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ESOS – Will you be compliant?

The 5th December 2019 ESOS date is fast approaching! Is your business ESOS Compliant?

It’s hard to believe that we are already halfway through 2019.
There have been a few changes this year with legislation and strengthen intentions around climate action at all levels of industry. For example, we’ve had councils make Climate Emergency declarations, the London Toxicity Charge (T-Charge) has been replaced by the upgraded Ultra Low Emission Zone (ULEZ) and organisations are looking towards Net Zero Carbon buildings and Carbon Neutrality by 2030.

Support for Businesses

At Acclaro we have been supporting our clients on their Environmental Sustainability and Energy Efficiency journeys. At present one of our main focus areas is ESOS. The UK’s opportunity for non-SMEs to recognise and act on energy efficiency improvements. Energy efficiency has been recognised as the premier cost-effective way to concurrently improve energy security, reduce energy costs, reduce carbon emissions, contribute to the overall energy and climate goals and enhance competitiveness.

6 months until the ESOS Phase 2 Deadline!

If you have not already made arrangements for compliance, it’s time to get in touch. Several organisations have started their compliance preparations and audits. But we already foresee a bottleneck as with 2015. So, don’t leave yours to last minute. Act now and make sure you are ESOS Compliant.

To get you started, here’s a list of what you need to do and how we can help.

1. Assess the total 12-month energy use across the organisation.
  • Remember to include at least your energy consumption for December 2018. This ensures you meet one criterion of compliance.
  •  Assess all buildings, UK transport related to your business (company cars / expensed car travel etc), industrial processes.
2. Identify areas and sites of significant energy use.
  • This should be your largest energy consuming assets from the above list.
3. Choose your route to compliance most suitable to business goals.
  •  What are your business goals/intentions?
  •  Are any changes on the horizon?
  •  Do you have specific targets or challenges?
4. Appoint your ESOS Lead Assessor, who is qualified to review your compliance route and reports.

 

5. Evidence opportunity for energy efficient measures in areas or sites of significant energy use and have the reports signed by the ESOS Lead Assessor and company Director.

 

6. Notify compliance to the administrator.
  • These are different for England, Wales and Northern Ireland.

Our experienced team has supported several organisations during phase 1 and have already started phase 2 compliance for our clients. We provide all the support you need from start to finish and beyond compliance.

Examples of our team’s experience with project complexity include:

  • Meeting compact schedules required during the intense phase 1 compliance deadline.
  • Effective audit sampling strategies to meet compliance and business requirements.
  • Successfully managing late compliance for organisations resulting in no financial penalties.
  • Successfully supporting on the Environmental Agency’s post-ESOS phase 1 audit checks.
  • Highlighting and implementing improved processes for phase 2 compliance.
  • Conducting Office, Theatre, Shopping Centre and Research Laboratory audits.

What about my multinational organisation?

Through us, you have access to knowledge and experience on the transposed regulation in the 28 EU countries. We can help you navigate the complex challenge of meeting all variations of requirements of the energy audit obligation.

Our team is up-to-date with the status of the directive across Europe and are equipped to support full compliance and carry out audits.

If you would like to understand these points further or would like advice or support with Article 8 of the EU Energy Efficiency Directive 2012/27/EU, please contact me on +44 1183 273519 or email Erica Hall

In the meantime, have a look at our Making Policy Clear – EED Article 8 article.

Acclaro Advisory provides Comprehensive information in One Location.

You can learn more about the Acclaro Energy Programme which helps you adapt and address responsibilities of energy efficiency as a business.

Through the Making Policy Clear Series, Acclaro Advisory informs clients of policy and regulatory changes around energy, environmental and social issues. Series 1 is focused on the energy and carbon regulatory schemes which impact business energy cost and reporting responsibilities.

For a detailed breakdown on the full extent of the impact on your organisation, steps to comply and where Acclaro’s expertise can support. Contact us now to arrange a consultation.

What is ESOS?

ESOS is a mandatory energy assessment and energy savings opportunity identification scheme for large enterprises operating in the UK. It aims to help organisations to increase energy efficiency and reduce energy cost by identifying cost-effective measures to improve business energy performance. Ultimately lowering carbon emissions.

