Thursday, January 15, 2015

Do you need to worry about ESOS?

Probably not.

You may not qualify and even if you do the reporting deadline is not until 5 December 2015.  

ESOS is the energy savings opportunity scheme. It implements art. 8 of the EU Energy efficiency directive.  It's a regulation but the Department of Energy and Climate Change (DECC) say that they will operate it with a light touch. Certainly it's very different from CRC. It's not a tax and although there could be penalties they will only apply in exceptional cases.The objective is to save energy, to make organisations more efficient and therefore more competitive, although in the face of collapsing oil prices and falling coal and gas prices the urgency of this may not be immediately apparent. Of course, to a large extent reducing energy usage reduces the nation's carbon footprint which is high on the priority list for DECC.

So is your organisation covered by ESOS?
If your organisation is in the public sector then it is excluded. If you operate in the private sector you are covered by ESOS if you employ more than 250 staff or you have a balance sheet total of more than £34 million or an annual turnover of more than £40 million. The reference date for this is 31st December 2014. ESOS applies to all UK operations which meet the criteria even if the ultimate owner is overseas. It also applies to non-profit organisations which fulfil the other criteria.

Assuming that you are covered by ESOS,  the first requirement is for you to identify the energy that you use in your buildings, your industrial processes and in transport. You must calculate the total use over a 12 month period and present an audit trail to justify your figures. If appropriate, you can use data from other schemes like the CRC or the EU emissions trading system to back up your results.You then have to audit at least 90% of the energy used by your organisation in accordance with the ESOS criteria.Your audit plan must be approved by your lead assessor. This may be an employee or an external consultant. Either way, the lead assessor must be qualified and appear on the Approved Register held by iema (Institute of Environmental Management and Assessment) or by a number of other Approved Organisations. A full list of Approved Registers is on the GOV.UK website.

 Once your audit is complete the report must be signed off by your lead assessor and by a director of the company. It must then be submitted to the environment agency not later than 5 December 2015. The environment agency is the scheme administrator. The next stage is to act on the ESOS audit recommendations.The whole objective of the process is the help organisations find ways of being more efficient and making better use of energy, so this step is arguably the most important. 

The Environment Agency will review a sample of audit reports and may possibly wish to review yours. Apart from that, your only obligation is to produce your next audit report in four years’ time: 2019.

At the time of writing, 15th January 2015, the oil price is around $47/barrel. That means it’s more than halved since the summer. Some say it’s down for the long term and I talk about that in "Energy - the story of 2015". For the moment, ESOS is designed to help save energy and that must sharpen your competitive edge, whatever the energy price. And designing and implementing energy saving strategies now is protecting your organisation against the day the price spikes back up again.

Want to know more? Go to and search for ESOS, or drop me an email: 

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