ESOS and business change

The Energy Savings Opportunity Scheme (ESOS) is a mandatory energy assessment scheme for organisations in the UK that meet certain qualification criteria. It requires organisations to conduct an energy audit of their operations and to produce realistic initiatives to promote energy efficiency. The deadline for the first compliance period was the 5th December 2015.

However, what happens if your business undergoes a significant structural change? Perhaps a merger or sale of part of the whole business. In short, you will be relieved to hear that you do not have to do anything. As long as the business structure and the undertakings covered were correct at the time of notification you have nothing to worry about according to the Environment Agency.

This is because ESOS operates through compliance periods, the next qualification date being 31st December 2018 for the second compliance period which runs from 5th December 2015 to 5th December 2019. This model is similar to the Carbon Reduction Commitment (CRC). Therefore, any business changes will be accounted for in this second period.

Of course, whether ESOS continues in its current form is debatable. As part of the UK government’s drive to reduce the burden on business, it was announced in the March 2016 budget that the CRC was to be closed following the 2018-19 compliance year. The lost revenue would be made up for by increasing the Climate Change Levy (CCL) from 2019. Interestingly, this will increase energy costs for ALL businesses whereas the CRC only affected organisations using 6000 MWh or more on settled Half-Hourly meters.

The original thinking was that a mix of carbon compliance requirements on businesses including CRC, CCL, ESOS and the mandatory reporting of greenhouse gas emissions by listed companies would be integrated into a simpler framework around ESOS. However, with the looming Brexit from the European Union the regulatory landscape will remain uncertain for a considerable time to come.

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