This scheme was put in place as a response to European Union law which required all EU states to transpose and implement Article 8 (4 to 6) of the EU Energy Efficiency Directive (2012/27/EU) into regulation suited to each country. This has been transposed in various forms across the EU member states with key elements remaining similar in each country. The ESOS Regulation 2014 gave effect to the scheme with the first compliance (Phase 1) which ended on 5 December 2015.

We are now in the second compliance period (Phase 2) which will last until 5 December 2019. Compliance with the scheme runs every four years.

Phase Qualification Date Four Year Compliance Period Compliance Deadline
1 31 December 2014 From 17 July 2014 – 5 December 2015 5 December 2015
2 31 December 2018 6 December 2015 – 5 December 2019 5 December 2019
3 31 December 2022 6 December 2019 – 5 December 2023 5 December 2023
4 31 December 2026 6 December 2023 – 5 December 2027 5 December 2027

Will ESOS affect me?

All large undertaking operating in the UK (business, not-for-profit, university etc.) except Public Sector undertakings, which on 31 December 2018 meet either one of the criteria below:

 

* This includes an overseas (non-UK registered) organisation with a UK registered establishment meeting either Criteria 1 or 2. Here, the only UK operating establishments need to comply.

N.B. Bank of England rates applied for qualification period of ESOS Phase 2.

We understand that organisational structure is not always this clear. If you are unsure of where your entity fits, or you are unsure if it meets the requirement to comply please get in touch for clarity.

How will ESOS Affect Me?

  • ESOS runs over four-year phases; Phase 1 ended on 5th December 2015 and Phase 2 will end on 5th December 2019.
  • Organisations must assess the total energy use across the business. This must cover a full 12-month period that includes 31st December 2018.
  • Non-compliance can result in financial penalty up to £90,000 and reputational damage.
  • Compliance can provide a series of benefits to the organisation which include but are not limited to:  Enhanced understanding of energy use across the organisation.
     Enhanced understanding of the parts of the business which consumes the most energy and carries the highest energy cost.
     Uncover and highlight deficiencies in data and information measurement and monitoring processes.
     Identify simple solutions to improving energy efficiency, such as behaviour change and engagement.
     Identify cost savings and activities to lower carbon emissions.

How Do I Comply?

1. Assess the total 12-month energy use across the organisation.

For example, Energy used in your buildings, industrial processes and for business-related transportation (company travel via cars, equipment/product transport via trucks, etc.) All assets/activities must be accounted for.

2. Identify areas and sites of significant energy use.
3. Choose your route to compliance most suitable to business goals.
4. Appoint your ESOS Lead Assessor, who is qualified to review your compliance route and reports.
5. Evidence opportunity for energy efficient measures in areas or sites of significant energy use and have the reports signed by the ESOS Lead Assessor and company Director.
6. Notify compliance to the administrator, the Environmental Agency.

How Acclaro Can Help?

The Acclaro Energy Programme is an end-to-end energy management package that helps your business to get to grips with its energy consumption from all angles. Our programme helps you adapt and address responsibilities of energy efficiency as a business, whether cultural, technical or financial.

At Acclaro, we possess vast experience in ESOS compliance, energy efficiency and reporting with a variety of clients. Our Energy Team assists clients through expert advice and detailed energy audits, providing opportunity for further energy reduction when in-house teams can no longer identify.

The final countdown to ESOS will soon begin, so get in contact with us now. Our experienced team help you through compliance and provide the best approach to fit with your organisation’s goals and aspirations.

 

NB This Blog was updated on 19th June 2019

The Countdown to ESOS Phase 2

With so much currently happening: Brexit negotiations, new policy frameworks SECR, end of CRC and FiT… the list goes on; it’s hard to believe that there are only 12 more months to comply with the next phase of Energy Savings Opportunity Scheme (ESOS). We are on the countdown to ESOS Phase 2.

Energy Savings Opportunity Scheme (ESOS) is a mandatory reporting regulation that requires large undertakings to audit their energy use. The key word in this scheme is opportunity. The aim is to identify opportunity to save energy and potentially cut related energy costs.

