Supplementary memorandum submitted by
the Department for Environment, Food and Rural Affairs
Questions 70-72 (Mr Philip Dunne): Salix Finance
Limited
Salix Finance Limited ("Salix") is
an independent company limited by guarantee. It has four members:
John Edmonds, as representative of the Carbon Trust (Non-Executive
Director of the Carbon Trust, Non-Executive member of the Board
of the Environment Agency, Senior Research Fellow at King's College,
University of London, formerly General Secretary of the GMB Trade
Union and President of the TUC), Teresa Graham (formerly Deputy
Chair of the Government's Better Regulation Commission, Chairman
of the Administrative Burdens Advisory Board of HMRC, Chair of
the Regulatory Board of the Royal Institution of Chartered Surveyors),
Peter Derrick (recently retired as Chamberlain of London, previously
Director of Finance and Corporate Services of Surrey County Council,
Chief Executive at Hammersmith and Fulham and Director of Finance
at Camden & Hounslow) and Mark Addison (Chief Operating Officer
Defra and Acting Permanent Secretary for a short period in 2005,
Non Executive Director of The National Archives).
The Carbon Trust Group has an overarching role
in relation to helping public sector organisations deliver carbon
savings both today and in the future. Salix designs and delivers
co-funded invest to save schemes for the implementation of energy
efficient capital projects in the public sector. The Carbon Trust
grant funds Salix to provide these schemes as an additional element
of the broader offer to the public sector (see diagram).
The Carbon Trust decided to set up Salix as
an independent company to deliver these schemes rather than looking
for a contractor to manage the schemes on its behalf because it
was felt that there was a role for an efficient single purpose
organisation which had the freedom to manage its schemes and that
could seek public funding from other sources over time.
The Carbon Trust seeks to provide a joined up
service to the public sector and in doing so monitors the work
of Salix and has agreed parameters for the use of Carbon Trust
funding by Salix that ensure cost effectiveness and programme
effectiveness. We also gather and share learnings to inform the
development of our respective offerings. The Carbon Trust has
an important role to play in ensuring that funding from Defra
to help the public sector reduce carbon emissions is used in a
way that maximises its impact.
Questions 114—117 (Mr Ian Davidson): State
Aid Rules
The Committee expressed concern that the Carbon
Trust was unable to focus on companies which have the potential
to deliver the highest savings because of State Aid rules and
asked what Defra had done to raise the issue with the EU Commission.
Defra has not made any representations to the
Commission as in practice the state aid rules do not unduly constrain
Carbon Trust's support to individual companies, for the reasons
stated below.
The Carbon Trust has agreed with Defra and BERR
that its carbon management and energy efficiency advice activities
operate as a "general measure" under state aid rules.
This means that they do not constitute state aid.
A general measure is a measure conferring a
benefit which is potentially available to all undertakings in
an EU Member State and is not selective. To comply with this definition,
the Carbon Trust's carbon management and energy efficiency advice
must be:
— Open to all non-domestic energy users
in the UK.
— Provided on the basis of need, assessed
using objective criteria and applied on a non-discriminatory basis.
— Reactive not proactive, meaning that
it is not targeted towards specific companies or particular sectors.
The Carbon Trust has consulted periodically
with Defra and the State Aid Unit at BERR about any significant
changes to its carbon management and energy efficiency advice
services to ensure that both Departments were satisfied that the
changes would not affect the general measure status of those activities.
The general measure status requires the Carbon
Trust to make services available to all organisations in the UK
but has not prevented it from developing a range of different
services appropriate to the diverse needs of customers based on
their energy consumption, thereby ensuring the cost effectiveness
of its services. The main categories of service which the Carbon
Trust has developed are:
— General Advice provided through
publications, the website, and a telephone helpline, which is
available to all business and public sector organisations (but
is typically used by smaller organisations with energy costs of
less than £50,000 per annum);
— Standard Surveys for organisations
with energy bills of over £50,000 per annum, under which
an accredited consultant undertakes one or more site surveys and
prepares a report with costed recommendations for reducing carbon
emissions and energy consumption. The work can also include a
range of other services; and
— Carbon Management for larger
energy use organisations where accredited energy experts work
with an organisation to undertake a strategic review of its carbon
emissions and energy consumption and to draw up a reduction action
plan. The energy experts are generally selected on the basis of
their specialist knowledge of the sector in which the organisation
operates.
The Carbon Trust seeks to maximise its effectiveness
by requiring co-funding for certain services and by larger organisations
(with energy bills of more than £3million) where there is
a much greater willingness and ability to pay part of the cost
of such services.
Although the general measure requirements mean
that the Carbon Trust's services must be reactive and open to
all, this is considered to be appropriate given that public money
is being used. The Carbon Trust is not prevented from giving support
for the specific needs of an organisation provided that it offers
equivalent support to other organisations. Through its marketing
campaigns and other promotional activities it is also able to
ensure that organisations, including those with the greatest potential
to make carbon savings, are made aware of its services and encourage
them to make contact.
In practice, therefore, the Carbon Trust does
not consider that the general measure principles have acted as
a significant constraint on its ability to work with those organisations
with the greatest potential for making carbon savings.
It has therefore not been considered necessary
for the Government to make any approaches to the EU Commission
with a view to achieving greater flexibility for the Carbon Trust
in carrying out activities in this area. However, the Carbon Trust
keeps developments in state aid law under close review in conjunction
with Defra and BERR.
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