Since Jan 1 2018, firms have been able to work on auditing their energy usage for ESOS Phase 2. But what has the legacy of Phase 1 been? Has anything changed? And do companies realise they should actually make the recommendations ESOS provides on energy efficiency?
ESOS Phase 1: the legacy
ESOS is the Government's corporate energy efficiency scheme. It forces private sector firms above a certain size to audit their energy usage on a four-yearly basis, and provides recommendations on how they could improve energy efficiency.
Overall, Phase 1 of the scheme was not without its challenges. For a start, The Carbon Trust advises that around 2,800 organisations had to tell the Environment Agency, the scheme's regulator, that they would be late in reporting compliance, and a number were ultimately fined.
Further, of the energy audits conducted for Phase 1, just 16% of participants were fully compliant. Three-quarters of audited participants needed to undertake remedial actions in order to become compliant.
That may not be a fault of ESOS though, in fact, it may simply prove the scheme is doing good, as some companies had to change their energy reporting in order to make the grade.
Firms which tried to duck under the radar were relatively limited; 500 organisations qualified for ESOS in the first phase but did not engage with the scheme. This has resulted in over 300 enforcement notifications sent out to date.
Perhaps most interesting is whether firms are actually making the energy efficiency improvements recommended in reports.
The sense is that many firms took a tick-box approach; to date, those who've fully embraced the energy recommendations, installing new efficiency equipment and hence reaping the rewards, have been rather limited.
Which brings us onto the next point, has anything changed for Phase 2?
ESOS Phase 2: has anything been altered?
Save the new compliance dates, and a few minutiae in the ESOS texts, absolutely nothing has changed in the ESOS rules for Phase 2.
For many, this is a disappointment; there were calls for more steps to make acting upon the energy efficiency opportunities derived from ESOS audits mandatory.
But for now, firms must only report on their energy usage; not improve upon it. Stating the obvious, firms must document their energy usage once again in Phase 2; compliance for Phase 1 won't cut the mustard.
However, the Government is still analysing and consulting on changes to a new overall Carbon Reporting Framework.
There is every possibility that ESOS will be extended into another, future phase, replacing all other corporate reporting elements, and potentially making firms act upon the energy efficiency opportunities.
So what should firms do about ESOS Phase 2?
First and foremost, comply. The requirements are 12 months of energy data, estate wide, across electricity, fuels, transport, buildings, plant and process.
The 12 months of data must include the compliance date of 31 December 2018, so firms should start now.
There are good reasons to do so. Last time round there was a real bottleneck; external auditors were overloaded and hiked prices at the last minute pre-deadline.
Further, if firms want to report on ESOS using internal staff, they need time to do the work. And firms who want to report through ISO 50001, and aren't yet certified to that standard, need to realise it takes time to get there.
Most importantly, the sooner UK PLC acts on ESOS Phase 2, the more rapidly we can hasten our transition to lower carbon and more profitable business.
The Carbon Trust estimates that from Phase 1 energy-saving opportunity assessments, making cost-effective improvements could usually cut energy costs in buildings, transport fleets and industrial processes by about 20%, on a typical spend of £1.8 million.
This translates into average annual savings of £360,000, with far more being possible in certain industry sectors.
That's big money; and companies should take expert advice to help with any energy-efficiency requirements they would like to make when their reporting is done.
If there is any doubt, companies can check whether they are affected by ESOS; if they meet the following criteria, they must comply:
a) The company employs at least 250 people
b) It has an annual turnover in excess of €50 million and a balance sheet in excess of €43 million
c) However, most public sector bodies are excluded, but other organisations that receive some public funding, such as universities, may qualify.
For further information on ESOS compliance contact Energys Group firstname.lastname@example.org or call on 01403 786 212.