Cornwall Insight warns that a reduction in subsidies could hinder the ability of firms to invest in decreasing fossil fuel emissions.

A renowned consulting firm has cautioned that the decline in government support for companies’ energy bills could undermine attempts to cut fossil fuel emissions. To cut the cost to the government, the Treasury stated on Monday, beginning in April, it will reduce the support given to “non-domestic” energy consumers. Including businesses, schools, hospitals, and charities.

Business groups quickly cautioned that the vast reduction could endanger the existence of businesses. As expenses are anticipated to remain higher this year than before the energy crisis began in 2021. Cornwall Insight said that a reduction in support could hinder businesses’ ability to engage in decarbonisation and its effects on earnings and cash flow.

Gareth Miller, the organisation’s chief executive, stated, “The government must also consider the restrictions on the capacity of the UK corporate sector.”

Decarbonising industry and business require ever-increasing capital investments as the decade passes.

Miller stated that some larger companies may still be able to implement their plans, but many “may now be unable to develop borrowing capacity or free cashflow. At least for the next few years” due to the cost issues they face.

The new billing structure will provide companies with a one-year reduction on wholesale gas and electricity prices in place of the current cost-capping method.

Energy-intensive manufacturers like glass and steel producers will receive a higher discount. However, most firms will only receive a 0.7p per Kwh discount on their gas bills and a 2p per kWh discount on their electricity prices.

Caroline Lucas of the Green Party stated, “This decision poses an existential threat to small businesses, many of whom believe they are left vulnerable to wholesale energy price increases.” Tania Potts stated, “The reduced support is really disappointing and concerning.” As a heavy energy consumer, the current assistance has been essential to keeping my firm afloat.”

Potts stated that she opened her dry cleaners and laundromat in 2019 and had “no choice except to raise my charges, but I cannot go any higher.”

She continued, “When you talk about my business size, you’re talking about keeping a roof over a family’s head, not the bonus paid to high workers.”

The government has stated that the cost of the program’s last 12 months will be capped at £5.5 billion. The programme’s first six months will cost an estimated £18 billion. To encourage investment in low-carbon technologies, the government announced a redesign of the capacity market on Monday. Which is supposed to maintain a consistent electricity supply regardless of the weather.