ESOS Phase 3 Update: Requirements, Deadline, & How Organisations Can Benefit
Share on LinkedIn5 Jul 2023
Achieving environmental goals and obligations can be tough work for companies but can provide a myriad of wider benefits. As the Government rolls out compliance schemes to large businesses, many seek ways of gaining longer term commercial and environmental advantages. By addressing compliance schemes with proactive measures, businesses can become more socially and commercially attractive. Mandated energy schemes can also create large savings for companies, with more than 1 in 3 businesses achieving net cost savings as a result of the Energy Savings Opportunity Scheme (ESOS). With an extension to the current ESOS scheme, there is more time to identify and make energy and carbon savings.
Mandatory Compliance
Since 2014 the UK Government has been operating the Energy Savings Opportunity Scheme (ESOS) in order to meet the European Union’s legislative requirements under the Energy Efficiency Directive Article 8 (EED A8). The scheme is run every 4 years, consisting of a qualification date, compliance period and compliance date over the course of the final year. For ESOS qualification, a business must be considered large – 'large' being an organisation that either:
- Employs 250 or more people
Or
- Has an annual turnover in excess of £44 million, and an annual balance sheet total in excess of £38 million
These 4-year long periods are called ‘Phases’ and involve mandatory site audits, total energy calculations, and reporting of consumption and emissions from gas consumption, electricity usage, fleet car emissions and other applicable data. From the audits and resulting site reports will come recommendations. The limited timeframe to get audits and reports completed has businesses asking – can this help my business reduce carbon and costs in the long run?
As the current Phase (3) is taking place (period of 2019-2023), and with the compliance date fast approaching, stakeholders have raised concerns to the Environment Agency about meeting the deadline and requested an extension due to a number of key factors, including the strengthening of the compliance reporting requirements and an increase in associated workloads.
The New Deadline
The ESOS Phase 3 New Deadline - 5th June 2024 is now set to allow businesses more time to carry out assessments and identify recommendations to reduce energy costs and carbon emissions. Whilst the compliance date has been pushed back it is important to clarify that the qualification date remains unchanged - 31st December 2022.
However, with a new compliance date comes new requirements as the Government have expressed the intention to expand the compliance requirements for the reporting period. This means that although relevant stakeholders have received the extension requested, there is likely to still be more work to be completed. The shifting of the goal posts could have major consequences for large businesses as a greater level of scrutiny may be carried out by regulatory bodies and broader stakeholders. Until the Government have released the additional requirements relating to ESOS Phase 3 it will not be possible for notification of compliance to be sent to the Environment Agency.
Phase 4 – As we know it
With a wider remit on Phase 3, it is likely that these will roll forward to Phase 4 and businesses will, again, be asking – how can our company achieve compliance and also continue to benefit from the results?
The key aspect for qualifying businesses is in gaining the most benefit in having to comply with the legislation, ensuring they reap the benefits of having their sites audited by implementing the recommendations highlighted within the report. A targeted approach is a must to ensure companies gain the most from the compliance process.
Many industrial and commercial companies have created an environmental, social and corporate governance (ESG) policy, which is dedicated to climate change and reducing the organization's impact on the environment, i.e., carbon reduction or neutrality commitments by a specific date. Several of them have set ambitious targets for transitioning to renewable energy and compliance schemes such as ESOS can further support these goals.
How NUS Can Help
The NUS Consulting UK office has a dedicated team committed to Energy and Sustainability Services (ESS) in which we carry out energy and carbon compliance, support with implementation of onsite generation, meeting the requirements of the Energy Efficiency Directive Article 8 (EED A8), Energy Savings Opportunity Scheme (ESOS), Climate change Agreement (CCA), Streamlined Energy and Carbon Reporting (SECR) and much more.
If your company has not yet started ESOS Phase 3 compliance, please contact NUS to develop a plan for meeting the required elements of compliance.
More: Energy Market Commentary, Climate Change Agreement (CCA), Energy and Sustainability Services (ESS), Energy Compliance, Energy Efficiency Directive Article 8 (EED A8), Energy Savings Opportunity Scheme (ESOS), Streamlined Energy and Carbon Reporting (SECR)
