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  • Last year we saved our CCA clients alone £25.5m

How ESOS Differs From Other Energy Legislation

If your business is required to become ESOS-compliant, this likely won’t be the first time you’ve needed to report your company’s energy usage. Between CRCs, DECs, and CCAs, there’s a danger that ESOS could become just another acronym. Over the next few months, we’ll be taking a brief look at previous legislative measures to see what ESOS has really brought to the table.

Carbon Reduction Commitment (CRC) Energy Efficiency Scheme

•    What is it? The CRC Energy Efficiency Scheme is designed to make businesses pay for the amount they pollute by requiring them to buy allowances for every tonne of carbon they emit.

•    Who is it for? Large, non-energy-intensive businesses – i.e. those using more than 6000MWh of electricity through settled half-hourly metering per year – are required to be compliant with the scheme. This affects both public and private sector organisations, such as supermarkets, banks, hotel chains and local authorities.

•    How is it different to ESOS?
–    Essentially, the CRC Energy Efficiency Scheme works in the same way as a carbon tax
–    There isn’t an incentive to identify any long-term energy-saving measures, whereas, with ESOS, this is mandatory
–    The CRC Energy Efficiency Scheme also doesn’t cover processes such as transport and manufacturing
–    While ESOS is a carrot, the CRC Energy Efficiency Scheme is definitely a stick

Display Energy Certificates (DECs)

•    What are they? DECs are mandatory for public buildings and designed to inform members of the public of the metered energy used by a particular building. A certificate provides an energy performance operational rating, where A is very efficient and G is the least efficient. An accompanying advisory report can identify where energy is being wasted and how energy-efficiency can be improved. In the private sector DECs are voluntary and not mandatory.

•    Who are they for? DECs are required in buildings with a floor area of over 500m2 that are occupied in whole or part by public authorities and frequently visited by the public. DECs only apply in England, Wales & Northern Ireland as Scotland does not have DECs.

•    How are they different to ESOS?
–    DECs are not necessarily different to ESOS; they just don’t cover as much ground
–    Although advisory reports can identify some energy-saving measures, DECs only cover the energy used by buildings and don’t touch on things like transport or manufacturing
–    They don’t cover whole life costs
–    They’re not super-convenient for large businesses with lots of sites as a separate DEC is needed for every building
–    There’s also a ‘naming and shaming’ element to DECs as lower-rated companies are forced to display their energy-inefficiency to whoever pays them a visit, and DECs are held on a national register
–    For the DEC to be meaningful it needs real time data for a period of 12 months and a site audit

Climate Change Agreements

  • What are they? Agreements which allow businesses to claim big discounts on their Climate Change Levy charges by making commitments to energy efficiency. Discounts of up to 90% are available on electricity bills with 65% discounts available on other fuels.
  • Who are they for? Energy-intensive businesses facing competition from overseas. This could be anything from a supermarket to a chemical plant to a poultry farm.
  • How are they different to ESOS?
    –    Unlike ESOS, participation in CCAs is voluntary.
    –    Climate Change Agreements require organisations to measure and manage their energy consumption, which lays much of the groundwork for ESOS reporting.
    –    However, CCAs are pitched as a short-term cost issue, rather than an opportunity to reduce energy use and make long-term savings on fuel and electricity bills.
    –    If an organisation does not meet the energy-reduction targets set by its CCA, it can effectively purchase allowances for the extra CO2 emitted and ‘buy out’ the obligation which isn’t possible under ESOS.
    –    It’s not obligatory to capture transport data under a CCA (however, it is likely that this information may already be recorded under financial control)

Mandatory Carbon Reporting

  • What is it? Mandatory reporting of industry CO2 emissions which appears alongside business progress in an annual report. The idea is that potential investors will be able to see which companies are effectively managing the hidden long-term costs of CO2 emissions.
  • Who is it for? As of October 2013, all UK companies listed on the UK stock exchange are required to take part in Mandatory Carbon Reporting.
  • How is it different to ESOS?
    –    Like ESOS, Mandatory Carbon Reporting is compulsory for businesses which meet the criteria, regardless of whether they are energy-intensive companies.
    –    There’s a ‘name and shame’ aspect to the reporting, as companies are forced to release details of their CO2 emissions to the public and investors.
    –    The idea is that transparency around energy use (and wastage) will spur businesses to speed up strategies to reduce their emissions, however concerns have arisen over whether the reports will go far enough in tackling the problem of energy waste.
    –    Under Mandatory Carbon Reporting, businesses only have to report on their carbon emissions. They don’t have to identify opportunities for making their practices more energy- and cost-efficient in the same way they do under ESOS.
    –    As above, it’s not obligatory to capture transport data under Mandatory Carbon Reporting (however, it is likely that this information may already be recorded under financial control)
    The good news is that much of the data needed to comply with ESOS has already been captured by companies complicit with other legislation. Whichever route you use to comply with ESOS, it’s important to ensure it suits your business.

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