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Emission impossible? The cost of cutting carbon

Tough economic times and changes in legislation can lead to unnecessary confusion over the best route forward when selecting and reviewing air conditioning systems. This is especially so when air conditioning units for commercial use are under consideration. There are, however, many ways in which efficiency targets can be met and money can be saved, says Des Franklin
The introduction of the Carbon Reduction Commitment (CRC) scheme has brought carbon emissions to the top of the agenda within the air conditioning industry. Reducing emissions and energy consumption as well as cutting costs is big news and most manufacturers see no signs of this changing.

As of this year, companies that use more than 6,000 MWhr of electricity per year will be subjected to power metering. The use of smart meters to determine annual usage has already shown who the largest users of energy are. Once forcibly registered, these large users will pay £12 per tonne of carbon they produce when using gas, electricity or oil.

Worth a huge amount of money
Under the CRC, number of £12 tokens available next year will be reduced, and again in subsequent years. This will be worth a huge amount of money in the years to come; reducing energy consumption, running costs and carbon produced will be the chief target of financial departments of large energy users.

Currently, most commercial businesses using fossil fuels are subject to a Climate Change Levy (CCL). This is a tax before VAT, so essentially it's a tax on tax. The rate of tax on each utility will take account of the average carbon content within the fossil fuel. These will be known as the 'CCL carbon price support rates'.

Lowering carbon emissions, running costs, CCL contribution and overall CRC is becoming increasingly important. Making investments in efficient equipment with low running costs is a great way to save money in the long term as the price of fuel will only continue to rise and this is where air conditioning installers can benefit.

The challenging economic climate has impacted upon businesses across the board. Coupled with the need to reduce energy consumption, the prospect of becoming more sustainable through adapting equipment in a bid to reduce emissions can appear daunting and expensive.

Reviewing existing equipment and investing in efficient air conditioning units with low running costs is crucial. Many businesses are using far more energy than is necessary to cool their offices or equipment. This is why my own company invests in developing products to provide money and energy-saving benefits.

Decreasing a company's carbon footprint can appear costly at first as there will always be an initial outlay associated with updating and renewing equipment, but the long term benefits really do make the investment worthwhile.

To offset the initial expense, financial incentives for complying with CRC schemes can be hugely beneficial. Companies should make sure they are fully aware of the financial incentives they are eligible for if they invest in carbon cutting technology. The Enhanced Capital Allowance, for example, is a scheme designed to provide businesses with tax relief for investments in equipment that meets a certain criteria.

As much as 65 per cent of the total costs involved with air conditioning systems are related to running costs. That's why improving efficiency, even by 10 per cent, can save businesses vast amounts of money - not just in fuel bills, but also in terms of their CRC and subsequent VAT on any fines they incur on carbon emissions.

It's clear that awareness of legislation is vital for those involved with reducing emissions as well as costs.

Further legislation closely linked to air conditioning systems has been rightly put in place in an attempt to remove refrigerants that have a detrimental effect on the ozone layer.

Harmful to the environment
The refrigerant R22 is now known to be harmful to the environment and is in the process of being phased out. The phase out programme began in the 1990s, and by 2004 there was a ban on introducing the supply of new systems using R22. By 2012, only recycled R22 could be used. By 1 January 2015 it will also be illegal to use recycled or reclaimed R22 for servicing, and alternatives will have to be used.

This leaves contractors with a couple of options. They can either repair or replace existing machines that currently use R22 refrigerants. It's advisable to consider replacing old systems to prevent incurring excessive servicing costs. This is also more likely to increase efficiency, and of course lower the Climate Change Levy and help in the CRC calculation, thereby lowering VAT costs also.

All new installations will use a refrigerant with zero Ozone Depleting Potential, like R410a. If this refrigerant is used, even if the system leaks, there will be minimal environmental damage. Furthermore, R410a has 35 per cent higher efficiency levels than R22. Options which allow you to re-use existing pipework, with new air conditioning systems, are a cost effective way to tackle the issue.

For further information about R22 legislation, you can visit: www.mitsubishir22.co.uk

// The author is European sales manager at Mitsubishi Heavy Industries //
10 September 2012

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