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Compliance schemes: compulsory vs voluntary

Compliance can be a difficult area for energy managers – with rules and regulations changing all the time, achieving and maintaining compliance requires constant work.

May 2018

While many compliance schemes are compulsory, there are also a number of optional energy compliance schemes available to businesses. For many, the idea of choosing to spend additional time on compliance may seem inconceivable when mandatory schemes command so much time and attention, but there can be some real benefits for businesses that choose to do so.

With this in mind, we’re focusing on compliance schemes: which ones you need to ensure you’re in line with, what’s changing and why you should consider adopting voluntary schemes…

Compliance is compulsory for…


After the mad dash to compliance in 2015, ESOS is back on the agenda.

To recap: ESOS is compulsory for ‘large undertakings’ within the UK, so if you employ more than 250 people or have an annual turnover of over 50m euro (£38,937,777) and a balance sheet total of over 43m euro (£33,486,489), you will need to comply with ESOS.

The most common route to compliance is to carry out an ESOS assessment, which involves measuring their total energy consumption and conducting audits to find areas where their energy efficiency could be improved. This needs to be conducted by an accredited Lead Assessor, which can be an internal member of staff (if you have the available resources) or an external auditor.

ESOS is the UK’s implementation of Article 8 of the EU’s Energy Efficiency Directive, but ESOS is unlikely to change after Brexit as the regulations have been embodied into the UK’s own regulatory framework. We’re now in the compliance period for ESOS Phase 2 – the next deadline isn’t until 5th December 2019, but if your business is required to comply with ESOS, you should act now to ensure that your business meets the deadline.

Carbon Reduction Commitment (CRC) scheme

If your business is required to comply with the CRC Energy Efficiency scheme, you should be aware that compliance is still mandatory, despite the fact that it closes from April 2019. The qualification period for CRC Phase 2, which we’re currently in, was between April 2012 and 31 March 2013 – if you had at least one settled half hourly meter (sHHM) and you used more than 6,000 MWh of electricity through sHHMs during this time, then you need to meet the scheme’s requirements.

While the CRC scheme will end on 31 March 2019, eligible businesses must comply with the rules until then. This involves monitoring and submitting an annual evidence pack on their CO2 emissions, and buying allowances to cover the CO2 they emit. Allowances now cost around £17 to £18 per tonne of CO2, depending on the year and the sale used.  If you don’t meet the requirements of the CRC, you could face civil penalties from the Environment Agency.

GHG emissions reporting

Since 2013, all UK quoted companies have been legally obliged to report their global greenhouse gas (GHG) emissions.

There’s no set method for reporting GHG emissions, but your report must cover your global emissions of all six Kyoto greenhouse gas groups. It must also be clear on which operations emissions data has been reported for, and if/how this is different to the operations within your financial statement. Your emissions must also be presented with intensity ratios, e.g. emissions per unit of revenue. This can be quite complicated, so if you don’t have compliance experts in-house, it’s wise to seek external support.

In the coming months, plans for the next phase of mandatory energy and carbon reporting will be confirmed by the Government and it is expected that there will be an element of GHG reporting within it, so it could pay to get to grips with your organisation’s emissions.

Consider observing…

ISO 50001

ISO 50001 is an international standard that provides businesses with a framework to create an effective energy management system. Some businesses choose ISO 50001 accreditation as a route to ESOS compliance, as it ensures an organisation is compliant with ESOS as long as at least 90% of their total energy use is covered.

Even if your business isn’t required to comply with ESOS, it can still be beneficial to become ISO 50001 accredited. Using the energy efficiency framework it provides can be an excellent way to reduce your energy consumption – which should in turn reduce your greenhouse gas emissions, which will be particularly advantageous if you’re required to report on them. Meeting ISO 50001 standards will also demonstrate your business’s green credentials, which should appeal to stakeholders and customers alike.

Climate Change Agreements

If your business operates within an energy-intensive sector and you’re currently paying the Climate Change Levy (CCL) at the full rate, you could significantly reduce your CCL costs by committing to a Climate Change Agreement (CCA).

To obtain a CCA, you need to report your energy use and carbon emissions against pre-agreed targets over four, two-year target periods. If you meet your targets by the end of the reporting period, you’ll be eligible for a CCL discount.

The CCL is set to increase significantly in 2019 to compensate for the abolishment of the CRC scheme, so a CCA could make a substantial difference to your energy costs. If you’re operating in an eligible energy-intensive sector, you could receive a reduction of up to 90% on the CCL. Depending on your company structure and the scope of eligible processes across your organisation, you could also claim full or partial exemption from the CRC scheme.


Many businesses voluntarily measure and disclose their greenhouse gas emissions through the Carbon Disclosure Project (CDP).

While collecting, analysing and reporting on your greenhouse gas emissions can be time-consuming, monitoring your emissions in this way is a great way to start managing and reducing your emissions. Participating in the CDP involves filling out a complex questionnaire, and respondents are scored on their performance. These scores are published, motivating participating companies to lower their carbon emissions and improve their score.

The increased transparency of CDP reporting can significantly boost your CSR credentials, so don’t be deterred by the complex process involved. Seeking external support can take the burden off your internal team and ensure you don’t miss out on the benefits of the CDP.

Compliance made simple

Whether you’re trying to meet mandatory requirements for your business, or looking to explore voluntary schemes, Inenco’s compliance and legislation experts can provide the support you need to make compliance hassle-free. To make sure you’re getting the most value out of the schemes available, give us a call on 08451 46 36 26 or email