Explaining TM44 Inspections: The what, who, when and why

EIC explores the purpose of TM44 inspections, why your organisation might need one and how EIC can help you get one.

 

What is TM44?

TM44 is the accepted guidance for the UK for judging the efficiency of air-conditioning units. The key role of the guidance is to support inspections to comply with the Energy Performance of Buildings Directive (EPBD). However, they can provide assistance to any building owner or manager desiring further data on the efficiency of their air-conditioning system. The EPBD1 was initiated in 2003 and replaced a decade later by a recast Directive2.

The legislation required that European members devise ‘measures to establish a regular inspection of air-conditioning systems of an effective rated output of more than 12 kW’.

 

Who needs a TM44?

Not all air-conditioning systems are equal; TM44 focuses on those that use refrigerants for cooling, and parts of other cooling methods such as cooled decks/ceiling slabs or those using aquifers for cooling.

The 12kW figure is a good rule of thumb, making any building owner or manager with a system of that scale subject to TM44. It is important to note that this applies to single large-scale units with an output of 12kW and to individual units that together reach or exceed 12kW.

When is a TM44 necessary?

Inspections timings are relevant here since each mandatory inspection must take place within five years of the previous one. According to TM44 guidance, the initial inspection must satisfy the following criteria:

  • Any system that began service on or after 1st January 2008, must have undergone an initial inspection within five years of the date service began.
  • Systems whose output exceeds 250kW must have undergone inspection no later than 4th January 2009.
  • Systems with a service start date prior to 1st January 2008 and whose output exceeds 12kW must have received inspection by 4th January 2011.

From 6 April 2012, all TM44 air-conditioning inspection reports have been required to be lodged on the Ministry of Housing, Communities & Local Government Energy Performance of Buildings Register where a report and certificate are generated. Accredited assessors and members of the public may access this site to view and download their TM44 certificates and reports.

 

Why is TM44 important?

There are several benefits to having a TM44 inspection. Firstly, a company can avoid penalties for non-compliance. These penalties are costly, inviting a £300 fine per offence – meaning either a non-complying building or multiple units inside a single structure whose combined output is more than 12kW, and if an organisation fails to supply a copy of their inspection report within seven days of request by an enforcement authority, they can incur an additional fixed penalty of £200 per building or unit. Enforcement Officers can check at any time whether a building or unit is compliant.

TM44 is an excellent data gathering opportunity about a major source of utility costs, offering insight on how to:

  • Improve efficiency
  • Reduce electricity consumption
  • Decrease operating costs
  • Diminish carbon emissions
  • Reduce maintenance needs
  • Improve controls and settings
  • Identify technical flaws

The report will also highlight opportunities such as:

  • Improvement to operation
  • Improvements to replace less efficient systems
  • Replacement of oversized systems (scale of the system relative to cooling load)

When viewed with these gains in mind, TM44 can be thought of a necessary process that yields significant benefits down the line.

 

Securing your TM44 with EIC

The EIC team were among the first to receive UK accreditation for the delivery of airconditioning inspections and actively follow any legislative changes so they can keep businesses ahead of the game.

The team can also provide Wrap Reports as standard, offering an overview of essential report findings including reference pictures, additional relevant data and a complete asset list of equipment found.

Alongside this extensive experience, clients will receive additional complimentary intelligence in other areas of sustainable improvement. EIC’s expertise in other fields like Energy Contract Procurement and Intelligent Building Management will position organisations to undertake other sustainable development projects seamlessly, with guidance and security.

For a full breakdown of EIC’s compliance services, and how your organisation can acquire TM44 Certification, get in touch with the EIC team here.

 

1(2002/91/EC)

2(2010/31/EU)

3(Statutory instrument 2012 N0 3118)

 

 

Simplifying Display Energy Certificates

EIC discusses the purpose behind DECs, the benefits they offer and how the EIC carbon team can help you secure one.

What is a DEC?

Display Energy Certificates (DEC) have been a required document in public buildings since 2012. While some structures are exempt, those with floor space of less than 250m2, larger buildings fitting certain criteria must comply. These are properties that are occupied by a public authority and frequently visited by the public.

The certificate summarises the energy performance of the building based on criteria known to affect energy demand and usage. These criteria include the type of building under assessment, its total floor area and fuel use.

Accreditors then measure this data against specific benchmarks to determine the building’s overall energy performance. Newer buildings are more likely to have consolidated record keeping on a building and their HVAC. However, older properties may need to collate this data from various departments and archives.

Since data might be stored in a multitude or locations and formats, this process can be complex and time-consuming. However, the more intelligence that can be sought, the more valuable the DEC becomes in its ability to help identify sources of energy waste.

What are the benefits?

The primary benefit of a DEC is to provide a litmus test for the current energy efficiency of a building. This data can then guide improvement strategies for the structure’s utility usage, thereby reducing their demand and subsequent cost. Only accredited assessors are qualified to analyse and deliver DECs. Part of their service is identifying opportunities for improvement and providing guidance on how to implement these improvements as well.

