tonnes of CO2 emissions

UK firms receiving tax breaks in exchange for setting energy efficiency targets cut their emissions by 6.6 million tonnes between 2019 and 2020, the Environment Agency (EA) has revealed.

This equates to an overall emissions reduction of 13.3% across a total of 8,705 facilities signed up to the the Climate Change Agreements (CCA) scheme.

Participants receive a reduction in the Climate Change Levy – a tax that is applied to commercial electricity, gas, and solid fuel bills – for meeting energy efficiency targets agreed by the government and sector associations.

In total, the EA’s latest biennial report shows that, between 2013 and 2020, the CCA scheme has seen total emissions savings of 23.8 million tonnes of CO2 equivalent.

Chief executive, Sir James Bevan, said: “The CCA scheme is encouraging businesses to find ways to reduce their energy usage and consequently their carbon emissions. Innovation is key, and the EA is here to support that through progressive regulation.

“We are already seeing the effects of climate change in the UK, so it is vital that businesses face up to the challenge of adapting to a different climate, thinking about energy use as well as the use of natural resources, such as water, which will become more scarce in the future.”

During the 2019-20 reporting period, the operators of 1,510 CCA agreements, covering 3,110 facilities, met or exceeded their improvement targets.

Operators who failed to meet their targets used any banked emissions savings from previous target periods, and paid a buy-out fee for each outstanding tonne of emissions above the target.

The scheme is administered by the EA on behalf of the Department for Business, Energy and Industrial Strategy, encouraging industry-wide energy reduction as the UK aims for net zero by 2050.

Speaking at the latest report's publication on Tuesday, business and energy minister, Lord Callanan, said: “Industry has a critical role to play in helping the UK meet its net-zero target by 2050, and today’s report shows the immense progress being made to improve energy efficiency and reduce carbon emissions across UK sectors.

“We expect to see results like these continue as the UK business community demonstrates how both green and growth go hand in hand.”