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UK business make cutting energy costs a priority

22 July 2008

Energy efficiency is now the number one cost-cutting priority for UK businesses looking to combat the impact of a potential economic slowdown, according to new research released today by the Carbon Trust.

Of business leaders surveyed by the Carbon Trust, twice as many say reducing carbon emissions has risen up their agenda in the last six months than those who say it has fallen down (20% vs. 9%). And they now rank energy efficiency ahead of recruitment freezes, redundancies, freezing salaries or giving below inflation pay rises as a potential cost-saving measure.

New statistical analysis by the Carbon Trust also highlights the scale and urgency of the issue, with estimates showing that UK businesses could collectively save nearly £2.5bn during the next 12 months, simply by implementing cost effective energy efficiency measures. And the savings are not just the preserve of large energy-intensive companies: the potential savings for SMEs alone are around £1.3bn.

The staggering £2.5bn figure is equivalent to 13 per cent of UK companies’ energy bills or the combined annual salaries of more than 100,000 employees on an average wage

With almost 7 in 10 (69 per cent) company bosses surveyed either actively cutting costs or considering doing so, the Carbon Trust is urging them to get in touch to seek help in reducing their energy bills and their carbon emissions.

Hugh Jones, Solutions Director at the Carbon Trust, said: “Our research shows that energy efficiency measures, not job cuts or salary freezes, are the cost-cutting steps businesses are considering first during this economically challenging time. It’s an encouraging sign that wise companies are realising that cutting carbon and being green is the easiest way to make a business lean.

“Our new statistics provide stark evidence that if companies are starting to feel the bite from the economic downturn, the first place to look for cost savings should be their energy bill. There are literally millions of pounds going out of the window every day, across the UK. We’re talking about money that could be saved by making quick and easy changes such as encouraging staff to turn off computers and lights, turning down the heating, or maintaining equipment properly.”

Carbon emissions are the key cause of climate change, and business is responsible for around 40 per cent of all carbon dioxide emissions in the UK. The Carbon Trust analysis shows that as well as saving cash, the measures would save around 22m tonnes of carbon dioxide emissions – equivalent to Scotland’s total annual business and commercial carbon emissions.

Large companies in particular appear to be ready to take action, with a third (33 per cent) of bosses of companies with more than 250 employees claiming carbon reduction has gone up their agenda in the last six months.

And bucking the predictions of some recent commentators, there are clear signs carbon reduction is not dropping off the priority list of those who have already put targets in place. Over a third (36 per cent) of business leaders surveyed who have carbon reduction targets say the issue is rising up their agenda, compared to just nine per cent who say it is going down. This is in contrast to bosses who have no targets and are not planning on putting any in place, among whom only eight per cent say it is rising up their agenda – suggesting they are yet to realise the potential cost savings available through carbon reduction measures.

Phil Woolas, Minister of State, Environment said, "With companies increasingly feeling the pinch, this is a welcome reminder that saving carbon also saves money. And, as this research highlights, business leaders know that there are big savings to be made and they're taking action accordingly. In recent years there has been some exceptional work by businesses on making the energy they use go further -- but there's still a lot to be done to avoid energy being wasted, and I'd encourage everyone in business, no matter how big or small, to adopt some of the cost-effective ways that will help them to cut their bills and their impact on the planet."

Neil Bentley, Director of Business Environment at the CBI said, “We welcome these findings from the Carbon Trust, which support the CBI’s conclusions that despite a choppy economic outlook, climate change remains a priority for business. The analysis confirms the compelling business case for urgent action to improve energy efficiency and common-sense measures like turning off lights and turning the heating down can lead to substantial reductions in firms’ energy bills.”

David Boomer, Head of Energy Efficiency and Climate Change at the Institute of Directors commented, “IoD data also confirms the findings of the Carbon Trust. Energy Efficiency is one of the most cost-effective measures that business can take to reduce operational costs and improve their competitiveness. The IoD’s research shows that those businesses currently addressing energy efficiency have reduced their bills by 6-10%, with savings of up to 20% being achievable. We strongly endorse the Carbon Trust’s message and would encourage businesses of all sizes to reduce their energy use.”

The Carbon Trust already works successfully with thousands of businesses offering practical help and advice. Businesses with energy bills of more than £50,000 a year can apply for carbon surveys which can help to identify energy-saving opportunities. Interest free Energy-Efficiency Loans of up to £100k (£400k available to all businesses in Northern Ireland supported by Invest Northern Ireland) are also available to SMEs to help them invest in energy-saving equipment such as improved lighting, boilers and insulation.

Last year the Carbon Trust helped to save up to 2m tonnes of carbon by working with companies. To find out more, businesses can call the advice line on 0800 085 2005 or visit the Carbon Trust website at http://www.carbontrust.co.uk/

Carbon Trust top energy saving tips for businesses

Switch lights off in empty rooms
You could cut your lighting costs by as much as 15%, just by making sure you turn lights off in rooms and corridors that aren’t being used
Don’t turn up the heating unless you really need to
Unless it’s just too cold for comfort, try to keep your thermostat at 19°C. Your heating costs will go up by 8% each time you increase the temperature by just one degree

Maintain your equipment properly
If you don’t regularly check your heating equipment, you could be adding as much as 10% to your heating bill without knowing it

Vending machines v kettles
It is cheaper to provide a kettle for staff who work outside normal business hours than to continue to run a drinks vending machine during these times

Standby
A single computer and monitor left on 24 hours a day will cost over £50 a year. Switching them off out of hours and enabling standby features could reduce this to £15 a year each and prolong the lifespan of equipment

Lighten up
Replacing high wattage filament lamps or tungsten halogen lamps with compact fluorescent lamps or metal halide lamps will give energy savings of 65-75%

Find and fix compressed air leaks
Compressed air leaking through a single 3mm hole could cost you nearly £700 per year in energy costs

Motors and drives
Swapping a single 10kW motor running at 25% loading for a 2.5kW motor running at full load can save around £300/year
Leaving electric motors running over weekends across the year could cost over £2,000 per motor
Lowering the speed of a motor by just 20% can produce an energy saving of up to 50%.


Footnotes

Research findings

1 YouGov research conducted online 26 June – 11 July 2008 among 857 senior managers or above in small, medium and large UK businesses (unweighted figures). The survey found that of companies that are cutting costs, or considering it, nearly a third (31 per cent) said encouraging staff to be more energy efficient and reduce waste was one of the first three things they would do, while more than a quarter (27 per cent) would prioritise general energy efficiency. These measures outranked redundancies (17 per cent), recruitment freezes (24 per cent) and freezing salaries or giving below inflation pay rises (24 per cent) as the favoured cost-cutting options.
2 Source of estimates contained in this press release: CT analysis of BERR, BRE and FES data.
3 Based on a UK average salary of £24,000, according to the 2007 Annual Survey of Hours and Earnings, Office of National Statistics.


• The Carbon Trust is an independent company set up by government in response to the threat of climate change, to accelerate the move to a low carbon economy by working with organisations to reduce carbon emissions and develop commercial low carbon technologies. The Carbon Trust works with UK business and the public sector through its work in five complementary areas: insights, solutions, innovations, enterprises and investments. Together these help to explain, deliver, develop, create and finance low carbon enterprise. The Carbon Trust is funded by the Department for Environment, Food and Rural Affairs (Defra), the Department for Business, Enterprise and Regulatory Reform (BERR), the Scottish Government, the Welsh Assembly Government and Invest Northern Ireland.


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