DECs also communicate your commitment to carbon reduction to visitors, due to the requirement to display them prominently. As consumers become more aware of the effect of their spending habits on the environment, it will dictate the businesses they are willing to interact with. A DEC demonstrates dedication to reduce to or maintain an efficient rating for the building.

Do you need a DEC?

If you are a public authority receiving frequent public visitation, with usable floor space in excess of 250m2, then you will need to display a DEC. The validity period of these certificates does vary depending on building size. The DEC of buildings between 250m2 -1000m2  remains valid for 10 years. However, buildings larger than 1000m2 must renew every year.

Those in need of a DEC or those looking to renew would benefit from shopping around. Ideally looking for a compliance specialist that can offer them the most value with their service.

EIC offers an end-to-end DEC acquisition, starting with a comprehensive site survey, if a lack of available data necessitates it. A copy of the accreditation documents will be forwarded to your organisation once the process is complete.

The EIC team pride themselves on providing relief from the complex process of accreditation, allowing business leaders to focus on their own clients and services. To date, EIC has produced over 5,000 DECs and currently manages the renewal process for over 600 sites.

Each of EIC’s EPBD delivery team, have worked within the schemes since their inception, thereby bringing trusted and reliable expertise to your project.

The EIC carbon team provides various compliance services including major carbon-legislative guidance and all EPBD services (EPCs, DECs, TM44). Since these accreditations work in tandem, and share data sets, getting them under one roof can save you some time. While each of these carbon services can be found on EIC’s trusted compliance page, those seeking the DEC offering specifically can find it here.

 

EPBD: What you need to know

EIC unpacks Energy Performance of Buildings Directive (EPBD), it’s origins, purpose and how firms can make sure they are compliant.

The Kyoto Protocol

Two years after the 1992 UNFCCC (United Nations Framework Convention on Climate Change), the Kyoto Protocol emerged as an extension to the conventions primary treaty.

The UNFCCC’s objective is the following:

“Stabilise greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system”

The extension took effect in 1997 and was as much political as it was scientific, viewing the climate crisis from a purely mathematical perspective. The consensus was that industrially developed nations were far greater contributors to climate change than rural and agricultural ones.

CO2 emissions would not be divided equally between the committed nations but rather based on their industrial activity. Subsequently, the EU and its member states committed to binding emission reduction targets which remain in effect today.

Following Kyoto, the EU established EPBD in January 2003 to ensure sufficient CO2 reductions from European buildings. The primary objective being to incentivise widespread improvement of their energy efficiency. The beauty of this that its criteria apply more to industrially developed nations due to their carbon intensity.

What legislative requirements are covered by EPBD?

The UK governments interpretation of embedding EPBD, recognises 3 streams of certification, required by both private and public sectors:

  • DECs (Display Energy Certificates) – required by publicly owned or funded buildings on an annual basis
  • TM44 / Air Conditioning Inspections – required for all buildings with installed comfort cooling
  • EPCs (Energy Performance Certificates) – required for both domestic and non-domestic new builds, majorly refurbished, sold or let out

The certificates are valid for 10 years from issue. EPCs underpin the MEES standard, whereby a building cannot be sold or let with an energy rating below E.

Building better 

As lockdown restrictions ease, and the ‘Build Back Better’ initiative gains momentum, compliance with EPBD will only become more relevant.

The most recent recast of EPBD, in 2010, focuses on new builds and major renovations thereby adopting a long term view of the situation.

EPBD also protects consumers, it requires disclosure of efficiency measures within a property to buyers, to inform them of running costs.

The requirement led to the widespread introduction of Energy Performance Certificates (EPC), one of the major successes of EPBD to date. First introduced in 2007, the UK national database now contains energy performance information on a staggering 40% of homes.

Last year marked the EPBD deadline for all member states to have NZEBs – or Nearly Zero Energy Buildings. The criteria for an NZEB is simply that it have a very high energy performance, made possible by quality insulation and on-site renewable generation.

Since Zero Carbon Homes was scrapped in 2016, EPBD is one of the few legislations that targets the energy performance of buildings.

The fervour in reaching net zero means that this legislation is here to stay and so firms should be asking how they could ensure they are taking part.

Upgrading for EPBD

Improving the energy performance of a structure needn’t be a complex process, however it must be an informed one.

EIC’s approach to structural efficiency is twofold, assessing pre-existing assets using integrated metering and monitoring technology. Next, EIC adopts an end-to-end approach, carrying out initial certification, devising and implementing improvements. Finally undertaking a certificate review to demonstrate progress.

Depending on site limitations, EIC can consult on the installation of on-site generation, with a particular focus on solar generation. Thereby lessening a structure’s energy consumption, lowering your utility bills and improving its overall energy profile. Full details of these services, as well as testimonials from past clients, can be found on the EIC website.

IETA’s net zero plan

EIC breaks down the IETA’s proposed ideas to help guide Europe towards net zero 2050, specifically the role cap and trade practices may play and why we must raise ambitions.

Rowing together

Last month the International Emissions Trading Association (IETA) announced its 2020s forecast for the price of carbon emissions, expected to rise to  €32 per CO2 tonne equivalent.

