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ECA for Energy-Saving Investments 9 December 2004. Mike Perry IEMA: Sustainability in the Built Environment. The Carbon Trust. “The Carbon Trust will take the lead on low carbon technology and innovation in this country and put Britain in the lead internationally” - PowerPoint PPT Presentation
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ECA for Energy-Saving Investments 9 December 2004
Mike PerryIEMA: Sustainability in the Built Environment
The Carbon Trust
“The Carbon Trust will take the lead on low carbon technology and innovation in this
country and put Britain in the lead internationally”
- The Prime Minister, October 2000
• UK Kyoto obligation“Cut greenhouse gas emissions by 12.5% on 1990 levels averaged over 2008-12”
• UK Energy White Paper: Goals to 2020
– 20% cut in CO2 by 2010 from 1990 levels
– Cut carbon emissions by 15-25 MtC per annum
– 10% of electricity generated from renewables by 2010 . . .
– . . . with an aspiration to rise to 20% by 2020
– 10GWe of electricity from combined heat and power (CHP) schemes
by 2010
• UK Energy White Paper: Goals beyond 2020
– To cut CO2 emissions by 60% by 2050
– To create a low carbon economy in the UK
UK Climate Change and Energy Policy Targets
There are 3 levers that can deliver a low carbon economy
The UK’s climate change objective requires reduction in the ratio of:
CO2 emissions
Unit of GDP
Focus of The Carbon Trust’s activities is improving energy efficiency and reducing the carbon intensity of energy supply
Energy demand
GDP
CO2 emission
Energy supply
Energy supply
Energy demandx x
1. Reduced Energy Intensity
2. Improved Energy Efficiency
3. Reduced Carbon Intensity
The Carbon Trust has 2 Financial Products
ECA for Energy-Saving Investments
• 100% first year tax allowance +
• Definitive list of qualifying products (ETL)
Energy-Efficiency Loans for SMEs
• £5k to £100k unsecured (£50k W, NI)• 0% APR • Repayable over 1 to 4 years
The ECA Scheme at a Glance
Scheme announced by Chancellor in November 1999 Pre-Budget report and came into statutory effect in August 2001
A means of recycling CCL receipts to bring about emissions abatement via energy-efficiency
Businesses can write off 100% of qualifying investments against taxable profits for period during which they make the investment
ECA saves 30% of investment cost in first year compared to 7.5% for ordinary capital allowances (assuming corporation tax at 30%)
1st year cash flow boost designed to help address the higher purchase price of the more energy-efficient plant & machinery to enable business to benefit from lower on-going energy bills
What are the benefits?
Scheme initiates carbon savings
Provides fiscal incentive to users
Provides a marketing tool for manufacturers, thereby encouraging innovation
Energy efficient equipment can potentially provide savings through future energy bills
How much of an incentive is it?
Ordinary capital allowances can save £7.50 for every £100 spent per annum (assuming company pays tax on profits)
Enhance capital allowance = 100% first year allowances, save £30 for every £100 spent (assuming company pays tax on profits at 30%)
All allowances due in the first year, therefore greatest effects of the scheme are on cashflow
Ordinary capital allowances can save £7.50 for every £100 spent per annum (assuming company pays tax on profits)
Enhance capital allowance = 100% first year allowances, save £30 for every £100 spent (assuming company pays tax on profits at 30%)
All allowances due in the first year, therefore greatest effects of the scheme are on cashflow
How the rates of relief compare
Year Expenditure written off against profits
Capital Allowance(25%)
Capital AllowanceSMEs Rate(40% then 25%)
100% ECA
12345678910
25.018.814.110.57.95.94.43.32.51.9
40.015.011.38.46.34.73.62.72.01.5
100---------
What qualifies for ECA?
Products on the ETPL as viewed on the ECA website www.eca.gov.uk/etl Or for the 3 technologies lighting, pipework insulation and CHP – products
which comply with the ETL criteria
Plus costs arising as a direct result of the installation of qualifying plant and machinery such as:
Installation costs Professional fees Costs of altering an existing building
Investment in assets for leasing: expenditure incurred from 17 April 2002 on energy-saving equipment for leasing can qualify for 100% first year allowances
…provided capital allowances available under the normal rules for plant and machinery leasing
The ECA scheme & the Energy Technology List (ETL)
ECA Scheme
ECA (tax break) ETL (qualifying equipment)• Claimed on tax return• Administered by I.R.
