From 31st December this year, if you are a UK registered ‘large enterprise’ with more than 250 employees, or a turnover of more than €50m and a balance sheet exceeding €43m, you are obliged to participate in the new Energy Savings Opportunity Scheme (ESOS). Whole UK corporate groups will qualify if just one member is classified as a 'large enterprise'.
What is it and is it relevant to my company?
ESOS is the UK Government's response to Article 8 of the EU's Energy Efficiency Directive which came into effect in December 2012. The scheme requires qualifying companies to produce detailed reports on the energy use and efficiency of their UK operations every four years.
Each of the 28 EU member states has the same obligation to introduce a similar scheme, resulting in it being an EU-wide compliance issue for companies to deal with by December 2015.
Assess energy consumption and identify efficiency opportunities
The Carbon Trust estimates that as many as 7,300 organisations in the UK will be affected by the scheme. This covers more than 200,000 buildings and 10,000 industrial plants, and accounts for 35% of total UK energy consumption.
If you are a UK registered ‘large enterprise’, or sit within a corporate group which contains one, you are required to assess all of your UK operations’ energy consumption for a consecutive 12 month period which includes 31st December 2014. Unlike existing compliance schemes such as the Carbon Reduction Commitment (CRC), Climate Change Agreement (CCA) and EU Emissions Trading System (EU ETS), all energy supplies and fuels consumed by buildings, vehicles (including grey fleet) and industrial processes must be accounted for. Participation in other carbon compliance schemes does not provide exemption from ESOS, but ISO 50001 certified sites can bypass most of the obligations while energy efficiency measures such as Department of Energy & Climate Change’s (DECC) Green Deal Assessments and Carbon Trust audits, adopted since December 2011, can also help reduce the burden.
Energy efficiency audits to identify cost-effective savings must be conducted on 90% of the identified energy consumption by 5th December 2015, with compliance reported to the Environment Agency. Furthermore, the energy assessment and audits must be overseen by a qualified ESOS Lead Assessor, of which there are currently only 112 in the country, though numbers are expected to increase in 2015.
What are benefits and how much will compliance cost?
By carrying out audits, which must be signed off at board level, businesses will likely have an improved understanding of energy consumption in your company. Variations in energy consumption and the drivers behind them can be identified and opportunities to improve energy efficiency and reduce operating costs acted upon.
Unlike other schemes there is no participation fee or levy to be paid. The Government estimates that the average cost to each participant will be around £6,600 per audit in each four-year scheme cycle, but that businesses will save around £35,400 – including a 15-25% saving on energy bills - from their initial audit. Of course, a business will only realise this benefit if it implements the cost-effective recommendations to improve its energy efficiency, which is not mandated.
In summary, if you are a qualifying business, complying with ESOS is a legal requirement. You must action in 2015 unless you are a certified ISO 50001 site. However, it presents an opportunity to realise long term energy and cost savings by implementing the audit findings.
Want to know more?
Join our free webinar on 14th January 2014 - register here or contact Oliver Parish, Senior Consultant, Climate Change Practice.