The IETA, in a report published last week, also outlined several ways in which international carbon trading, spurred by the increased price, could aid the fight against climate change.

The report outlined that some countries and firms were better equipped than others to reduce and replace carbon-intensive practices. Infrastructure, resources and trade exports are among the variables that can impede or hasten an organisations ability to stay within allotted carbon allowances while remaining soluble.

The trading of such allowances frees individual states and firms up to offset one another’s emissions in order to achieve the collective goal of limiting global temperature rise.

Moreover, it is effective; the European Union’s Emissions Trading System (EUETS) reported a drop of 29% in emissions from stationary structures when comparing 2018 to 2005, thanks largely to such ‘cap and trade’ schemes.

Cap and trade is not a novel concept, it has been suggested as a market-led solution to polluting industry for years. During his presidency, Barack Obama met with a lot of criticism for introducing a bill in support of such schemes with pundits calling it a “sledgehammer to freedom”.

The concern was not unjustified since it was predicted that Carbon intensive industry would simply be undercut by foreign interests able to offer more competitive energy rates to consumers.

However with international cooperation now being actively encouraged, the attraction and probability of price gouging between domestic and international firms is likely to reduce.

The price is right

Alongside the proposed price rise has emerged a surge of concern that, while ambitious, the UK will fall behind on its own national targets unless an even higher charge is established.

The IETA’s forecast would mean an increase on the €27 price that was in effect from June 2018-19 however, think-tank Carbon Tracker believes this would still fall short of the targets stipulated in the UK’s Green New Deal.

A report released by the Zero Carbon Commission has estimated that the IETA’s price would need to be increased by almost 100% to €60 by 2025 to stay within established carbon budgets.

“We need to introduce a stronger, more consistent carbon price signal across more sectors of the economy if we want to accelerate the transition to a low-carbon economy.”

Sam Fankhauser

Assuming that Fankhauser’s perspective is adopted in the UK, carbon allowance trading promises to become a lucrative venture for firms that are able to significantly reduce their carbon emissions ahead of time. Any shortfall between emissions and allowance could be traded with more carbon intensive firms, thereby effectively doubling the value of carbon emissions saved.

Intelligent utility management, on-site generation and smart procurement are all methods to increase the gap between emissions and allowance and, subsequently, its potential value in cap and trade. EIC offers all of these services as well as over forty years of direct experience in integrating and applying them to the benefit of its clients.

Science-Based Targets

A number of large corporations are leading the way in a bid to tackle climate change, with science-based targets.

What are science based targets?

Science-based targets are ambitious emissions reductions objectives, set out by businesses to specify how much they need to reduce their carbon emissions by, to limit temperature rises through global warming. They are considered a positive way to transition to a low-carbon economy.

This transformative action is a consequence of the Paris agreement in 2015 where 195 of the world’s governments committed to prevent climate change. A target was set, limiting global warming to below 2°C above pre-industrial levels, to a level of warming of 1.5°C.

The targets set for businesses to reduce GHG (greenhouse gas) emissions to meet this target, are referred to as ‘science-based’ if they are in-line with this temperature goal.

A united initiative

An initiative for this was set up by CDP, World Resources Institute (WRI), the World Wide Fund for Nature (WWF), and the United Nations Global Compact (UNGC). It focuses on companies that have set science-based targets to highlight the positive effects such as increased innovation, strengthened investor confidence and improved profitability.

In addition, the initiative:

  1. Defines and promotes best practice in science-based target setting via the support of a Technical Advisory Group.
  2. Offers resources, workshops and guidance to reduce barriers to adoption.
  3. Independently assesses and approves companies’ targets.

What are the benefits of setting science-based targets?

There are many benefits to setting science-based targets. As well as saving the planet it;

  • Illustrates excellent CSR – for large corporates there is almost a responsibility to take action against climate change, science-based targets are a way to do this.
  • Delivers a competitive advantage – helps your business to stand out in a crowded marketplace.
  • The whole company can be involved – you can engage both internal and external stakeholders to help your business achieve or even exceed your targets.
  • Provides Investor confidence – 52% of execs have seen investor confidence boosted by targets (sciencebasedtargets.org).
  • Increases innovation – 63% of company execs say science based targets drive innovation (sciencebasedtargets.org).

How do you set a science based target?

There are three science-based target (SBT) setting approaches:

  1. In a sector-based approach the global carbon budget is divided by sector and emission reductions allocated to individual companies based on its sector’s budget.
  2. With an absolute-based approach all companies will equally work towards the same percent reduction in absolute emissions.
  3. Economic-based approach – A carbon budget is equated to global GDP and a company’s share of emissions is determined by its gross profit, since the sum of all companies’ gross profits worldwide equate to global GDP.

How do businesses get involved?

For a business to get involved in the initiative there is a simple 4 step process to follow:

  1. Submit a letter to say you are committed to the scheme.
  2. Develop your own science-based target within 24 months.
  3. Submit your target for validation.
  4. Announce your target.

838 companies are currently taking science-based climate action and 343 companies have approved science-based targets.