Criteria List (ETCL)
Performance criteria Categories of equipment Split into Technology Groups &
Sub-Technologies Updated annually
Product List (ETPL)
All qualifying products Uniquely identifiable Manufacturer self-certification Updated monthly
Adding your product to the List
Product list updated on 1st every month Complete online application Application assessed by technical expert
Letter of acceptanceOR Invitation to re-submit if not accepted
If accepted, products listed on website Lighting and pipe insulation manufacturers will have company
details, technology area and sub-technology listed rather than products
Online product application (1)
Products and Claims
Online product application (2)
Products and Claims
Adding a new technology to the List
Categories reviewed on annual basis and new categories/ amendments to existing are proposed in Budget and if accepted added the the List in the summer
Historically, proposals have been accepted from individual companies or associations (process takes about one year)
For 2004/5 Carbon Trust are undertaking a strategic review of the Scheme
ETL – Technology Groups
Air-to-air energy recovery* Automatic monitoring and
targeting equipment Boilers CHP Compact heat exchangers* Compressed air equipment Heat pumps for space heating HVAC zone controls* Lighting Motors and Drives Pipe insulation Refrigeration equipment Solar thermal systems Thermal screens Warm air and radiant heaters
* Added August 2004
Air-to-air energy recovery
Heat exchangers for recovering ventilation energy losses from buildings.
ECA may be claimed on qualifying:– Plate heat exchangers– Thermal wheels– Run-around coils
ETL criteria for each of the above, performance levels set based on: effectiveness; leakage and pressure drop
Automatic monitoring and targeting equipment
Systems that monitor energy consumption and automatically generate reports that enables the business to manage the energy it uses
ECA may be claimed on qualifying:- Portable monitoring equipment - Component based installations that include all of the following
elementsA.Fixed meters/meteringB.Automatic meter reading systemC.Energy management software
ETL criteria for each of the above
Note ECA claim requires a certificate issued by Defra - online application process at www.eca.gov.uk/etl
Boilers and boiler add-ons (i)
Boiler plant and machinery, and associated heat distribution equipment, will be eligible for ECA support, whether installed, either as part of a heating system, or CHP scheme
ECA may be claimed on qualifying:- Hot Water Boilers up to 400kW that are classified as condensing
boilers under the Boiler Efficiency Directive - Hot Water Boilers over 400kW- Steam Boilers- Localised Rapid Steam Generators- Gas Fired Condensing Water Heaters- Biomass boilers up to 300kW- Biomass boilers 300 to 15,000kW
» cont’d
Boilers and boiler add-ons (ii)
<cont’d>
ECA may be claimed on qualifying:- Burners with controls - Retrofit burner controls systems- Combustion trim controls- Sequence controls- Automatic TDS control- Optimising controllers- Flue gas economisers - Condensing economisers - Heat recovery from boiler blowdown- Condensate recovery and return systems
ETL criteria for each sub-technology above
Combined Heat and Power (CHP)
Systems that simultaneously generate heat and power (usually electricity) in a single process; supplies otherwise wasted heat for use, for instance in industry or in Community Heating.
ECA may be claimed on:- New and Upgraded CHP Schemes- Good Quality CHP certified under CHPQA Programme- Relief for the full cost of qualifying expenditure incurred in accounting
period and within Scheme boundary
Note ECA claim requires a Certificate of Energy Efficiency from Defra (issued via CHPQA)
Details on CHPQA Web Site (www.chpqa.com) See also CHP Club Website (www.chpclub.com)
Compact heat exchangers
ECA may be claimed on qualifying CHEs: 3 types included: – Plate heat exchangers (excluding air-air plate heat exchangers
for building applications) – Plate-fin heat exchangers – Compact heat exchangers with precision formed surfaces
ETL criteria require– Surface to volume ratio greater than 200m2/m3
– Minimum design efficiency at least 90% at 100% capacity Plate
Compressed air equipment
ECA may be claimed on qualifying: Electronic drain taps. Condition monitoring control systems Ultrasonic leak detector Refrigerated air dryers
ETL criteria for each sub-technology above
Heat pumps
ECA may be claimed on qualifying heat pumps in the categories:– Air cooled: split and multi-split (incl variable refrigerant flow) – Air cooled: packaged “double duct” units– Air cooled: Single-duct units– Water cooled: split and multi-split appliances – Water cooled: packaged – Air cooled: Gas engine driven split and multi-split (including variable
refrigerant flow)– Ground source: Brine to water– Ground source: Brine to air
ETL criteria for each sub-technology above:– Performance criteria for both heating and cooling (Standard
EN14511)– Products not covered by Eurovent certification required to show
evidence of 3rd party testing by accredited laboratories
HVAC Zone Controls
Provide environmental control of independent building zones whilst minimising the energy requirements.
ETL criteria require controls to
be dedicated to a particular aspect of building services control. ensure that energy consuming devices only operate when required
and operate at a level appropriate to the demand from the zone. be either
a single unit, or modules which operate together via a communication network
Lighting
Lighting includes the Lamps, Associated control gear, Lighting fittings (aka “luminaires”), and Controls necessary to meet the wide range of lighting requirements
ECA may be claimed on qualifying:
High efficiency lighting units, defined as consisting of:– Lamp(s) PLUS associated control gear PLUS lighting fitting – All 3 components must meet ETL defined specifications– Criteria determine the overall application efficacy
Controls– Stand alone lighting control devices, e.g. occupancy sensors– Criteria related to product functionality
Motors & Drives
ECA may be claimed on qualifying: Single Speed Motors Multiple Speed Motors Switched Reluctance Drives- Integrated motor/drive units- Variable speed drives
ETL criteria for each sub technology above
Pipework Insulation
The eligibility criteria for pipework insulation is based on insulation being installed in compliance with BS5422 (2001).
