ESOS: Government begins issuing non-compliance fines as Phase 2 begins

With the second phase of the UK Government's Energy Savings Opportunity Scheme (ESOS) now underway, the Environment Agency has revealed that hundreds of organisations will be hit with large fines for failing to comply with Phase 1 of the mandatory scheme.

A newsletter sent out by the Environment Agency this week revealed that it has already issued more than 300 enforcement notices to non-compliant organisations, with around 200 more set to be issued penalties this financial year. 

And hundreds more organisations could be in line for fines – which can be as high as £50,000 – after incorrectly claiming that they did not qualify for the scheme upon the the ultimate ESOS Phase 1 deadline of 29 April 2016.

Call to action

There had been some speculation that ESOS, which requires all large businesses to produce reports on energy use and efficiency every four years, would be discontinued after the UK general election, having been placed under consideration by the previous Government’s 2015 energy efficiency tax landscape review.

Brexit had also thrown ESOS into a state of uncertainty, as the scheme was brought in as part of the UK’s implementation of the European Commission’s 2012 Energy Efficiency Directive, which may cease to apply after the UK’s departure from the EU.

But the Environment Agency’s newsletter confirms that the scheme will continue into its second phase as planned, and the body is now encouraging businesses to begin carrying out energy audits before the Phase 2 compliance deadline of 5 December 2019.

“If you know that you will qualify for Phase 2, there is no reason why you shouldn’t start doing your energy assessments now,” the newsletter reads. “You will not be able to carry out the assessment of your ‘total energy consumption’, as this has to include the qualification date of 31 December 2018. However, where you know that an energy supply will be included in your ‘significant energy consumption’, you can do the audit work on this supply.”

Significant savings

All organisations that undertook an energy audit as the compliance route for ESOS Phase 1 will have to repeat the exercise before the end of 2019. The ESOS audit needs to be based on at least one year’s energy measurement – which can be taken from any year-long period between 6 December 2014 and 5 December 2019 – but this cannot be the same data that was used last time around.

As with Phase 1 of the scheme, any qualifying organisation can become automatically compliant with ESOS by achieving certification to ISO 50001 energy management system, and providing evidence that they have done so.

Writing in a blog post on edie this week, Hugh Jones, managing director of the Carbon Trust Advisory, stated that taking early action to comply with ESOS can help qualifying organisations unlock significant financial savings brought about by greater energy efficiency.

“Cost-effective measures could usually cut energy costs in buildings, transport fleets and industrial processes by about 20% on a typical spend of £1.8m,” Jones wrote. “This translates into average annual savings of £360,000, with far more being possible in certain industry sectors.

“The earlier the opportunities are identified, the sooner energy saving projects can be implemented. So, getting moving on ESOS Phase 2 today will help organisations to minimise the risk of disruption during the compliance process and get maximum financial value from cost-effective energy efficiency.”

Luke Nicholls

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