How EIC can help

We can help you create science-based targets as part of a Carbon Management Plan that can also incorporate Net Zero goals. We’re already partnering with leading UK private and public sector organisations supporting them to transform their operations in line with ambitious targets that will help to save the planet and future-proof their business.

EIC can assist in meeting your science based targets by:

  • Establishing your carbon footprint to act as your baseline
  • Provide recommendations to reduce your carbon impact
  • Set your target to reduce your carbon footprint to meet the 5°C objective
  • Create an ongoing Carbon Management Plan
  • Create and publish all documentation required for the scheme
  • Work with you to embed the strategy into your business
  • Assist you with carbon offset strategies

We can also provide marketing packages for use both internally and externally, to assist with CSR around your targets.

An update on ESOS Phase 2

The ESOS deadline for Phase 2 was 5 December 2019. Unlike Phase 1, no extra time has been issued to allow for late submissions. Any qualifying organisations who did not complete their assessment and submit a compliance notification by the deadline are at risk of enforcement action. Penalties issued in Phase 1 for compliance failures ranged up to £45,000 with a potential maximum fine of £90,000.

Compliance Notices

ESOS Regulators are currently issuing compliance notices to all UK corporate groups who they believe should have participated but they haven’t yet received a notification of completion from.

If you receive this, you must inform the regulators whether you are;

  • in the process of completing your compliance, or
  • provide evidence you have already submitted your notification, or
  • advise that you do not qualify for ESOS

ESOS submissions

You can find a published list of all businesses who have made a submission via the ESOS notification system as of 1 February 2020 here.

Further evaluation on the effectiveness of energy audits and ESOS can be found here.

ESOS support

If you need urgent support with your Phase 2 compliance, talk to EIC today. Our dedicated team of ESOS Lead Assessors and highly trained Energy Auditors will work hard to help you comply as soon as possible, and support you in any conversations with the Environment Agency.

After ESOS compliance

It’s vital that you don’t let your compliance go to waste. ESOS aims to highlight where companies can make energy improvements, cut wastage and lower costs. Use these opportunities to improve your operations and make significant energy savings. The most common areas for energy savings are lighting, energy management through smarter energy procurement, metering, monitoring and controls, and air conditioning.

SECR

If your business complies with ESOS, it’s highly likely you will need to comply with Streamlined Energy and Carbon Reporting (SECR) too. SECR was introduced in April 2019 as a framework for energy and carbon reporting. Its aim is to reduce some of the administrative burden of overlapping carbon schemes and to improve visibility of energy and carbon emissions for large UK organisations.

SECR can also help businesses on their first steps to meet the UK’s 2050 Net Zero target. Companies in scope of the legislation will need to include their energy use and carbon emissions in their Directors’ Report as part of their annual filing obligations. They will also need to report any energy efficiency actions they have taken within each financial year. If the coronavirus is likely to cause a delay to your accounts, there is guidance here.

Talk to EIC on 01527 511 757 or email info@eic.co.uk if you need any further advice on ESOS or SECR. We’re here to help.

UK Energy Policy in 2020

Following the results of the UK General Election, it will be the Conservative Party responsible for delivering the net zero target and a green economy. The Conservatives made positive pledges to invest in green jobs, low carbon infrastructure and investment in energy efficiency.

Their Manifesto promised that the first Budget in 2020 will prioritise the environment and contain investment in research & development, decarbonisation schemes, new flood defences, electric vehicle infrastructure and clean energy. The Budget date is to be confirmed, but will likely take place in early Spring.

White Paper

The Department for Business, Energy and Industrial Strategy (BEIS) intend to release an Energy White Paper, which is expected in Q1 2020. It will detail the country’s strategy to achieving net zero emissions by 2050.

Energy Secretary, Andrea Leadsom, has said that BEIS are currently evaluating a number of different approaches. This will include decisions on renewables, nuclear levels and the role of carbon capture, usage and storage.

The White Paper is expected to yield further policy indications on a range of energy and environmental issues that are currently unclear.

COP26

The 26th session of the Conference of the Parties (COP26) to the United Nations Framework Convention on Climate Change (UNFCCC) is scheduled to take place 9-19 November 2020 in Glasgow.

The UK will host the main COP summit, which will enable world leaders to discuss actions to tackle climate change and serve as a spotlight on how far the government’s climate policy decisions have come. Claire Perry, the previous Minister of State for Energy and Clean Growth, will preside as the UK nominated president for the event.

Second Balancing Services Charges Taskforce

Ofgem formed the first Balancing Services Charges Taskforce, in collaboration with the Electricity System Operator, back in November 2018. The main goal of the Taskforce was to investigate the future direction of Balancing Services Use of System (BSUoS) charges.

The Taskforce found that the BSUoS charge does not currently provide any useful forward-looking signal. This makes the charges hard to forecast, reducing the influence of the charge on user behaviour.

With this information, the Taskforce assessed whether individual elements of BSUoS have the potential for being charged more cost-effectively and hence could provide a forward-looking signal. However, whilst it was concluded there were theoretical advantages to options suggested, it remained that the implementation would not or could not provide a cost-reflective and forward-looking signal that would drive efficient and effective market behaviour.

