Global warming caused by the emission of greenhouse gases (GHG) into the atmosphere is becoming a very high profile issue for businesses. Investors are increasingly assessing company’s green credentials and how they are planning to meet the legal target of net zero carbon by 2050 set by the UK government. Customers are more likely to deal with companies that source materials from sustainable sources and take care to protect the environment. Successful companies will be those that start planning now to reduce GHG emissions.
27 June 2019, government commits UK to legally binding target of net zero emissions by 2050. In some circumstances it will be impractical to eliminate all GHG emissions and companies will need to enter into an approved offsetting scheme whereby an amount of carbon equal to the residual emissions is removed from the atmosphere.
On 10 March 2021, the government published the outcome of the consultation on ending the sale of new petrol, diesel and hybrid car and vans. The main outcomes were that:
On 1 January 2021, the government introduced the UK ETS to replace the previous EU ETS. The first auction of carbon credits is set for 19 May 2021 when the price will be set. The price of carbon credits is expected to increase year on year.
The CCL for electricity from 1 April 2021 is 0.00775 £/kWh a nearly 10% reduction on the previous year, while the rate for gas is 0.00465 £/kWh a nearly 15% increase. As the decarbonisation of electricity generation gathers pace this trend is likely to continue which has implications for technologies such as heat pumps to replace gas heating systems.
Companies that qualify as large are required to carry out an audit of their total energy consumption every four year and report to the Environment Agency. The next audit is due by 5 December 2023.
Qualifying large companies are required to report their total energy consumption and GHG emissions in their annual Directors’ report for the first complete financial year after 1 April 2019. Companies with financial year from 1 April should already have reported on their financial year to 31 March 2020 and all large companies will need to report by 31 March 2022.
From 1 April 2018, landlords of non-domestic private rented properties (including public sector landlords) may not grant a tenancy to new or existing tenants if their property has an EPC rating of band F or G (shown on a valid Energy Performance Certificate for the property).
From 1 April 2023, landlords must not continue letting a non-domestic property which is already let if that property has an EPC rating of band F or G.
It is anticipated that the minimum EPC rating will be increased to band D or E
There are a number of incentives to encourage companies to take steps to reduce their GHG emissions that include grants, low interest loans and tax benefits. Some examples are:
Provide financial support for qualifying technologies for 20 years
A £billion grant scheme primarily aimed at decarbonising heating in public sector organisations through the introduction of heat pumps but other projects were also approved. The deadline for applications was January 2021 but it is anticipated there will be similar schemes in the future.
Typically provide 30% grants towards the cost of qualifying projects
New low emission vehicles qualify for grants although these were recently reduced. For example, cars with CO2 emissions of less than 50g/km and can travel at least 112km (70miles) without any emissions at all and costing less than £35,000, the grant will now pay 35% of the purchase price (including VAT and delivery charges) up to a maximum of £2500. Full details can be found at
Low emission vehicles have lower vehicle excise duty and lower Benefit in Kind (BIK) rating compared with fossil fuel vehicles.
Decarbonising electricity generation when combined with measures to reduce energy consumption is the key to achieving net zero carbon. Due to the large scale investment in wind turbines and solar panels the carbon intensity of electricity is projected to fall to 0.1 kg CO2 equivalent by 2030. Critically this is lower than natural gas at 0.18396 kg CO2 equivalent. However, in 2018 just 11% of the UK’s energy consumption was from renewable sources meaning further large scale investment will be needed including upgrading the transmission and distribution networks to carry the increase electricity loads.
The decarbonisation of electricity generation allows a considerable reduction in GHG emissions through introducing alternative electrical based alternatives to fossil fuels.
Heat pumps in the form of air conditioning have been in use for decades and are capable of supplying heating or cooling. Their performance depends critically on the temperature difference between the source of the heat or coolth and the space to be heated or cooled. In heating mode under favourable conditions, a Coefficient of Performance of between 3.5 and 4 is achievable meaning that for every unit of electricity the heat pump delivers between 3.5 and 4 units of heat. When combined with the projected reduction in the carbon intensity of electricity generation by 2030 carbon emission can be reduced by around 85% or if green electricity is used by 100%. However, heat pumps are more expensive than boilers and to avoid increased operating costs careful optimisation of the heat pump system is required.
Pure battery powered vehicles produce zero emissions when running but generating the electricity to charge the batteries can produce emissions depending on the source. Manufacturing batteries is very energy intensive leading to a high embodied energy and hence associated GHG emissions. Nevertheless, since petrol and diesel vehicle are to be phased out from 2030 companies are going to need to plan to replace their company vehicles with electric alternatives.
Hydrogen can be produced by the electrolysis of water, but the majority is made by reforming natural gas a process that emits CO2. If hydrogen is produced using electricity from renewable sources, it is a truly emission free fuel since the only product of combustion is water. This makes hydrogen a promising fuel for transport, for example, in fuel cells for electric vehicles. There are some limited applications in buses and trucks but the infrastructure to support the widespread use of hydrogen is still some way off.
Colin Lillicrap Associates has been advising companies on energy efficiency and reducing GHG emissions for over twenty years drawing on experience gained through research into energy intensive processes and energy efficient buildings. We guide you through the challenging process of decarbonising your operations based on our knowledge and experience of all the issues raised above. Our comprehensive service includes: