UK businesses to receive £550m in green loans

Three-year deal between Siemens and the Carbon Trust will provide funding for energy efficiency measures and equipment

Businesses will be given green loans totalling £550m to cut their energy use as part of a three-year deal between the financial arm of Siemens and the Carbon Trust, it was announced on Friday.

The loans represent a significant new source of funding for energy efficiency measures and equipment, such as low-energy lighting and biomass heating. The savings in the companies' power bills is expected to at least match the repayments of the loans. The measures will also cut the carbon footprint of UK business, which currently accounts for around 40% of UK emissions.

"Driving green growth in the UK is key to our economic recovery," said Tom Delay, the chief executive of the Carbon Trust. "A missing ingredient at present is access to affordable finance to enable business to make green investments. This new major finance facility will improve business competitiveness, cut carbon and boost green growth."


Miles Templeman, the director general of the Institute of Directors, said: "In today's high-energy cost environment, improving energy efficiency is a must for all businesses. The new scheme could play a significant role in stimulating innovative solutions."

The loans will be provided by Siemens Financial Services in the UK, with the Carbon Trust assessing the cost, energy and carbon savings of the plans proposed by companies. The Carbon Trust anticipates it will generate lifetime energy cost savings of £1bn and 5.5m tonnes of carbon.

The scheme opens on 4 April and any energy equipment is eligible as long as it meets the scheme's energy-saving criteria. A previous scheme through which the Carbon Trust made interest-free loans of up to £250,000 each to small to medium-sized enterprises for energy efficiency ends on 28 March.

The loans will be made at commercial rates for periods of one to seven years and sums from £1,000 to several hundred thousand pounds.

John Sauven, the executive director of Greenpeace UK, said: "The Siemens-Carbon Trust green finance deal is exactly the sort of initiative that we need to see happening more frequently in the future. A green growth strategy can only work if it is backed by green finance."

Analysts agree that increasing energy efficiency is frequently the cheapest way of cutting greenhouse gas emissions, but requires upfront investment. The government's plan for a green investment bank, which could help finance energy-efficient technology, is currently being hampered by objections from the Treasury over the scale and scope of its operations. The government has already cut funding to the Carbon Trust and the Energy Savings Trust by 40% and 50% respectively.

The government also has a "green deal" programme, currently being debated in parliament, to provide loans for energy efficiency improvements to homes and small and medium-sized businesses. The Department of Energy and Climate Change estimates it will provide £7bn a year of private sector investment. It is expected to start after March 2012 and some experts are concerned that only the simplest measures, such as loft insulation, will be eligible.

Neil Bentley, the deputy director general of the CBI, said: "The government's green deal energy efficiency scheme could help cut emissions from buildings, but with 18 months to go, the businesses that will have to deliver it still do not have enough detail on how it is going to work."




Damian Carrington