The first Taskforce concluded that it was not feasible to charge any of the BSUoS components in a more cost-reflective and forward-looking manner that would effectively influence behaviour to help the system and/or lower costs to customers. The group recommended that all costs included with BSUoS should be treated on a cost-recover basis.

Taskforce key deliverables

The new Taskforce will aim to assess who should pay BSUoS charges, how these charges should be recovered and how principles from the Targeted Charging Review can be applied. In order to achieve this the Taskforce has compiled five deliverables:

  1. Consideration and assessment based recommendation as to who should pay balancing services charges
  2. Investigation and recommendation for recovering balancing services charges, including collection methodology and frequency
  3. Produce interim report providing detailed reasoning and any relevant analysis behind the initial conclusions
  4. Consult on the interim report providing opportunity for stakeholder comment
  5. Issue a final report including consideration of stakeholder consultation responses providing a final recommendation on who should pay, the design of balancing services charges and potential timescales for implementation

The final report, containing the recommendations to Ofgem, is scheduled to be published in June 2020.

Electric Vehicle Smart Charging consultation response

On 15 July 2019 the Government published a consultation on Electric Vehicle Smart Charging. This was to seek views on the outline of the current approach and objectives for the implementation of smart charging systems for electric vehicles (EVs).

The Government believes that the encouragement of consumer uptake and innovation is necessary to meet future targets. To this effect, Government’s overall aim is to maximise the use of smart charging technologies to benefit both consumers and the electricity system, whilst supporting the transition to EVs.

The consultation states that without government intervention, it is unlikely that smart charging will be taken up at the rate required to achieve the full potential benefits. This could lead to the risk of varying standards and inadequate protections for the grid and consumers.

The long and short-term plans for smart charging

The Government provided detail on both short and long-term plans for smart charging. The approach for Phase One of the project would see new non-public charge points required to have smart functionality, compliant with the British Standards Institution.

Phase Two is a work in progress, as the Government seeks views on what the long-term approach for operational requirements should be, with some potential options. The consultation proposes that a decision should be made between 2020 and 2022.

A potential response to the consultation is expected in 2020 and would dictate the rate and method of rollout of new EV infrastructure across the country in the future.

Review of Default Tariff Cap

The initial default tariff cap came in effect on 1 January 2019. It was designed as a temporary cap on standard variable tariffs and fixed term default tariffs. In accordance with the licence requirements, Ofgem run an update progress twice a year. This is so the default tariff cap reflects changes in the cost of supplying energy.

On 7 August 2019, Ofgem updated the cap levels to come into effect for the third charge restriction from 1 October 2019 to 31 March 2020. A fall in wholesale costs saw the level of the cap reduce from £1,254 to £1,179 for this period.

The default tariff cap is intended to be a temporary measure, with an upcoming review next year on whether it is still fit for purpose. The cap will remain in place until at least the end of 2020. The government will be able to choose whether to extend the cap beyond this, up to a maximum of 2023.

Dermot Nolan, Chief Executive of Ofgem, said, “The price cap requires suppliers to pass on any savings to customers when their cost to supply electricity and gas falls.

He added, “This means the energy bills of around 15 million customers on default deals or pre-payment meters will fall this winter to reflect the reduction in cost of the wholesale energy. Households can cut their bills further in time for winter, and we would encourage all customers to shop around to get themselves the best deal possible for their energy.”

CCC to publish Sixth Carbon Budget

The Committee on Climate Change (CCC) is scheduled to publish its recommendation on the level of the Sixth Carbon Budget in September 2020.

The Sixth Carbon Budget, required under the Climate Change Act, will provide ministers with advice on the volume of greenhouse gases the UK can emit during the period 2033-2037. The Budget will set the path to the UK’s net-zero emissions target in 2050, as the first carbon budget to be set into law following that commitment.

CCC Chairman, Lord Deben, advised the Government of the Committee’s intention in a letter to the Exchequer Secretary to the Treasury, Simon Clarke MP.

The letter sets out the Committee’s expectations for the Treasury’s planned review of how the costs of the transition to a net-zero economy by 2050 can be funded and distributed fairly.

The Committee called on the Treasury to conduct the review in its May 2019 advice to Government on setting a net-zero target for the UK. The Committee sees the review as crucial in ensuring a successful transition and recommend that the review is a key input to next year’s spending review and budget, and longer-term policy direction.

Lord Deben’s letter also recommends that the Treasury review develops a plan for funding decarbonisation and examines the distribution of costs for businesses, households and the Exchequer.

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Time to focus on SECR compliance

The ESOS deadline has now passed and it’s time to focus on a new compliance scheme.

SECR, Streamlined Energy and Carbon Reporting, was introduced in April 2019 as a framework for energy and carbon reporting. Its aim is to reduce some of the administrative burden of overlapping carbon schemes and to improve visibility of energy and carbon emissions for large UK organisations. Given the timing of its introduction SECR could also help businesses on their first steps to meet the UK’s 2050 net zero target. Companies in scope of the legislation will need to include their energy use and carbon emissions in their Directors’ Report as part of their annual filing obligations they will also need to report any energy efficiency actions they have taken within each financial year.

