With Brexit on the horizon, many people are asking how the UK’s exit from the European Union will impact the Energy Savings Opportunity Scheme (ESOS). In light of this, many companies are stalling when it comes to complying with Phase 2 of the scheme, under the illusion that it will be scrapped.
ESOS is the implementation of Article 8 of the EU’s Energy Efficiency Directive, which aims to reduce EU energy consumption by 20% by 2020 based on 1990 levels. Large organisations must submit regular energy audits to prove compliance with the scheme.
The earliest that the UK could leave the EU would be 29th March 2019. The compliance deadline for Phase 2 of ESOS is the 5th December 2019, which leaves just a 9 month gap. This short gap has left many commenting that it would be inconceivable that the government would scrap the scheme before then. But most importantly, when the UK leaves the EU, the EU laws we abide by currently will automatically be converted into domestic law (including ESOS) to ensure a smooth transition.
Sam Davidson, head of consulting operations at Utilitywise PLC. commented ‘With the Phase 2 deadline being so close to the very earliest date we could leave the EU, it is inconceivable that ESOS would be scrapped ahead of the next compliance date.”
The fine for failing to complete audit requirements and provide notification of compliance is up to £50,000, therefore companies who choose not to comply with the legislation will be in for a nasty surprise.
For those companies who are still unaware of ESOS or not sure whether they meet the criteria to need to comply, it is best to gain an early understanding as Phase 2 approaches quickly. The criteria and the way ESOS compliance is achieved remains unchanged from Phase 1, so companies with either 250 or more employees, or an annual turnover in excess of €50 million and an annual balance sheet total in excess of €43 million, are required to demonstrate an awareness of their energy use and environmental impact by having an energy audit conducted whereby recommendations will be identified for making improvements and submitting a report to the regulator (Environment Agency – England, SEPA – Scotland, NRW – Wales, and Northern Ireland Environment Agency– Northern Ireland) before the compliance deadline of 5th December 2019.
Although the UK will likely have formally left the European Union by the end of 2019, our legal and moral obligations to measure, manage, and improve our energy efficiency and environmental footprint remain unchanged. The UK has committed itself to various international agreements to improve energy efficiency and reduce carbon emissions so despite no longer being obliged to comply with new European Laws and Directives, the country still needs to fulfil its wider responsibilities.
ESOS will also continue to highlight substantial cost savings to UK businesses post BREXIT, as despite initial capital investment in improving energy efficiency, the savings on energy bills, transport costs and improving occupancy comfort are expected to create short payback periods and significant financial returns. In a time when investors are becoming increasingly interested in business sustainability and longevity, an awareness of energy efficiency is proving to be a critical component of daily activities, creating cost savings to businesses, and improving our energy security post BREXIT, whilst also helping the country strive to improve its carbon emissions and environmental impact – Elmhurst Energy Consultancy believes it presents a full spectrum of opportunities.
For those businesses who would like to know more about ESOS or how Elmhurst Energy Consultancy could assist in your compliance journey, we will be releasing details over the next few weeks about our ESOS breakfast seminar due to be held in September.