Government promises loans for energy efficient farmers

The Carbon Trust is to extend its interest-free business loan scheme to the farming community in an attempt to encourage the agricultural sector to invest in more energy efficient equipment.

The government-backed company announced yesterday that from February 1 next year British farmers will be eligible for unsecured, interest-free loans of between £3,000 and £20,000.

The Carbon Trust said the loans will pay for themselves through direct energy savings over four years. It predicted that the loans will primarily be used to fund the purchase of equipment, such as thermal screens for greenhouses, new milk cooling systems, insulation for crop stores, upgraded heating systems and grain drying humidity controls.

The announcement was welcomed by Environment Secretary Hilary Benn, who said that it would provide both financial and environmental benefits for farmers.

"It makes sense for farmers to reduce the energy they use," he said. "It reduces the cost of producing food, and it cuts the environmental impact too - something more and more consumers are asking about."

The government estimates the deal will slash energy bills across the agricultural sector by a total of £4m, and reduce emissions by 25,000 tonnes a year.

The loans will only be available to smaller operations, i.e. companies with fewer than 250 employees or which do not qualify for the Carbon Reduction Commitment.

"There are already examples of businesses that have taken simple but effective steps to reduce their environmental impact in this way and I hope these loans will enable others to follow suit," said National Farmers' Union president Peter Kendall.

Money for the loans will come from the £100m fund ringfenced by the Treasury for the Carbon Trust's Big Business Refit scheme, a nationwide campaign encouraging British businesses to replace old, energy intensive equipment which is estimated to waste £3.3bn a year.

The Carbon Trsut said that £30m out of the £100m available has been dispersed to over 800 businesses since April 2009, saving UK businesses £100m and cutting carbon emissions by 615,000 tonnes.

"Upgrading old equipment using our loans scheme is an excellent way for farmers to be more competitive in difficult times, by cutting their costs and reducing carbon emissions," said Carbon Trust chief executive Tom Delay.

"By reducing costs and associated carbon emissions in this way, goods will also be more appealing to the rising tide of carbon conscious shoppers."