We believe it’s time to focus on SECR. The good news is, if your business complies with ESOS, you’re in a much stronger position as you may have much of the data you require already to hand.

Who needs to comply with SECR?

The scheme affects UK quoted companies and ‘large’ unquoted companies and LLPs. These are defined as those meeting at least two of the following; 250 employees or more, annual turnover of £36m or more or an annual balance sheet of £18m or more.

What the scheme requires

For SECR, companies are required to report the following:

  • Scope 1 (direct) and Scope 2 (indirect) energy and carbon emissions (electricity, gas and transport as a minimum).
  • Previous year’s figures for energy and carbon. At least one intensity ratio (e.g. tCO2/turnover).
  • Detail of energy efficiency action taken within the reporting year.
  • Reporting methodology applied.

When will you need to comply?

Compliance will be based on your financial reporting year. Therefore, if your financial year is 1st April – 31st March, your first energy and carbon disclosure data collection will be for the period covering 1st April 2019 – 31st March 2020. This must be submitted in your Director’s Report after March 2020.

Take a look at our chart to see when your SECR deadline will be.

What happens if I don’t comply?

Whilst there are no fixed penalties specified, as there are in ESOS, there are still consequences for non-compliance. Not meeting the reporting requirements of SECR can result in accounts not being signed off. Missing the filing deadline could lead to a civil penalty. So it’s important for organisations to fully align communications between their energy and finance teams and to get a head start where possible.

Save time and hassle

There are similarities with SECR and ESOS when it comes to required data for each scheme, this can be used to your advantage. We offer a combined ESOS and SECR compliance package for businesses at a discounted rate. If you’d like more information on this or any of our services, call +44 1527 511 757 or email us.

General Election 2019 – A focus on energy and climate change

As the date of the General Election nears, there is little doubt that the focus is how the results will affect Brexit. However, as shown by polling carried out by YouGov, electoral concern for the environment is at an all-time high. 25% of voters place it as one of their top three issues facing the country today. This is up from 8% before the 2017 general election. A separate poll by Ipsos found 71% of people believe protecting the environment should be a priority, even if it slows economic growth.

This trend has been reflected in the released manifestos. Each party recognises the climate emergency and is dedicating space to energy and the environment.

Conservatives

The Conservative Manifesto

The Conservative party would maintain their current energy tariff cap policy. It also intends to introduce measures to lower energy bills further. In this effect, there would be a £9.2 billion investment in improving the energy efficiency of homes, schools and hospitals. The party would also support the creation of more environmentally friendly homes.

They state that their first Budget would prioritise the environment with investment in decarbonisation schemes, electric vehicle infrastructure and clean energy. They would also consult on the earliest date they believe appropriate to begin phasing out sales of new petrol and diesel cars.

There are aims to increase the capacity of the offshore wind industry from it’s current 8.5GW to 40GW by 2030. They would also help introduce new floating wind farms. Alongside development of renewables, the Conservatives would also support gas for hydrogen production and nuclear energy.

The moratorium on fracking in England would remain in place. This is unless the Conservatives believe there is scientific evidence that the practice can be carried out safely.

Further investment would include a £1 billion fund to develop “affordable and accessible clean energy”. £800 million to build the first fully-deployed carbon capture storage cluster. There would also be £500 million to help energy-intensive industries transition towards low-carbon technologies.

You can read the full manifesto here

Labour

The Labour Manifesto

The Labour party has committed to a ‘Green New Deal’. The aim is to achieve the majority of required emissions reduction by 2030.

Labour would create a Sustainable Investment Board, involving the oversight of the Chancellor, Business Secretary and Bank of England Governor. They would co-ordinate with trade unions and businesses to deliver investment to necessary areas. The Office of Budget Responsibility would be asked to incorporate climate and environmental impacts into its forecasts so as to properly evaluate decisions made.

They would also seek to bring the energy and water systems into public ownership. They believe this would allow the acceleration and co-ordination needed to upgrade networks at the speed and scale needed to transition to a low-carbon economy.

Labour’s plans would see:

  • A new UK National Energy Agency responsible for the national grid infrastructure and the oversight of the country’s decarbonisation targets.
  • Fourteen new Regional Energy Agencies to replace the existing District Network Operators (DNOs) responsible for decarbonising electricity and heat.
  • The supply arms of the ‘Big Six’ energy companies would be brought into public ownership to continue to supply households while helping consumers reduce their energy demands.

As part of Labour’s ‘National Transformation Fund’ £250 billion would be dedicated to investment in renewable and low-carbon energy and transport, biodiversity and environmental restoration.

Labour aims to deliver nearly 90% of electricity and 50% of heat from renewable and low-carbon sources by 2030. To this effect they would build 7,000 new offshore wind turbines, (this equates to around 52GW) 2,000 new onshore turbines, “enough solar panels to cover 22,000 football pitches” (roughly 157km2) and new nuclear power. Labour would also trial and expand on tidal energy and invest in hydrogen production.