Yes! It has already been 4 years. We are officially in the last 12 months to comply.

While ESOS phase 1 may be in the distant memory of the corporate world, it remains fresh in the minds of Consultants, Energy Managers and Lead Assessors. Also, ever present in the mind of the Environment Agency’s (EA) own auditors, the introduction of ESOS requirements in 2014 was chaotic. As a result, many companies struggled to complete the scheme before the first compliance deadline 5th December 2015.

During phase 1, over 2700 companies were forced to send notifications advising of their need for late compliance to the Environmental Agency. However, even with the resulting deadline extension into the first quarter of 2016, many organisations were ultimately fined for non-compliance.

The UK regulators continue to conduct ‘Compliance check audits’ for Phase 1 ESOS while companies should be preparing for phase 2.

Lessons Learnt from Phase 1

  •  Poor quality energy data
  •  Poor quality energy audits including due diligence due to poor quality data
  •  Poor quality reports due to lack of detail
  •  Lack of Early Action taken compounded by the availability of Lead Assessors

In 2018, it was reported that 15 businesses had been issued in civil penalties of up to £45,000 for non-compliance. While several other businesses received non-compliant designations without financial penalty.
Standards are expected to be considerably higher for phase 2

Are you ready?

Don’t leave choosing your assessor until too late. As the 12 months moves on it will be more challenging on the supply of auditors and Lead Assessors available to work with you.

Research suggests that few companies have started to secure the support of Lead Assessors for the fast approaching ESOS Phase 2 compliance deadline on 5th December 2019. Its time to actively support now to avoid repeating the bottlenecks and other challenges of phase 1. The countdown to ESOS Phase 2 is on!

What has changed since Phase 1?

In short, nothing has changed with regards to the regulation. Compliance dates remain the same for Phase 1 but have been updated to reflect the new Phase. The regulation will remain in place unaffected by the UK leaving the European Union.

If the size and structure of your organisation has changed since the first compliance period, then it is best you re-assess your organisation against the qualification criteria.

Who Must Comply?

Companies have grown, merged and evolved since 2014 which could mean that they are now eligible for compliance. For those who are new to ESOS…

If your organisation has maintained its size (as a large undertaking) for at least two consecutive accounting periods but has reduced in size since it remains eligible to comply. However, for organisations which were SME’s for two consecutive accounting periods, but has changed in December 2018, these would not be required to comply.

Even more so you must understand your organisations’ legal corporate structure when assessing the qualification.
All large undertaking (as defined in the Companies Act 2006) except Public Sector organisations, which meet any of the following criteria must comply with ESOS:

1. ≥250 employees
2. Annual turnover >£44mil (€50 mil) and, Annual balance sheet total >£38mil (€43mil)*
3. Part of a Corporate Group undertaking (overseas company) that meets one of the other criteria.

Your organisation will be assessed by these criteria as the ESOS qualification date – 31st December 2018. You may still be eligible to comply if your organisation is close to either of these criteria. Contact us for a consultation if you are unsure about your eligibility.

* Using the Bank of England spot exchange rate at the close of business on qualification date 31 December 2018.

Routes to Compliance

Energy Assessments and notification of compliance must be completed by 5th December 2019 to comply with ESOS via:

• ESOS Energy Audit
• ISO 50001 Certification
• Display Energy Certificates
• Green Deal Assessments

Assessments must consider all business energy consumption for buildings, industrial processes and transport over 12 consecutive months including qualification date 31 December 2018.

Does ESOS apply to our Europe based businesses?

If you are a multinational organisation with businesses throughout Europe, you may also need to comply in these territories. We have extensive experience with auditing for the transposed Article 8 of the European Energy Efficiency Directive; the ESOS equivalent in EU countries. Our lead assessors and consultants have worked in and with assessors in Europe to ensure our clients effectively comply with the regulation and meet business objectives. Make sure your business has the Countdown to ESOS Phase 2 in its sights!
To understand more about the energy audit compliance requirements for EU sites have a look at our Making Policy Clear – EED Article 8 or get in touch.

