Retailers and manufacturers should invest in renewable power plants to minimise the impact of forthcoming legislation that will penalise energy use, legal expert Eversheds has warned.

Businesses with an energy spend of £500,000 or more will be affected by a government proposal that will force companies to buy carbon credits to offset their impact on the environment if they use more than a certain amount of energy every year.

This level will be set before the proposal becomes law, probably by 2010.

Eversheds lawyer Elizabeth Shepherd, speaking at a seminar on the issue, said UK food companies had been slow to recognise the benefits of investing in their own sources of renewable energy - and that this had to change.

"They have had anaerobic digestion plants in the EU for years but we are only just seeing them come through," she said. "It's old technology, not new. We've got a lot of catching up to do."

Management consultancy PMSS, also at the event, said every retailer should aim to run its own anaerobic digestion unit. "This can be done on a relatively small scale," said Nick Fleming . "They can fit nicely next to existing distribution depots so planning is not normally a problem."

n Tate & Lyle has begun work on a new £20m biomass boiler at its Thames refinery in London. The boiler will mean the cane sugar manufacturer can switch to renewable biomass to supply 70% of the energy needs of its refinery and cut its carbon footprint by 25%.