What has happened?
The government is under pressure on many fronts, not least of them being the state of the environment and, specifically, its commitment to get to Net Zero by 2050, (whatever that may mean).
In an effort to increase the carbon reductions being made by companies, the government issued a public consultation on ESOS last year, and have just published their intended changes to the scheme.
These changes have not yet been fully specified, but they have been outlined. As such, some of what is included in the paper may change in the fullness of time.
What’s changing in ESOS Phase 3 (2023)?
The government has proposed that the following changes will apply for ESOS Phase 3:
- A new section of the ESOS report that will have to include the compliance related information in a specific templated format.
Action required: None, the Enistic platform will automatically generate this for you.
2. The amount of data that you can include without any investigation or analysis has halved from 10% to 5% of your total energy use.
Action required: Most Enistic clients have good records and will be below the new threshold anyway. 1 or 2 will need to improve their record keeping in fringe areas which is typically where these problems lay, for example fork-lift use, oil based heating in occasional buildings etc.
3. Reporting an energy intensity, such as XYZ kWh per sqft.
Action required: None, Enistic do this anyway as a matter of routine.
4. Sharing the final ESOS reports with subsidiaries.
Action required: In most cases companies share the information with all parts of the group anyway (including subsidiaries) so no further action is required.
5. Action plans
a. Provide more information about the next steps to be taken to reduce energy use; and
b. Set out a plan on how you will reduce your energy use; and
c. Report back next time (2027) on your success (or otherwise) in meeting the targets set out in the plan
Action required: With most clients, we will need to formulate an action plan with you to reduce your energy.
For clients on a Science Based Targets or TCFD track you will not need to do anything as these aspects are already adequately covered.
For clients on a Carbon Reduction Plan or PPN 06/21 track, we will need to work with you to ensure that the projects defined in the Enistic platform truly represent of what you intend to do as this will be checked in 2027. We will contact you later in the process to ensure this task is carried out correctly and your resultant carbon reduction plan stands up to scrutiny.
6. Collecting and disclosing far greater deal of detail surrounding your estate and energy use. This includes how many sites you have, what energy savings measures you have implemented already, the split of your energy by fuel type, by site, what type of buildings you have in your estate, etc.
Action required: We will need to discuss some of these aspects with you in more detail but as the Enistic platform already automates much of the required additional analysis, the majority of Enistic clients are in a good place and well prepared to fulfil these additional obligations.
7. Increased scrutiny of the quality of your ESOS Assessment and the work of your ESOS Lead Assessor.
Action required: None. We’re pleased to say that as Enistic is a Tier 1 provider of ESOS Services, Enistic easily pass any scrutiny in this regard.
8. Not really announced last week, but please remember that the Environment Agency have increased their maximum level of fines to £235,000 and have changed to a “fine first, ask questions later” model.
Action required: Please don’t ignore the ESOS process. We will help you through it and do the majority of the required analyses but, with these additional requirements, it will take time and if you allocate insufficient resources to it or leave it too late you may have difficulties meeting the deadline (5th December 2023).
What is happening in ESOS Phase 4 (2026/27)?
Frankly, it’s anyone’s guess. The changes announced last week are a good starting point but fail to address the carbon reduction problem, focussing primarily on only energy reduction.
To illustrate this, consider one of my clients that takes over 1,000 business class flights each year to the Far East. None of the flights or the associated carbon of hotel stays, entertaining clients, or taxi fares are considered in ESOS. So long as they reduce the electricity used in their buildings and reduce their occasional drives between offices or to UK clients, they will be seen as whiter-than-white in respect of ESOS whereas this is clearly not the case.
As such, we should expect the inclusion of other carbon factors to be brought in to either ESOS Phase 4 or SECR. It’s somewhat perplexing that they have been omitted so far, so look out for them next time.
As ever, if you have any questions, please don’t hesitate to ask and once the changes are finalised I will update you again.
Darryl Mattocks.
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