On 1 January 2005, the Programme for Improving Energy Efficiency Act (2004:1196) came into force. The programme is intended to increase energy efficiency and create opportunities for tax exemption.
On 1 July 2004, the tax on industrial process-related electricity was raised from SEK 0 to SEK 0.005 per kWh (according to the Tax on Energy Act, LSE, Chapter 11 § 3, this relates to electric power consumed in industrial operations or in commercial greenhouses”.) The tax rise, which represents the adoption of the EU’s Energy Tax Directive, does not affect manufacturing processes in the following sectors: metallurgy, electrolysis, chemical reduction (Bill 2003/04:144).
The Directive gives energy-intensive companies in manufacturing industry, which are subject to the tax, the opportunity of being granted tax exemption on their electricity consumption if they take action to improve their energy efficiency. The government has, therefore, adopted a programme of improving energy efficiency in energy-intensive companies (PFE), with the carrot of reduced taxation. Participation in the programme is voluntary, and is open to energy-intensive manufacturing companies which meet certain criteria.
The Programme for Improving Energy Efficiency Act (2004:1196) came into force on 1 January 2005. From that date, companies have been able to apply to participate in PFE. Companies applying before 31 March 2005 are entitled to a tax reduction backdated to 1 July 2004, when the legislation on the tax came into force. The Swedish Energy Agency is the supervisory authority for the programme. We can provide the most up-to-date information on the programme. Applications for the programme should be submitted through the Swedish Energy Agency’s e-services.
Increased energy efficiency through energy management systems
The aim of the programme is partly to increase the efficiency of energy use among companies which consume large amounts of energy, i.e. energy-intensive companies. One measure to improve efficiency is to introduce an energy management system (EMS), the energy equivalent of an environmental management system.
A five year programme
The programme period for participating companies is five years. During the first two years of the programme period, the company must introduce and obtain certification for a standardized energy management system. An energy audit and analysis are used to generate a list of measures to improve energy efficiency, which the company then implements during the remaining three years of the programme. Since PFE focuses on electricity-efficiency, the priority is to list measures to improve the efficiency of electricity use.
Report after two years in the programme
When a company has participated in PFE for two years, it is required to submit a report on the energy audit, the energy management system and the list of measures. The period of two years is counted from the date on which the company was accepted for participation in PFE. For those companies which are granted retrospective tax relief, the two-year period in PFE is counted from 1 July 2004. The report is to be submitted via the Swedish Energy Agency’s e-services.
Benefits of EMS and PFE
An energy management system makes it easier for a company to check its energy use and ensure that its energy consumption is more consciously planned and structured. With more conscious planning, improved operating and maintenance procedures and purchasing procedures, companies can reduce their energy consumption and, therefore, their energy costs.
In addition to the advantages generated by the management system itself, companies which join the programme are granted tax relief on their electricity costs. When the companies join PFE, the tax is reduced from SEK 0.005 per kWh to SEK 0 per kWh. By the end of the programme period, the companies have to show that they have achieved an improvement in the efficiency of their electricity consumption.
EMS gives:
- the company better control and structure in its energy use.
- better planning, operating and maintenance procedures and purchasing procedures.
- reduced electricity consumption – lower energy costs.
- reduced negative impact on the environment
There are a number of options for energy-intensive companies which use electricity in their manufacturing processes to reduce their energy costs. We consider two of them here:
- by introducing an energy management system (one of the requirements for participation in PFE).
- by participating in the programme and earning the right to tax relief.
Companies can, of course, introduce energy management systems without participating in the programme.
