Report calls for variable business rates and non-domestic Green Deal to boost energy efficiency work

Green For Growth 120

The Confederation of British Industry has called on the government to introduce tax changes in order to drive the uptake of energy efficiency measures in commercial buildings.

In a report issued this week the Confederation of British Industry (CBI) outlined a raft of changes it wanted to see from the government to stimulate energy efficiency in business buildings and operations.

The report found that the UK market for energy efficiency, including construction, was worth about £17.6bn a year.

But it said it had been the “Cinderella of energy policy” and that “both business and government still have a long way to go in order to fully unlock the energy efficiency opportunity”.

The report said the government should introduce variable business rates reflecting the energy use of commercial buildings. It said: “In the short term, business rates for empty properties could be waived for those undertaking a refurbishment which would improve the energy efficiency of the building.”

Rhian Kelly, director for business environment policy at the CBI, said the policy environment “provides perverse incentives” not to invest because tenants receive the benefit from landlords’ spending on energy efficiency.

She added: “This picture must change to reward those who plough money back into improving the energy performance of buildings.”

Building’s own Green for Growth campaign has been pressuring the government to use incentives to bolster uptake of the Green Deal and energy efficiency in much the same way as the CBI suggests.

Patrick Brown, sustainability director at the British Property Federation (BPF), said the proposal to introduce variable business rates was “in the right direction” but would prove complex to implement.

He said: “Those that occupy less efficient properties are going to have to pay higher rates than they do today to pay for those in more efficient properties.”
He said the BPF’s research had shown the level of variation from the current rate would need to be around 10% to work as an incentive.

Brown said a business rates break for firms upgrading vacant properties was easier to implement but still had complications in multi-tenanted buildings.

The report also said the government should speed up moves to develop a non-domestic Green Deal, not currently expected to be ready until later this year.

Richard Griffiths, policy and campaigns consultant at the UK Green Building Council, said the report showed that energy efficiency “must be at the very top of the government’s agenda”.

He added: “For many businesses … the scheme has real potential as a source of finance but, as we have seen with the domestic version, this in itself is not enough to create a market.”

Greg Barker, minister for energy and climate change, said: “The CBI is absolutely right to highlight the opportunities that energy efficiency can bring to British business, and the challenges that remain.

“Already, the energy efficiency market in the UK is worth £17.6bn and employs around 136,000 people.

“However, I’m determined to do even more to create the right conditions for businesses to cut energy waste, and take advantage of the energy efficiency opportunity. That is why we launched the Energy Efficiency Deployment Office in February 2012 to help businesses overcome a range of barriers to making considerable cost savings.”

Key recommendations

  • Use business rates to boost energy efficiency work in commercial buildings
  • Use Green Investment Bank to help energy-intensive businesses improve efficiency
  • Develop non-domestic Green Deal
  • Businesses should encourage energy efficiency in their supply chains