The party will aim to upgrade almost all of the UK’s 27 million homes to the highest energy efficiency standards. They state that this would reduce the average household energy bill by £417 per year by 2030. It also aims to tackle fuel poverty. All new homes would be required to meet a zero-carbon homes standard.

The Labour party would introduce a Climate and Environment Emergency Bill to set out new binding standards for decarbonisation and environmental quality. In addition, they would introduce a new Clean Air Act in line with World Health Organisation (WHO) limits for fine particles and nitrous oxides. The party would aim to end new sales of conventional petrol and diesel vehicles by 2030.

You can read the full manifesto here

Liberal Democrats

The Liberal Democrat Manifesto

If elected, the Liberal Democrats would immediately implement a ten-year emergency programme designed to cut emissions substantially. They would then phase out emissions from remaining hard-to-treat sectors by 2045 at the latest.

The party has identified that their first priorities upon entering government would be:

  • An emergency programme to insulate all Britain’s homes by 2030, cutting emissions and fuel bills and ending fuel poverty.
  • Investing in renewable power so that at least 80 per cent of UK electricity is generated from renewables by 2030 – and banning fracking for good.
  • Protecting nature and the countryside, tackling biodiversity loss and planting 60 million trees a year to absorb carbon, protect wildlife and improve health.
  • Investing in public transport, electrifying Britain’s railways and ensuring that all new cars are electric by 2030.

Specifically, they would aim to accelerate the deployment of renewable power, providing more funding and removing the current government’s restrictions on solar and wind and building more interconnectors to improve security of supply. The party aims to reach at least 80% renewable electricity in the UK by 2030.

The Liberal Democrats would also seek to cut energy bills and reduce fuel poverty by providing retrofits for low-income homes to improve energy efficiency standards. They would introduce a zero-carbon standard to all new homes and non-domestic buildings by 2021. The party would also increase minimum energy efficiency standards for rented properties.

There would be a focus on investment in carbon capture and storage facilities and support to companies on cutting emissions. The party would also pass a new Clean Air Act, based on WHO guidelines.

You can read the full manifesto here

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Our Market Intelligence team keep a close eye on the energy markets and industry updates. For the timeliest updates you can find us on Twitter and LinkedIn.

Consultation to improve MEES

The Department for Business, Energy & Industrial Strategy (BEIS) has published a consultation to seek views on proposed targets for the Minimum Energy Efficiency Standard (MEES). Currently MEES make it unlawful to grant new leases to properties with an Energy Performance Certificate rating of F and G.

The Government’s options

The Government has identified two potential trajectories for strengthening the PRS (Private Rented Sector) Regulations. These aim to unlock the economic opportunities of low carbon growth, and deliver important energy and carbon savings:

  • The Government’s preferred route is that all non-domestic privately rented buildings achieve a Minimum Energy Efficiency Standard of a B rating, by 1 April 2030. This is provided the measure (or package of measures) required to reach an EPC ‘B’ proves cost effective.
  • The alternative option is that all non-domestic privately rented buildings reach a ‘C’ rating by 1 April 2030, if cost effective.

In both cases, the Government recognises that not all buildings will be able to reach the required minimum standard. In this instance the Government proposes that landlords can continue to lease their building (from 2030) providing they can prove that the building has reached the highest EPC band that a cost-effective package of measures can deliver.

The impacts

BEIS estimates that using the ‘B’ rating EPC route, an investment of approximately £5 billion up to 2030 is required. The estimated average payback time would be 4-5 years. Their modelling suggests this will translate to £1 billion in bill savings for business in 2030. This would deliver an overall value of £6.1 billion to the UK economy. The annual benefit to businesses by using this option is projected to be approximately double that of the ‘C’ rating EPC.

Regardless of the option chosen, BEIS proposes that existing exemptions will continue to apply. This means that landlords will be required to carry out upgrades that are cost-effective, with an expected payback on energy savings of seven years or less. If the work cannot meet this criteria then landlords are able to register an exemption, valid for five years.

The proposed timescale

The Government has asked whether a single implementation date of 2030 is appropriate for landlords to meet the determined rating. As an alternative it has been suggested that incremental targets leading up to 2030 could be introduced. This would encourage landlords to improve the EPC rating of their buildings over time.

The consultation is expected to close on 7 January 2020.

Stay informed with EIC insights

Our Market Intelligence team keep a close eye on the energy markets and industry updates. For the timeliest updates you can find us on Twitter and LinkedIn. To find out more about our Minimum Energy Efficiency Standard (MEES) solutions click here.

ESOS Phase 2 – Deadline Approaching

By this date (5th December 2019) all companies that qualify for ESOS must have submitted notification of their compliance with the Environment Agency (EA) or risk enforcement action. There is still a considerable amount of work to do to ensure that all of the ~10,000 qualifying organisations are fully compliant.

Penalties for non-compliance are high

Fines for non-compliance could be severe and scheme regulators will issue fixed penalties for a variety of offences. These include:

  • Failing to notify of compliance or to maintain sufficient records (up to £5,000)
  • Failing to undertake compliance activities or making misleading statements (up to £50,000 plus £500 per day up to 80 days)

Businesses that are subject to a penalty will have their details published online.

