ESOS - what next?

3rd February 2016


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Related tags

  • Mitigation ,
  • Management/saving ,
  • Business & Industry

Author

IEMA

The Carbon Trust's Myles McCarthy on what ESOS-compliant companies should do now.

Facilities and energy managers around the UK let out a collective sigh of relief when the Environment Agency announced that it would extend the window for compliance with the new ESOS regulations beyond the original submission deadline of 5 December last year.

Despite this extended period, many businesses found the compliance process more challenging than anticipated. And over the last few months there has been a crunch period where good quality advice and support from external consultants and ESOS lead assessors has been difficult to secure. We know that many companies were still scrabbling to gather data, complete audits and finish their compliance packs right up until the revised submission date of 29 January.

We understand 6,000 organisations have now completed the process and a further 1,000 have notified the Environment Agency that they expect to comply within a matter of weeks. And there are a small number of businesses on track to meet the regulations by completing their ISO 50001 energy management certification by the later deadline of 30 June.

However, this means there are a few thousand more companies caught by the regulations that haven’t made it in under the wire. They now face being slapped with tens of thousands of pounds of potential fines, alongside reputational risks in situations where they are obliged to disclose environmental enforcement notices.

It is likely that the tail end of ESOS compliance will continue wagging on into the summer. But for those businesses that now have the luxury of three years until the next ESOS deadline starts looming again, the question is what should they do next?

Larger corporates that haven’t already done so will start thinking seriously about implementing ISO 50001. This is not a simple standard to implement – it takes time, money and dedicated resource – but it does provide automatic compliance with ESOS and involves embedding within the business an energy management system that meets international best practice. This is a very sensible investment that will ensure that energy is well managed on an ongoing basis.

For many of the smaller organisations, complying with the regulations will have involved a relatively steep learning curve, particularly for those that did not have a clear grasp of their energy use. But going through the exercise should have identified a valuable list of cost-effective energy saving opportunities, which if implemented, can provide some very significant reductions in overheads.

In order to extract that value it is important that they harness the momentum that has been generated by going through ESOS, putting in place plans to realise those cost savings as soon as possible. But as with many things this is easier said than done.

There are any number of reasons projects may stumble at the implementation stage. For example, audit recommendations may need to be developed into a clear business case which might require further investigations, especially if they were identified internally. There are also common issues around financing projects, or finding trusted suppliers such as the accredited ones listed in the Carbon Trust’s Green Business Directory. For those organisations that do need advice on how to take their next steps then DECC has released a guide to Implementing Energy Saving Opportunities which provides an excellent starting point.

Government analysis suggests that if just 5% of the identified energy efficiency opportunities were implemented then the businesses caught by ESOS could collective achieve annual savings of over £250 million. This seems like a conservative estimate for actual implementation rates, which could be far higher. Energy efficiency is a huge opportunity for the UK and well worth the effort. It is important that the intentions behind the ESOS regulations result in real savings, which will improve productivity and competitiveness, at the same time as meeting the UK’s climate change ambitions.

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