THE WARREN REPORT


Reducing costs for industry, but not their energy use


The government recently pledged to reduce levies for energy-intensive businesses, but Andrew Warren questions why they have not been given any incentive to actually reduce the energy they use.


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n my rather lengthy career, I have met hundreds of people whose professional role has majored on managing energy in industrial production and/or building facilities. Their job has always been to reduce the size of the fuel bills that their employers have to meet. And I cannot recall a single one who was confident that sufficient investment money would be made available to fund all the energy saving opportunities they had identified. More recently, there has been


growing concern at the unit costs per litre or per kilowatt hour of fuel. Last month, the government confirmed that existing support – at least for energy-intensive industries – under the British Industry Supercharger scheme will be increased to further reduce the amount companies in sectors such as steel, chemicals, and glass pay in electricity network charges. Around 500 qualifying businesses currently get a 60% discount on network charges; the strategy confirms that from next year the discount will increase to 90%. The move is designed to reduce


unit costs, but crucially not the overall number of units that need to be bought. A new British Industrial Competitiveness Scheme is expected to reduce electricity costs


by up to £40 per megawatt hour for businesses in manufacturing sectors such as automotive, aerospace, and chemicals. How? From 2027, over 7,000 electricity-intensive businesses will be exempted from paying levies on their electricity bills to cover the cost of schemes such as the Renewables Obligation, Feed-in Tariff, and Capacity Market.


Funding gap Asked how such exemptions will impact upon all other energy users, energy minister Mike Shanks has warned somewhat ominously that “the government is looking to fund this support, by bearing down on levies.” This cannot augur well for those seeking to transfer the costs of programmes like the Energy Company Obligation from energy companies to the public purse. What seems to be entirely absent


from current government thinking is the potential role that ensuring more investment in energy efficiency measures might play in reducing industrial energy costs. This lacuna is consistent with last


November’s government strategy document: ‘Invest 2035’. That too made no mention at all of the wisdom of making a more rational use of energy. Nothing at all about cutting


out unnecessary consumption. Or even of minimising waste. This government document stated unequivocally: “The only [sic] way to guarantee our energy security and protect bill payers is to speed up the transition away from fossil fuels and towards homegrown clean energy.” In other words, the new


government seemed exclusively to be concerned about how energy is supplied to business, and also about assisting those companies that profit from selling more and more energy. There is absolutely no recognition of the many benefits that occur when an organisation’s energy consumption is managed well.


Neglected reform Symptomatic of this is the failure to proceed with long promised regulatory changes, like confirming the long-promised (since 2017!) timetable to upgrade minimum standards for energy efficiency in leased non-residential buildings. Like bothering to ensure that public buildings not only display their energy ratings prominently, but more importantly implement the cost- effective energy efficiency measures identified under such surveys. Instead, the government is now


There is absolutely no recognition of the many benefits that occur when an organisation's energy consumption is well managed


set to abandon current funding arrangements for its flagship Public Sector Decarbonisation Scheme, despite its administrator SALIX’s long lauded track record of providing judicious investment capital to save future energy costs. This new neglect is in complete


contrast to all official energy policies for industry, commerce and the public sector over the previous 50 years. For decades, previous governments of all persuasions have deliberately prioritised seeking to help organisations improve their energy efficiency. Initially, the government published a monthly magazine entitled


EIBI | JULY � AUGUST 2025


‘Energy Management’, designed to inform management professionals about successful technologies and techniques to save energy. It was phased out only after it was acknowledged that several private sector publishers had identified that this was a market that would prosper.


Investing to save This magazine continues to be full of case histories, detailing how individual companies have improved their financial productivity by judicious investment in energy saving equipment and materials. As one memorable government initiative from the Business Department during the Brown government sloganised, energy efficiency is all about companies ‘Investing to Save’. For years, previous energy


secretaries from all parties have emphasised consistently how much managing energy consumption more effectively can benefit the bottom line, making each company grow far more economically productive. Consequently, we have enjoyed major improvement in our companies’ energy efficiency. Over the past 50 years, our GDP national wealth has increased almost three- fold. But the amount of fuel burned is now no more than it was in the early 1970s.


It is surely in everybody’s interest


to ensure that profligate on-site energy usage is minimised. This is simply so that, as a nation, we do not need to pay more for greater energy infrastructure costs than necessary in conveying both gas and electricity (even non-fossil fuel electricity!) to consumers.


When the current government


took office a year ago, five ministers were appointed to oversee energy policy. None of these was officially given any responsibility for improving energy efficiency anywhere apart from in homes. This void is now all too obvious. It is high time that somebody competent took charge of ensuring that these energy savings identified by so many professional energy managers are fully realised. ■


Andrew Warren


Chairs the British Energy Efficiency Federation


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