New research released today by corporate energy retailer npower Business Solutions indicates that Rishi Sunak and prime minister Johnson need to be more generous with tax breaks to the UK’s 6 million enterprises around Net Zero goals.
Tax-based incentives are needed to decarbonise UK PLC, the retailer’s commissioned research among over 60 firms reveals.
Three out of four companies responding to nBS’s survey don’t believe current government incentives do enough to help them decarbonise. More than four out of five – or 83% – would favour tax-based incentives as the foundation for a Whitehall drive, spurring them to decarbonise faster.
Premier Johnson announced in November his Ten Point Plan for a green industrial revolution, sketching an outline of how post-pandemic Britain could ‘build back greener’, on the way to meeting his administration’s targets of Net Zero by 2050, and stripping 78% out of 1990-level emissions from the economy by 2035.
Today’s research from npower Business Solutions shows companies insisting bigger fiscal prompts are essential to expand energy efficiency, and to widen firms’ embrace of clean tech such as electric vehicles (EVs) and on-site generation.
The report – ‘Plot Your Path to Net Zero: A Focus on Incentives’ – also gauges respondents’ views on alternative steps to cut emissions. In March the Confederation of British Industry outlined in its ‘Greening the Tax System’ report how ‘fiscal measures, including environmental taxes and tax incentives, can play an important role in driving change’.
An overwhelming majority (83%) of npower Business Solutions’ respondents said they would welcome this approach. Carrots as well as sticks are needed, the research concludes, to curb polluting behaviour and encourage new spend in clean tech.
Chancellor Rishi Sunak announced in his Spring Budget a new ‘super-deduction’ grant, trimming companies’ tax bills by 25p for every pound they invest in new capital equipment.
Two thirds (66%) of npower Business Solutions’ respondents would consider applying for this if it were restricted to low carbon kit, such as heating, ventilation and air conditioning (HVAC), combined heat and power (CHP), EV charging and solar photovoltaic (PV).
The study also asked firms to rank areas where new tax breaks would be most welcome. Energy efficiency came top, followed by on-site generation and EVs.
Asked if they had taken advantage of any recent incentives such as the Non-Domestic Renewable Heat Incentive (NDRHI), just 13% of respondents said they had.
Anthony Ainsworth, chief operating officer at E.ON-owned nBS, commented, “It is clear that businesses would welcome an approach where organisations across all sectors could benefit from a tax-based incentive scheme to help them reduce emissions.
”For example, under the current system, taxes may actually indirectly deter investment in energy efficiency improvements or new technologies. Business rates rise when property value increases or new plant and machinery assets are added. This includes green technologies like solar PV, which puts the current business rates rules at odds with the government’s net zero ambitions.
Solar Energy UK are among green economy lobbyist who have long made exactly the same complaint.
Ainsworth noted that while schemes such as the NDRHI benefited many organisations, a large proportion of businesses hadn’t taken advantage. What this report tells us is they actually want help with more ‘day-to-day’ measures, such as energy efficiency.
“With less than two months to go until COP26, we are still awaiting some major announcements from the government, such as the Heat and Buildings Strategy, Net Zero Review and the Net Zero Strategy.
While we have seen the publication of the Industrial Decarbonisation Strategy and Transport Decarbonisation Plan, these additional key pieces in the net zero puzzle really are an opportunity for the government to support businesses with new incentives, as they will play such a vital role in our road to net zero.”
Small and medium-sized firms employing up to 250 workers make up 99.9% of UK companies, according to analysis of 2021 government statistics. SMEs provide a reported 60% of UK employment.
nBS’ report can be downloaded at npowerbusinesssolutions.com/roadtonetzero, by clicking on the ‘A Focus on Incentives’ button.