Carbon Trust increases maximum loan for energy-saving projects

Firms planning to invest in energy-efficient plant and machinery could be eligible for an interest-free loan of up to £500,000 after the Carbon Trust today increased the maximum value of the loans it can make available to small and medium-sized businesses.

The government-backed company said that it had increased the maximum value of its unsecured loans in response to increased interest in high-value loans over the past three months.

The loans are made available as part of the Carbon Trust's £100m Big Business Refit campaign, and are designed to ensure that repayments are covered through lower energy bills, meaning that savings delivered after the loan is repaid go straight on the bottom line. Any business that does not qualify for the Carbon Reduction Commitment or EU emissions trading scheme is eligible to apply for the loans.

The Carbon Trust said that 800 loans had been awarded since the scheme was launched last year, and that it remains on track to lend more than £100m over the next 18 months.

The announcement comes on the same day as the Carbon Trust unveiled its largest loan to date, revealing that it has awarded a £400,000 loan to North East steel components manufacturer Astrum.

The company used the money to replace its ageing air compressors as part of a project that is expected to cut its energy bills by £80,000 a year.

Mike Hutchinson, Operations Director at Astrum, said the loan will pay for itself within four years through energy savings. "Our compressed-air system is critical to the performance of our plant and the quality of the products we produce," he said. "The Carbon Trust money allows us to accelerate our investment plans and install a system that will not only cut energy costs, but will also improve the efficiency of our business."

Astrum contracted compressor efficiency specialist Air Energy Management to replace old, large air compressors with two more-efficient smaller Compair compressors, and develop a bespoke system to switch off the compressor's drive motors when they were not being used.

The loan also paid for low-pressure drop piping, variable speed compressors and a leak-detection programme, all of which will improve efficiency.

Hugh Jones, director of solutions at the Carbon Trust, said the Astrum loan is a classic example of how zero-interest capital can help firms improve the efficiency of their business. "Instead of making a short-term fix by simply replacing kit on a like-for-like basis, Astrum saw our offer of interest-free funding as an opportunity to improve its systems and give itself a competitive edge," he said.

Air Energy Management estimates that around 10 per cent of all UK industrial electricity consumption is used for compressed-air generation. Between 20 and 50 per cent of that electricity is wasted due to air leakage and incorrect pressure control.