An arduous task if not prepared

In order to ensure compliance, businesses need to calculate their total energy consumption; this can be an onerous task if sound internal data collection processes are not already in place. Appropriate compliance activities should then be completed covering significant energy consumption or 90% of total energy consumption. Finally, ESOS compliance must be reviewed and signed-off by a qualified Lead Assessor, of which there are a limited number.

Environment Agency external audit

ESOS compliance is subject to an external audit by the Environment Agency (EA). As such it is critical for businesses to ensure compliance activities are delivered to a high standard. In ESOS Phase 1, the Environment Agency audited approximately 1 in 20 businesses that notified compliance. Many of the enforcement penalties related to maintenance and accuracy of records.

Leniency is unlikely

Regulators are less likely to be lenient in this phase of ESOS than they were in Phase 1. This applies to both late compliance and the standard of compliance activity such as energy audits. The deadline is in just two months and businesses that qualify still have an opportunity to ensure compliance, although quick action is required.

The benefits of ESOS

If engaged with effectively, ESOS serves as an excellent way for businesses to identify ways in which they can reduce their energy consumption as well as associated costs and carbon emissions. EIC have engaged with many businesses that have implemented energy saving opportunities following their ESOS Phase 1 compliance activities.

Why choose EIC?

Whether it’s ESOS, SECR, or CCAs, EIC will work with you to reach compliance deadlines and targets. In Phase 1 of ESOS our team identified 2,829 individual energy efficiency opportunities, equivalent to 461GWh or £43.9m of annual savings across 1,148 individual audits. We also helped over 300 ESOS Phase 1 clients avoid combined penalties of over £48m, based on maximum fines.

To find out more about how we can help you comply and implement recommendations post ESOS compliance, call us on 01527 511 757 or email esos@eic.co.uk

The end of CRC

The final reporting period for the Carbon Reduction Commitment Scheme (CRC) concluded in March this year. Qualifying companies now only have to manage the final elements of the scheme: ensuring they have purchased and surrendered sufficient allowances to finalise Phase 2 reporting.

The CRC scheme ran for eight years, from April 2010 to March 2019. It covered approximately 10% of the UK’s carbon emissions, and raised roughly £790 million annually for the exchequer.

Qualifying businesses

Qualification criteria for CRC Phase 2 was determined as organisations with at least one half-hourly meter using 6,000 megawatt hours or more of qualifying electricity. This was a simpler method of working out relevant organisations and was implemented following Phase 1 feedback that the system was too complex. The seemingly sensible criteria did a good job of identifying significant energy consumers with a test that was simple.

An issue arose however with qualification being considered only in the period April 2012 to March 2013, and then lasting for all subsequent years in the phase. As time went on, there was an increase in companies who qualified, but had subsequently sold off the (usually industrial) sites that made them qualify for the scheme. This left comparatively low energy users stuck in a scheme for which they were no longer suitable. The qualification criteria became less effective over time. We learnt that rolling qualification criteria for schemes helps to avoid this problem and keep qualifying members relevant.

The impact of ‘greening the grid’

The CRC scheme also changed significantly due to the “greening of the grid”. The government’s electricity conversion factors, which denote the amount of carbon dioxide equivalent emissions associated with consuming a fixed amount of electricity, fell approximately 15% year on year over the last three years of the scheme.

This meant that in three years the number of allowances required to cover a fixed amount of electricity, halved. Some members of the scheme were caught out by this, and held a large number of prepaid allowances which were no longer needed due to the drop in conversion factors that was not forecast. This also had a big impact on the total tax revenue generated by CRC, and if the scheme were to continue, we would expect this to be addressed in a review. We learnt that if part of a carbon scheme’s purpose is to raise tax, then there are factors that can unexpectedly influence this.

The future of compliance

Now the CRC scheme is closed, we see a new future opening for carbon compliance. The tax-raising component of CRC has been incorporated into the Climate Change Levy as an increased flat rate across business energy bills in the UK for firms who pay 20% VAT. This is charged per kWh of energy, and so tax revenues are easier to forecast and less likely to change. However, this has shifted the tax burden initially placed on high emitters to being evenly spread across a wider group of energy bills.

The reporting side of CRC has been followed by the new Streamlined Energy and Carbon Reporting (SECR) scheme. This has a larger footprint of approximately 11,000 qualifying firms, and the new qualifying criteria is attached to accounting standards which is both simple and applicable year on year. We welcome the increased attention on emissions that will be generated by the SECR scheme.

Talk to the EIC team

EIC can offer a full review of your organisation to assess your legal obligations and compliance status. We offer ESOS, SECR, Air Conditioning Inspections, Display Energy Certificates and much more, see our full suite of services here. We’ll provide you with a Compliance Report that will summarise our findings, explain the legislation, and outline your next steps.

Our in-house team includes qualified ESOS Lead Assessors and ISO 50001 Lead Auditors, as well as members of the Chartered Institution of Building Service Engineers (CIBSE), the Register of Professional Energy Consultants (RPEC), and the Energy Institute. Call us on 01527 511 757 or contact us here.