In March 2011, the European Commission adopted its communication on the 2011 Energy Efficiency Plan. This communication confirmed that the Union is not on target to achieve its energy reduction targets of saving 20% of energy consumption by 2020. In October 2012, the EU then produced the Energy Efficiency Directive (EED), specifying all member countries to create an energy audit scheme to ensure the achievement of the Union's 2020 target on energy efficiency and to pave the way for further energy efficiency improvements.
In 2014 the Department of Energy and Climate Change (DECC) established the Energy Savings Opportunity Scheme (ESOS) to implement this EU Directive in the UK. ESOS is an energy assessment and savings scheme that applies to large undertakings and groups containing large undertakings in the UK. A large undertaking is any UK undertaking that meets either one or both of these conditions (a) it employs 250 or more people and / or (b) it has an annual turnover in excess of 50 million euro (£39,937,770), and an annual balance sheet total in excess of 43 million euro (£33,486,489).
The scheme is estimated to lead to £1.6 billion net benefits to the UK, with the majority of these being directly felt by businesses as a result of energy savings. An organisation must take part in ESOS if they qualify as a large undertaking on the qualification date. The qualification date for the first compliance period (of which there are three additional four year compliance periods to follow) was the 31st December 2014. The scheme is administered by the Environment Agency.
The penalties for non-compliance are upto £50,000 fine and/or publication of company director details.
Should companies consider this another tick box exercise or are there real benefits?
The ESOS is split into three components (a) a company is required to measure their total energy consumption through energy use in buildings, industrial processes and transport. (2) they are then required to identify energy audit and auditor and (3) they must then notify the Environment Agency when complete. The energy audit is key in all of this, which is why all companies are required to appoint and approved ESOS Lead Assessor. A qualified individual who can carry out the energy audit and sign of the evidence pack with the company director. A detailed energy audit can, on average, identify energy savings of between 10% to 40% and with the 20+ organisations I have worked with this is indeed the case.
Clearly there will be a requirement for capital expenditure and significant changes in operation to realise the bigger savings, but simple housekeeping exercises can yield some good results. These vary of course, however, I believe that ESOS should not be treated as another tick box exercise and should in fact be embraced by all as a real and significant opportunity to save money and reduce carbon emission.
About the author: Dr Stephen Finnegan is a Lecturer at the University of Liverpool, a business advisor on ESOS and an editorial board member on sustainability for the RICS.
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