Monday April 12, 2021

The deadline for the third phase of ESOS is on 5 December 2023, but it is never too early to start your carbon reporting process. Although working on a distant deadline may not seem like a priority, planning ahead may save considerable time and money.

Regulated by The Environment Agency, the mandatory compliance scheme aims to ensure that big energy users are working as efficiently as possible. Businesses that qualify for the scheme must have compliance plans in place to avoid fines and civil penalties.

The first step towards assessing an organisation’s carbon footprint is to conduct an energy audit. Energy audits assess total consumption within a business including buildings, industrial processes and transport usage. This is also crucial for understanding where a business could save money through energy conservation.

Who qualifies for ESOS?

ESOS is mandatory for large UK organisations that meet one of more of the following criteria:

  • Employ at least 250 people.
  • Have an annual turnover excess of €50 million and an annual balance sheet excess of €43
  • Are part of a corporate group containing a large enterprise.

Businesses that qualify must carry out ESOS assessments every four years. While fines differ from case to case, they can include an immediate £50,000 fine or £500 per day for up to 80 working days. Businesses who refuse to comply also run the risk of having their information published online.

What are the benefits of ESOS?

You may be thinking, why should I start thinking about phase 3 so early? Starting work towards phase 3 now means you are able to explore different options before deciding on the perfect one for your business. Becoming more energy efficient now will also mean environmental and financial benefits in the long term.

The two most significant benefits of ESOS lie in the reduction of carbon emissions and lowering of energy bills. If approached correctly, ESOS could bring benefits for both the business in question and the environment, in the form of cost effective savings.

ESOS has been predicted to deliver a total of £1.6 billion in savings to UK businesses between 2015 and 2030. Some of the most common areas in which savings are found include lighting, air conditioning and metering. EIC can also provide intelligent procurement: further simplifying our client’s energy management and reducing their utility costs.

Putting off compliance plans may also leave you vulnerable to price increases. Phase 1 of the scheme more than 40% of businesses were still not compliant 4 months after the deadline. If this were to happen again, in excess of 2,800 firms would be fined and in turn suppliers would be forced to raise their prices again. By identifying areas of carbon reduction, ESOS can also improve your Streamlined Energy and Carbon Reporting (SECR) narrative. While they are separate schemes, information gained from ESOS can be used to manage energy efficiency in annual reports.

How can EIC help with your compliance needs?

Our carbon team have extensive experience with complex compliance legislation and are dedicated to helping you reach deadlines efficiently. Our Lead Assessors and highly trained Auditors are on hand to assist you throughout your compliance process.

We have assisted over 550 clients with their ESOS journey, and in doing so have identified 4.65 million tonnes worth of CO2 savings. This has meant that our clients have avoided approximately £80 million worth of fines over phase 1 and 2.

Whilst balancing other jobs and responsibilities, schemes may seem like a hassle. Fortunately, EIC can help turn that obligation into an opportunity for your organisation.  Get in touch to find out how we can help you start your compliance journey.

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