The revision of BS 5422 involves a change in emphasis concerning the use of "economic thickness" as a method of determining the minimum thickness of applied insulation.

Although the economic thickness approach will still be permissible, the focus of all energy-related tables in the standard will now be based on the consideration of absolute energy usage and associated carbon dioxide emissions.

For the first time this offers an assurance that energy savings for a given pipe diameter and temperature will be equivalent, irrespective of the insulation type selected.

These "environmental" tables have also included an overall increase in the insulation levels stipulated for pipes.  If these new levels were installed in all existing applications accross the UK, they could account for up to a further 5 million tonnes of CO₂ savings each year.

The increase in stipulated levels has been introduced with due consideration of cost/benefit and practicality.

This cost/benefit analysis has shown that the incremental CO₂ savings from pipe insulation remain among the most cost-effective methods of saving CO₂ available to regulators. 

Enhanced Capital Allowances

Enhanced Capital allowances have been granted in other areas before, but this is the first time that they have been proposed to support energy efficiency, and in particular pipe insulation.

The proposed scheme will build on existing statutory provisions, under which businesses may obtain tax relief in the form of capital allowances, for their investment in certain machinery, plant and technologies.

This relief is normally given at a rate of 25% a year on a reducing balance basis, which spreads the benefit over a number of years (about 95% of the cost is relieved in 8 years).  Enhanced capital allowances will enable businesses to take relief on the full cost in the first year - boosting cash flow by reducing the tax bill in the year the investment is made.

Key features of the scheme include:

• Pipe insulation is eligible if installed to a thickness meeting the revised BS 5422
• The thermal performance of the insulation must be above that which would otherwise be the standard
• Installers must provide the claimant with certification verifying the investment is eligible
• All businesses can claim enhanced capital allowances, regardless of size, sector or location
• Costs eligible for ECA's include covering materials, fixings and installation

Note: These proposals are subject to the Enhanced Capital Allowance scheme obtaining EU State Aid clearance and the passage of the 2001 Finance Bill through Parliament.