New Carbon emissions law could be costly

Industry comment

Published: 06 April

Author: Alan O'Brien

Type: Industry comment

Year: 2010

Helen Loveless, Financial Mail

4 April 2010

New legislation on carbon emissions came into force last Wednesday and it could result in tens of thousands of businesses facing higher costs.

Firms using more than 6,000MWh of electricity a year will have to buy an allowance equal to their carbon emissions from April 2011.

Businesses have until September 30 to register for the Carbon Reduction Commitment Energy Efficiency Scheme. Those that fail to do so face a penalty of £5,000 plus £500 for every working day after the deadline.

The scheme is key to Britain's commitment to reduce carbon emissions by 80% by 2050. It is hoped that firms will invest in energy-saving technology to reduce their carbon emissions.

Savings: Sabien's Alan O'Brien

And it is good news for Sabien Technology in Watford, Hertfordshire, which provides that technology to businesses.

Set up by Alan O'Brien in 2004, the firm employs nine full-time staff and is growing rapidly. The Aim-listed company, which has a market capitalisation of £9.5m, recorded a turnover of just under £500,000 in 2009 and is on track for £1.5m this year.

O'Brien, 40, says: 'When we listed three years ago, many blue-chip companies had little idea of their energy consumption, but now there is an increased focus on the need to become more energy efficient.'

Sabien's M2G technology, which it claims reduces energy consumption in commercial boilers by between 15 per cent and 25 per cent, is used by clients including Royal Bank of Scotland, O2 and Deutsche Bank.

The technology developed by Sabien is approved by the Carbon Trust and also qualifies for the Enhanced Capital Allowances scheme under which firms can claim 100% of first-year allowances when they buy qualifying plant or machinery.

While the forthcoming legislation does not apply to small businesses, experts believe there will be increasing pressure on firms to ensure they are as energy-efficient as possible, both to bring operating costs down but also to answer the growing demand from consumers for better environmental standards.

O'Brien says: 'Consumers are increasingly questioning businesses' environmentally friendly credentials and the risk for firms of being at the bottom of carbon league tables will play into competitors' hands.'

The Carbon Trust, a not-for-profit organisation, offers a range of services aimed at helping small businesses reduce the amount of energy they use.

These include advice, online training and interest-free business loans for firms looking to buy energy-saving equipment. Its website is at carbontrust.co.uk

To read the Mail on Sunday article click here