Ruth Bowyer
October 2015

We need to talk about ESOS

Despite it being their legal requirement, UK businesses are failing to undertake energy audits under the new ESOS scheme. Compliance will save them money and work towards fulfilling their corporate sustainability goals, so why are so few undertaking audits? And is the administrator of the scheme, the Environment Agency, culpable?

The Energy Saving Opportunities Scheme (ESOS) is the scheme designed by the UK government to implement Article 8 (4-6) of the EU Energy Efficiency Directive (2012/27/EU), aimed at meeting the EU’s 20% reduction target by 2020.This initiative aims to cut carbon emissions by requiring large businesses to complete energy audits, which will identify potential energy-use reduction measures. Although the Directive does not require companies to implement these measures, it is expected that the cost savings these audits would demonstrate would act as sufficient incentive.

Under ESOS, all large companies meeting the qualification criteria must undertake an energy audit, conducted by an ESOS Lead Assessor who is registered with an organisation such as the IES. These audits will cover energy consumption across buildings, industrial processes and transport. With the Carbon Trust estimating that large businesses in the UK could save £300 million on energy bills in 2016 alone, the incentives for compliance seem clear.

ESOS logo

However, currently less than 5% of UK enterprises required to undertake ESOS audits by the compliance deadline of December 5th have done so. There is huge market potential in this area for willing consultants with an expected inundation of requests for audit throughout the end of October and November. Despite this, we still have seen relatively little uptake from Members in becoming registered to undertake such audits. Many of the Members who we surveyed said they were slightly reticent to join our register of Lead Energy Assessors as they fear many enterprises will not participate in ESOS. Yet the mandatory scheme aims to ensure UK organisations meet energy efficiency targets in an ultimately beneficial, cost-effective manner. On paper, it looks like a win-win for cost savings and environmental duties, so why have so few businesses complied?

Shifting goal posts?
The Environment Agency (EA) are the UK administrators of the scheme. For the past few months they have embarked on an extensive awareness campaign - sending out correspondence to businesses to notify them of their legal responsibility to comply - resulting in at least nine out of ten business being aware of the scheme. However, penalties and sanctions for non-compliance have only recently been clarified, and the EA are taking a non-sanctionary approach to ensuring compliance, only using enforcement notices and civil penalties in the most necessary of cases. Despite the murmurings that the compliance deadline would be shifted back, the EA have remained insistent that 5th December deadline will not be amended. However, there is some wriggle room with an opportunity for late notification provided it is received by 29th January 2016, but it looks as though the EA are remaining steadfast in ensuring ESOS is undertaken by as many of the UK organisations required to do so.

To ESOS or not ESOS?
The cost of an ESOS audit significantly varies depending on the scale of the business, but estimates by VEOLIA and the EA suggest that the total cost to all businesses required to comply will be in the region of £165m. However, the energy savings should reduce business costs by a significantly greater amount in the long-run, and the conservative energy savings estimates are in the region of 3TWh per year - enough to power 160,000 homes.

Ultimately, ESOS is good for the environment and good for business. It is a sad indictment  of the British business communities approach to sustainability that, even with the monetary savings and obvious environmental benefits, so many are either leaving compliance to the last minute or hoping to avoid complying at all. It is essential therefore that the professional auditing sector are able to offer quality, efficient and effective audits that not only comply with regulations but ensure the maximum benefit to the environment and to business.

To find out how to join the IES Lead Energy Assessor Register, please visit our ESOS page.

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