ESTA Viewpoint

For further information on ESTA visit www.estaenergy.org.uk

Plotting a course for Glasgow

COP26 in Glasgow is just a few months away. But is the Government setting the right course to ensure the UK is on track to meet its climate obligations?, asks Mervyn Pilley

Agreat deal has happened since my last column.

The budget came and went. Unfortunately, there was very little in that document relating to energy efficiency and a green recovery. There was an announcement of a new UK Infrastructure Bank due to be based in Leeds, which will have £12bn in capital with an aim of funding £40bn worth of public and private projects. Unfortunately, as so often is the case, there is a lack of detail around the announcement. It is not clear that the infrastructure projects will all be based around achieving the most environmentally friendly, sustainable outcomes.

There has already been a big debate about the announced increase in road building projects with campaigners pointing out that miles of new roads will not help cut down on car journeys and resulting emissions. £15bn of green bonds are to be created, including for retail investors to help finance the transition to Net Zero by 2050. It is clearly a good idea for individual investors to be able to help fund environmentally friendly projects, but again we await the detail.

Having removed the Enhanced Capital Allowances scheme last April a super allowance scheme allowing companies to reduce their taxable profits by 130 per cent against investment in capital equipment was announced in the budget. Unfortunately, unlike the ECA that was specifically tied into the Energy technology List (ETL), that listed energy efficient equipment, it appears that the new scheme will cover any capital expenditure including distinctly non energy efficient equipment. In addition, the new version of the ETL is not proving to be the driving force to get businesses to invest in energy efficiency measures that was intended. We are exploring ways of providing an end user friendly interface into the list using our planned end user information hub. A customer should not

‘There is still so much focus on supply and not demand side’

need a PhD in energy management to be able to use the list.

On the subject of using the tax system as a way of incentivising energy efficiency measures, many have pointed out the missed opportunity of not having a lower VAT rate for installing energy efficiency measures. This is an especially relevant discussion as one of the key reasons cited as a benefit of leaving the EU was the fact that the UK Government would have more freedom to set its own VAT rates.

Abolition of the Green Homes Grant

The failure and abolition of the Green Homes Grant has been a huge area of worry. Of particular concern to someone like me who has been actively involved with an SME installer company in the past is that with schemes like this not working effectively it is very unlikely that SMEs will want to get involved in the future. Companies may invest in training and scheme administration only to find that the work does not exist. This clearly has a potential impact on the green jobs creation that the public believes should be a key pillar of a post-pandemic recovery. At the time of writing there

Mervyn Pilley is executive director of ESTA (Energy Services and Technology Association) are various rumours circulating that the Government has realised that any retrofit scheme does indeed need to be a very much longer-term project.

All of a sudden everyone, certainly the Government, seems to have woken up to the fact that COP26 is only seven months away. Having failed to take full advantage of the enforced delay from 2020 all sorts of activity has opened up. Businesses are being encouraged to sign up to various ‘charters’ around carbon reduction. The Cumbrian coalmine opening has been referred back to the planning approval process but licences for North Sea exploration for oil and gas are being extended. The Industrial Decarbonisation strategy has been issued. For all of that activity a great deal of the 2019 £9bn manifesto commitment remains unspent and as far as ESTA is concerned, energy efficiency - actually using less energy and using the energy that you use more efficiently - has sadly not moved up the agenda to the place it deserves. There is still so much focus on supply and not demand side. At ESTA we are working on an energy efficiency manifesto to present to the COP delegates highlighting all of the options available and also reiterating the need to bring into play the UK’s non- domestic, commercial building stock.

In addition to the manifesto, we have put in two bids for space at the external events being held in Glasgow one on our own account and one on a joint basis with BESA. We hope that we will be successful in our bid although the rumoured £14,000 cost for a hotel room in Glasgow may mean tracking down those Scottish relatives to put us up. While on the subject of COP we are also looking to play an active role in a virtual roadmap of events being organised by the Italian Exhibition Group leading up to the pre-COP events taking place in Milan.

I have been to Glasgow in November before, but my last trip was certainly not as important as COP26 is going to be. It is hard to argue with those commentators who say that this COP is a last chance to get the plan right. 