We heard from the Chancellor George Osborne yesterday as he set out government spending plans and it certainly offered a mixed bag for the energy and environment sector. It was framed as a budget of long-term solutions, “putting the next generation first”, which was promising following the recent Paris Agreement, however this claim has since received some criticism from representatives of the ‘green economy’.
There were undoubtedly some positive announcements and there was an obvious effort to streamline energy efficiency requirements for businesses. Following a consultation on the future of the energy efficiency tax landscape it was finally revealed that the CRC scheme is to be abolished. In the form it has adopted, the CRC is a tax rather than a ‘commitment’ and, recognising this, the levy will be collected through an increase in the Climate Change Levy (CCL) after the 2018-19 reporting year.
The obligation for large companies to report on their greenhouse gas (GHG) emissions will remain. In the consultation, GHG reporting through the ESOS regulations was highlighted as a successful driver for energy efficiency investments. CO2balance are conducting a review of our ESOS experience and will publish the results in the coming weeks.
A single energy and carbon reporting scheme is to be introduced from April 2019 that integrates the requirements from climate change agreements (CCA), the ESOS regulations and the EU emissions trading scheme (EU ETS). In the short-term, not much will change but a single reporting system and tax will be seen as an improvement for any company negotiating the current overlapping policies and schemes.
Those looking for a drive towards a low-carbon, energy efficient future however have found few positives. After the last Budget the CCL also applies to electricity generated from renewable sources who will be impacted by the increase and policies to support and encourage the renewables sector were again, scarce. This dearth is one reason the UK has slipped in the ‘Renewable Energy Country Attractiveness’ table and with the announced tax cuts for oil and gas it does not seem as if the Government has much ambition to climb it again.
In the first Budget since the Paris Agreement and in the face of record-breaking global temperatures over the first two months of the year, many felt there was an opportunity to send a strong signal to bolster the ‘green economy’ in the UK. This ‘budget for the next generation’ however, was particularly notable for its failure to mention climate change at all and has left many feeling that, perhaps, this was an opportunity wasted.
As we reach the extended deadline for large companies within the UK to comply to the Government’s Energy Saving Opportunity Scheme (ESOS), it is a good time to reflect on the main outcomes that were common across many of the reviews we conducted.
Depending on the level of detail, audits can identify savings of between 10-40% and this is certainly the case with the organisations that we have worked with. Running through the audits there were a few themes where the vast majority of organisations could reduce energy consumption, save money and thereby improve the bottom line.
When visiting any organisation with a large number of employees it is clear that small actions by many will result in a large cumulative energy reduction. An effective employee engagement campaign, tailored to an organisation, is one example of the relatively simple opportunities to drive down energy expenditures. Just by adjusting the heating timer or the layout of an office, coupled benefits of energy saving and employee comfort can be achieved. Typically, zero or low investment opportunities alone could achieve 10% reductions in energy bills.
Though not the case with all organisations, where the company owns or leases vehicles, transport makes up a significant proportion of their total energy consumption. This presents attractive energy and cost saving opportunities, for example vehicle procurement policies, driver efficiency training and more effective route planning, all achieving dramatic fuel reductions. This came as a surprise, particularly to organisations with an established energy and sustainability management policy, highlighting that across sectors, not enough attention has been paid to decarbonisation of the transport sector.
With this being the first ESOS reference period there was a sense of ‘getting your house in order’ to get an idea of the energy baseline before considering more significant investments. In many cases, responsibility for energy management was limited to supplier account management without considering the organisations’ energy expenditure. The attitude of ‘the cost is the cost’ is almost unique to energy bills and wouldn’t be accepted in any other area of business. Designating one or a few individuals as responsible for understanding, monitoring and managing energy consumption will inevitably lead to achievements in reducing energy demand.
Looking to the future, it is likely that the multiple policies and regulations relating to energy and carbon reduction will be amalgamated in to one energy tax similar to the Climate Change Levy (CCL) and one reporting system that is based on ESOS; many of these policy decisions are expected to be announced in the Spring budget in March. To date, ESOS has highlighted the wealth of energy-saving opportunities but hopefully also raised energy management up the agenda, bringing it to the attention of company boards and directors. With current low prices, now would be an attractive time to act on opportunities to future proof organisations against rising energy costs and more stringent energy policies. Time will tell how the policy landscape might change but CO2balance will continue to work with all of our clients to help manage their energy and make significant cost savings in the process.
Its been a busy few months for co2balance as we close off our ESOS Energy Audit reports in time for the 5th December ESOS compliance deadline. This date marks the cut off for when participating organisations must declare that a Lead Assessor has calculated their total energy consumption and overseen an audit identifying cost effective energy savings for their operations.
Organisations that havent done this by the 5th December risk a maximum penalty for non- compliance of £50,000.
However the good news is its not too late to avoid this penalty; in a recent update, the Environment Agency have agreed to not enforce penalties on those organisations who notify them before the 5th of December that they have appointed a Lead Assessor and intend to register their compliance by the 29th January 2016.
We expect to have a number of enquiries during this period and have set aside resources to help meet demand. So if you are an organisation with more than 250 employees – or have a turnover of at least €47 million and a balance sheet of €50 million, dont delay – appoint your Lead Assessor before the 5th December to avoid a penalty notice.
