Monday, 15 October 2012

Neil Ritchie, Local Business Unit Manager, Low Voltage AC Drives, ABB writes: Have the European Parliament and the EU fallen out with each other? I wonder because they don’t seem to be talking to each other about energy policy.

The European Parliament recently approved a new scheme aimed at cutting energy consumption by 20 percent across the EU by 2020, along with basing 20 percent of energy consumption on renewable sources and cutting greenhouse gas emissions by 20 percent. Under the new measures, energy companies will have to achieve a “cumulative end-use energy savings target” by 2020 and reduce energy sales to industrial and household consumers by at least 1.5 percent every year.

Yet at the same time, the EU is threatening to slap the 20 percent rate of VAT on energy saving products. Many industry experts think it could “seriously damage” the Government’s Green Deal programme, a loan scheme aimed at consumer and industry which aims to reduce carbon emissions cost effectively by dramatically improving the energy efficiency of British properties.

The scheme has been made possible by applying a reduced VAT of 5 percent on energy saving products, yet UK ministers are finding themselves in the position of having to defend the scheme in the EU Courts of Justice.

The Association for the Conservation of Energy fears for the future of many packages currently on offer under the Green Deal, warning that the EU’s plan could increase the costs of installing many key energy-saving measures and make many potential packages unviable.

So much for joined up government!

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