Budget 2016 – A missed opportunity?

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.

ESOS – Up and Running in 2015

The Environment Agency’s ESOS Compliance Portal is now live as you can see from the timeline below;

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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.”

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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.

Getting ready for ESOS

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.