CO2balance has been quite busy working with companies across the UK to realise operational and cost efficiency energy savings under the Energy Saving Opportunity Scheme (ESOS), an EU wide energy efficiency directive. This week alone we have been conducting audits of businesses from a variety of sectors in Liverpool, Cardiff and London. In all cases our team has been able to identify cost-effective opportunities to make significant savings in both energy and expenditure, helping businesses to increase profits and become more competitive.
With less than a month to go before the compliance date, we are busy compiling our findings and feeding back to companies that we have been working with on where the most significant improvements can be sought. Our collaborative approach will ensure that this scheme provides real business value as well as gaining compliance with new regulations.
The government has estimated that the net benefit of the policy will be 1.6 billion over the next 15 years however our experience suggests that benefits could well exceed this. We look forward to working with our clients over the next ESOS phase, seeing many of the opportunities implemented and the savings realized.
For information about our approach, contact us at firstname.lastname@example.org.
This blog has been compiled by Richard Stone, ESOS consultant at CO2balance.
The deadline for compliance to the Energy Savings Opportunity Scheme (ESOS) is, now less than 100 days away.
So far to-date, only a small fraction of the estimated 14,000+ organisation that fall under the new ESOS energy efficiency scheme, have met their legal requirements. A report published by the Energyst, found that there had been only 32 notifications of ESOS compliance by June 2015. With less than 100 days to go, the situation is still not greatly improved with only 120 organisations having notified the Environment Agency of compliance. Based on the current status, co2balance estimate that 140 organisations must comply, every single day in order to meet UK ESOS deadlines by 5 December 2015.
At co2balance we are doing our bit to help ensure that our ESOS clients are safely guided through the compliance process. Just yesterday, our team were in Crawley, at the Toshiba Medical Systems UK Headquarters conducting a site visit and looking at ways to reduce onsite energy consumption. It proved to be a highly informative site visit.
With less than 100 days to go there could be a serious risk for the 14,000+ organisations and Lead ESOS Assessors, to the Environment Agency & the environmental credentials of the new UK Government.
The Environment Agency’s ESOS Compliance Portal is now live as you can see from the timeline below;
ESOS requires all large UK enterprises to have an organisational energy audit every four years. In December, the Environment Agency launched its compliance portal through which all submissions must be made in time for the January 2016 start date.In mid 2014, the Energy Savings Opportunity Scheme (ESOS), the latest EU-led compliance legislation was transmuted into UK statute, with the Environment Agency as the key administrators of the scheme.
Businesses that qualify for ESOS compliance are required to submit their data before 5th December 2015. Importantly, with this development, businesses can be registered as fully ESOS compliant from 1st January 2015 and begin to make savings from their investment.
As of 2015, Lead Assessors managing ESOS compliance are now able to submit finalised data on behalf of businesses. The main role of the Lead Assessor is to ensure that organisations are ESOS compliant and that the recommendations being made are technically accurate and of true benefit to the client. The ESOS organisation is ultimately responsible for the accuracy of its compliance.
Paul Chiplen, coordinating ESOS strategy here at CO2Balance, says, “I am looking forward to working with ESOS clients to help reduce their operational costs and their carbon. ESOS is a fantastic opportunity to really make a difference to energy usage in UK organisations. CO2Balance acting as Lead Assessor can play an important role in overseeing the ESOS process, using their extensive experience to audit through site visits and project timelines.”
Throughout 2015, using our Optimised ESOS Plan (see above), CO2Balance is mobilising to make savings for their ESOS clients that will result from implementing the measures recommended in their audits. If you are one of the many companies currently unprepared and perplexed for ESOS first off, you are not alone. Approximately 50% of the 9,000 companies in scope are also in your position. Even here at CO2Balance there are still many questions to be answered on ESOS and the energy efficiency policy landscape in general in the UK. However we are here to help and guide you through your ESOS compliance and energy performance in 2015.
For further information please contact Paul Chiplen, to learn more and get ready.
Some you may be aware of the Government’s new Energy Saving Opportunity Scheme (ESOS), which forces “large undertakings” to audit their energy usages and report them to the Environment Agency.
The concept is that through activity managing your energy usage it will open up your eyes to potential areas of energy savings, which has the “double whammy” of saving money as well as carbon emissions.
ESOS has been created in response the EU Energy Efficiency Directive (2012/27/EU). In layman’s terms it is an assessment of your energy consumption, so very much like the Greenhouse Gas Audits that we regularly carry out for our clients.
You have to comply if you are a “large undertaking”, meaning that you….
- employ at least 250 persons; or
- employ fewer than 250 persons but has an annual turnover in excess of 50 million euro and an annual balance sheet in excess of 43 million euro
You need to submit your data to the Environment Agency by 5th December 2015, but as ever preparation is vital and it is important to start looking at the way you collect and manage your data as soon as possible.
As ever with new schemes such as this there are lots of holes that need to be finalised and definitions to be clarified; we’ll post more articles on the scheme as they are made public, along with more information about how we can support you to ensure that you are fully complaint – if you have any queries in the meantime then please get in touch.