Climate Change Levy—£50 million
Energy Efficiency Fund
ENERGY
EFFICIENCY FUND
In line with the recommendation contained in
Lord Marshall's report (Economic Instruments and the Business
Use of Energy), part of the revenues of the climate change
will be recycled back to business by way of a £50 million
energy efficiency fund. In line with the Marshall report, the
fund will channel revenue into schemes aimed at promoting energy
efficiency and reducing greenhouse gas emissions. Specifically,
the fund will be used to:
— provide energy efficiency advice
and audits to small and medium sized enterprises;
— promote the development of "new"
sources of renewable energy; and
— encourage the research, development
and take up of low carbon technologies and energy saving measures
through a "Carbon Trust".
ALLOCATION
OF THE
FUND
Funding options were considered against value
for money criteria as well as information gathered through a consultation
exercise on the use of the fund. As a result, the breadkdown of
the fund for each of the next three years, announced as part of
the 2000 Spending Review, is as follows:
| Renewables
|
| DTI | Renewable energy research and development (eg offshore wind energy)
| £13.000 million |
| MAFF | Renewable energy (energy crops) research and development
| £4.000 million |
| Renewables sub total | £17.000 million
|
| Renewable Efficiency and Low Carbon Technology
|
| DETR | Energy efficiency advice and audits for business and research into low carbon technologies*
| £27.000 million |
| DA—Scotland | Energy efficiency work**
| £3.222 million |
| DA—Wales | Energy efficiency work**
| £1.790 million |
| DA—N Ireland | Energy efficiency work**
| £1.115 million |
| Energy Efficiency and Low Carbon Technologies sub total
| £33.127 million
|
| Total for Fund | £50.127 million
|
*includes an allocation of £5 million over three
years for the horticulture sector.
**Barnett consequentials of other allocation.
CARBON TRUST
The Government believes that a Carbon Trust is the most effective
way of delivering the energy efficiency programme and funding
research into low carbon technology. The Government will be taking
forward the establishment of the Trust—as a private company
limited by guarantee—over the next few months. The devolved
administrations can buy into the Carbon Trust if they view that
as the most effective method of delivering their energy efficiency
work.
IMPACT OF
THE FUND
The £50 million energy efficiency fund will provide
a significant boost for both business and the environment. It
provides an additional £100 million to fund energy efficiency
improvements in business and promote the development of low carbon
technologies and £50 million to promote the development of
new renewables, over the three years of the review. Business will
also benefit from the introduction of Enhanced Capital Allowances—providing
an added incentive for firms to invest in energy saving technologies.
RECOMMENDATION S: QUALIFICATION
FOR REBATE
The Committee would be assisted by information on the outcome
of consideration to be given to moving processes from Part B to
Part A2
Operation of processes governed by Part A of the Pollution
Prevention and Control (England and Wales) Regulations 2000 ("The
PPC Regulations") remains the basis for eligibility for entry
into climate change agreements. The PPC Regulations came into
force on 1 August 2000 and Schedule 6 to the Finance Act 2000
will be amended to reflect the Regulations as they now stand.
DETR's consultation on movement of some Part B processes to Part
A(2) has concluded. The outcome of the consultation will be announced
shortly.
RECOMMENDATION T: EXEMPTION
FOR GASES
The Committee would be assisted by information on the position
of industrial gases
Production of industrial gases is a relatively "clean"
process and is not covered by Part A of the PPC Regulations. Consequently,
stand alone air separation plant are not eligible to enter into
climate change agreements with the Government. The sector has
lobbied hard to change the eligibility criteria, but the Government
was not convinced by the arguments put forward that stand alone
plant should be eligible to join a climate change agreement. However,
discussions are continuing on whether air separation plant serving
an installation regulated under PPC Regulations, Part A, might
form part of the facility for climate change agreement purposes.
The industrial gases sector will not be affected by the review
of Part B processes under the PPC Regulations.
RECOMMENDATION U: RECYCLING
The Committee would be assisted by information on the inclusion
of recycling activities within the rebate scheme
In line with the recommendations of the Marshall report,
the Government believes that there should be some incentive for
all users to save energy at the margin and that is why we have
ruled out complete exemption for any sector.
The Government took the view that where energy is used for
electrolysis in the production of aluminium, fuel is being used
as a feedstock rather than an energy source and it would therefore
not be appropriate to include this within the scope of the levy.
Similarly, where fuels are used as a feedstock in other sectors
such as in the production of steel, it was appropriate for these
also to be excluded from the levey. For administrative simplicity,
where fuels are used jointly as a feedstock and energy source,
these will also be excluded. The Government does not believe this
treatment represents a significant disincentive to recycling.
For the glass sector, the Government expects that the vast
majority of recycling will be entitled to the rebates applicable
to primary production.
RECOMMENDATION GG: UK HIGH
TECHNOLOGY FUND
An indication of any outcome of discussions with the UK High
Technology Fund managers and investors on publicity for the Fund
would be helpful, and an update on EU clearance of the Fund
The UK High Technology Fund has received wide coverage in
the international trade journals associated with the private equity
industry. This is in addition to the work Westport Private Equity,
the fund manager, has done publicising the Fund to over 200 UK
pension funds, their advisers and managers. Recent publicity in
the specialist legal press generated further leads and press enquiries
for the fund manager. Dicussions with individual investors on
publicity for the fund will continue until its final closing.
It should be stressed, however, that some investors have expressed
a wish to retain their anonymity and are entitled to do this under
the terms of the agreement.
The Government received State Aid clearance of the UK High
Techology Fund from the European Commission in July.
BMW, Rover and Longbridge, Eighth Report 1999-2000, HC 383:
Government Response, Eighth Special Report 1999-2000, HC 634
1. The Committee undertook this emergency inquiry following
the 16 March 2000 decision of BMW to sell the Longbridge car plant.
It was intended to explore various allegations made in connection
with this decision, including that Ministers had or should have
had foreknowledge of the plans, and that their or others' actions
or inaction had contributed to the decision. After four sessions
of oral evidence in late March and early April, the Committee
reported on 11 April 2000.
2. The Government replied in June 2000 and noted that
the Committee's report had brought to an end "considerable
speculation" about the events surrounding BMW's decision.
Almost half of the conclusions and recommendations were not directed
at Government: of those so directed, several were accepted.
3. The Committee is currently engaged in an inquiry into
UK vehicle manufacturing, which is picking up on a number of the
points raised in this Report.
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