Note: Products not listed on the ETL. Manufacturers details given on the ECA website.
Refrigeration
Air Cooled Condensing Units Automatic Air Purgers Automatic Leak Detection Cellar Cooling Equipment Commercial Service Cabinets Curtains, Blinds, Transparent
Covers
Evaporative Condensers Forced Air Pre-Coolers Liquid Pressure Amplification Packaged Chillers Refrigeration Compressors Refrigerated Display cases Refrigeration System Controls
ECA may be claimed on qualifying:
ETL criteria for each sub technology above
Solar thermal systems
Capture solar energy and convert it for heating.
ECA may be claimed on qualifying system, comprising Collector(s) All tanks and heat exchangers except auxiliary tank and cold water tank Pipework and valves connecting the above Insulation for the above Frame or mounting system of the above Pump(s) Controls, sensors and their power supplies
ETL criteria require Systems with collectors which meet BS EN 12975 or entire systems
which meet BS EN 12976 Insulation which meets ETL criteria for pipework insulation
Thermal screens
Specifically designed to reduce energy consumption of a greenhouse
ETL criteria require consideration to be given to: Screen Material (minimum specifications detailed: energy saving
performance of at least 40%; life expectancy in excess of 3 years; dimensional stability)
Operating Mechanism (mechanical opening/closing) Controls Manual Switches
Warm air and radiant heaters
ECA may be claimed on qualifying:– Packaged warm air heaters
Indirectly fired Directly fired
– Overhead radiant heaters Unitary radiant tube Multi burner radiant tube Continuous radiant tube Radiant plaque Radiant cone
– Plus optimiser controllers for the above
ETL criteria for each type of heater, based on efficiencies.
Promoting the Scheme – the ETL Logo
Energy Technology List symbol
An opportunity for marketing to different audiences
The ETL symbol signals:
Equipment meets energy saving criteria
Businesses may claim 100% first-year capital allowance
Potential cash-flow boost and shortened payback period
Energy-saving technologies should reduce energy costs
More information from ….
ECA website www.eca.gov.uk
The Carbon Trust’s Energy Helpline 0800 58 57 94
Factsheet available from Helpline
Claiming ECA – Eligibility
Business in the charge to UK corporation tax or income tax
Capital purchase of plant & machinery included on the ETL
Further information from the Inland Revenue website www.inlandrevenue.gov.uk http://www.inlandrevenue.gov.uk/capital_allowances/investmentschemes.htm Allowances http://www.inlandrevenue.gov.uk/capital_allowances/index.htm ECA scheme http://www.inlandrevenue.gov.uk/capital_allowances/eca-guidance.htm Overview http://www.inlandrevenue.gov.uk/capital_allowances/eca-guidance-pt1.htm Qualifying http://www.inlandrevenue.gov.uk/capital_allowances/eca-guidance-pt2.htm Detailed notes
Claiming an ECA
Choose from the products displayed on Energy Technology Product List (Look out for the ETL logo)
Install equipment that qualifies
Obtain documentation that would enable you to prove your claims for 100% allowances (eg. invoice)
Fill in self assessment tax return
Claiming ECA – Tax Return
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Making Business Senseof Climate Change
Disclaimer
Capital expenditure incurred on equipment that is (a) on the Energy Technology List and Energy Technology Product List; and (b) which comprises plant and machinery for the purposes of Capital Allowances (Tax), can qualify for 100 per cent Enhanced Capital Allowances (ECAs). If you are in any doubt about whether expenditure can qualify, you must consult your tax adviser.
To qualify for the Energy Technology List and be allowed to use the Energy Technology List
symbol, products and technologies must comply with energy efficiency criteria set by Government. Neither the Carbon Trust nor the Government make any warranties or representations of any kind in relation to the products or technologies and, to the maximum extent permitted by law, accept any liability whatsoever for the same including, without limit, for direct, indirect or consequential loss, business interruption, loss of profits, production, contracts, goodwill or anticipated savings. Any person makes use of the products or technologies on the Energy Technology Product List at their own risk and it is recommended that they seek professional advice from their own adviser whenever appropriate.
A full list of all products and technologies that are allowed to use the Energy Technology List
symbol can be found on www.eca.gov.uk. Whilst reasonable steps have been taken to ensure that the information contained within this
document is correct, neither the Carbon Trust nor the Government give any warranty or make any representation as to its accuracy and accept no liability for any errors or omissions.