NOT enough is being done by industry to prepare for the new Climate Change Levy due to be introduced next April.

That is the conclusion of a detailed report commissioned by York-based Shepherd, the privately-owned engineering and construction company.

The 18-page report, developed with senior staff in leading companies in six energy-intensive sectors, finds that with only six months to go, fewer than half the UK's largest industrial companies have set up working parties to look into the cost implications of the tax.

Yet this levy on the business use of energy - designed to cut back on greenhouse gas emissions -is likely to increase typical average energy bills by 11 to 13 per cent. For instance, a business currently paying £50,000 a year based on 80 per cent electricity, 20 per cent gas, will see their bill rise by £5,400.

A larger firm paying £200,000 per year on the same energy split will be lumbered with an extra £25,000.

The report looks at ways of halving lighting bills, slashing energy costs on new and refurbished buildings, and installing heat-producing electricity generators.

Ron Pearson, director at Shepherd said: "Our research shows that many companies think they are already energy-efficient and cannot do much more. Others think that because their industry sector has negotiated initial 80 per cent discounts from the levy, the cost impact will be minimal."

Shepherd, which offers a technical review service for anyone planning new offices or plant or is re-configuring existing premises bigger than 4,000 sq ft, points out that the government is planning to give 100 per cent capital tax allowances to companies installing energy-efficient technologies, including Combined Heat and Power (CHP) generators. Both the gas burned and electricity generated from a CHP will also be tax exempt.

Mr Pearson said: "Unfortunately, there is a lack of understanding about where self-generated electricity is appropriate. In our research, one of the UK's largest electronic companies said that a CHP would not be relevant to them.

"They incorrectly thought that they did not have the capacity to use the heat by-product produced from self-generated electricity. Yet electronics manufacturing requires sensitive temperature controlling that would more than use up heat produced from a CHP generator."