Introduction - What is it?

The Chancellor of the Exchequer, Gordon Brown, in his November 1999 Pre-Budget Report, announced support for business investment in low carbon technologies under the climate change levy package. This allowed for the introduction of a 100% first year Enhanced Capital Allowance scheme, and a £50m fund for energy efficiency and renewables.

	All businesses in the charge to UK tax can claim enhanced capital allowances, on their qualifying expenditure, regardless of size, industrial or commercial sector or location.
	Enhanced capital allowances permit the full cost of the investment in specified technologies to be relieved for tax purposes against taxable profits of the period of the investment.
	The qualifying technologies have to meet the published energy saving criteria. They are published in the Energy Technology Criteria List, where the criteria will be reviewed on an annual basis; there are no territorial restrictions on manufacturers wishing to place their products on the list or the source of products.
	Only investments in new and unused plant and machinery can qualify for ECAs.

Budget 2003 announced additional qualifying technologies and amended some energy-saving qualifying criteria for ECA investment. On receipt of EU state aid approval one new technology and 7 new sub-technologies were added to the Energy Technology List, they are: Automatic monitoring and targeting equipment; Boilers - biomass boilers (>300kw and <15,000kW); Compressed Air – refrigerant dryer controllers, ultrasonic leak detectors; Refrigeration – air blast pre-coolers, catering storage cabinets, cellar cooling, packaged chillers. Criteria was amended in the following existing technology groups: lighting; Advanced boiler controls and additional energy saving add-ons; Compressed-air – electronic drain traps;Refrigeration display cabinets; Boilers – blow down systems; Warm air and radiant heating; Heat Pumps. The new Energy Technology List was published on the 15 July 2003 and the Treasury Order to give statutory effect to the new list came into effect on 5 August 2003. Spending on the new technologies can qualify from that date.