Acclaro Advisory Expertise

The Acclaro Energy Programme helps organisations adapt for and address the very visible responsibilities that sit within energy efficiency. We aim to deliver the right result for our clients. That’s why we start our programme by finding out your drivers and barriers to making energy interventions. Understanding your concerns means we can deliver recommendations that really fit the way you work. We’d be happy to assist you in taking action whether mandatory or voluntary to manage risk, reduce cost or enhance business reputation.

NB This blog was updated 19th June 2019

Today we launch the Acclaro Energy Programme, and with it comes a series of free guidance that opens up the world of energy management and policy. Today we begin with a jargon busting look at UK energy and carbon compliance.

The energy and carbon industry is so full of reporting acronyms, that sometimes it’s hard to keep up.  July (2018) brought yet another to the doors of the UK corporate world; SECR – Streamlined Energy Carbon Reporting. For the many businesses currently navigating the energy and carbon regulatory regimes, adding another to the mix should not be too difficult to handle. In many instances, reporting requirements utilise the same energy data in a variety of ways to translate into business energy and carbon. But, as new regulations are added, the harder the names roll off the tongue.

Let’s talk a bit about what currently exists.

CCL
Climate Change Levy is first of the two energy taxes targeted towards energy-intensive organisations. Introduced in 2001, the tax is applied to electricity and gas bills for all businesses and public sector organisations that pay the standard rate of VAT. Exempt from CCL are businesses using less than 1,000kWh electricity and less than 4,397kWh gas, per month. No reporting is required by business energy users. CCL seems to be here for the long haul.

MGHG
Mandatory greenhouse gas reporting (MGHG reporting), introduced in 2013, requires all UK quoted companies to publicly report their greenhouse gas emissions on all forms of energy used annually. At present this policy only affects around 1200 companies. The main focus is on transparency of carbon data for carbon management and reduction.

CRC
The Carbon Reduction Commitment Energy Efficiency Scheme, this one doesn’t exactly roll of the tongue, but luckily it is also known as the CRC scheme. CRC is second of the two energy taxes targeted towards large energy-intensive organisations. This tax and reporting mechanism, introduced in 2016, is levied to encourage eligible businesses and public sector organisations to consume energy more efficiently. Over 5000 undertakings report annually to the Environment Agency. The reports cover UK energy use and the purchase of allowances to cover their carbon emissions. The scheme phases cover emissions generated over UK financial year; March 2019 will mark the last phase – the end of the CRC scheme.

ESOS
Energy Savings Opportunity Scheme (ESOS) introduced in 2014; another which seems to be here to stay, is a mandatory reporting regulation that requires non-SME undertakings to audit their energy use. The key word in this scheme is opportunity; the aim is to identify opportunity to save energy and potentially cut related energy costs. However, whilst this scheme requires an element of reporting, the minimal nature of the reporting does not include public disclosure. In fact, unless formally audited, the compliance reports are not reviewed by the regulator, Environment Agency.

SECR
Streamlined Energy and Carbon Reporting framework, as the name suggests is aimed to simplify and bring together elements of the above reporting schemes into one clean process. This framework will be in play from April 2019 with a wider compliance qualification. Similar to MGHG reporting, it will be implemented through disclosure in annual directors reports with Companies House. SECR will replace CRC reporting, with a combination of MGHG and ESOS reporting elements. These changes will add value to robust reporting mechanisms and the opportunity to quantify ESOS outputs with energy efficiency action and carbon management into one streamlined approach.  It is estimated that the number of companies which will be required to comply with SECR will change from the 1,200 covered in MGHG to 11,900. This includes all quoted and large unquoted companies with some exceptions. In other words, many companies complying with ESOS will be scooped up into the SECR framework.

Our team of energy and sustainability experts have extensive experience in navigating the policy landscape and delivering reporting that meets regulatory requirements and business objectives. To find out more about the above reporting mechanisms and how they may affect your business, please get in touch.

The Acclaro Energy Programme helps organisations to adapt for and address the very visible responsibilities that sit within energy efficiency. We’d be happy to assist you in taking action whether mandatory or voluntary to manage risk, reduce cost or enhance business reputation.

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