Until 3 October 2013 the UK Government is consulting on the implementation of Article 8 of the EU Energy Efficiency Directive 2012/27/EU which requires the promotion of the availability of high-quality energy audits designed to identify energy-saving recommendations, and imposes an obligation on all Member States to introduce a programme of regular audits for “large enterprises”. It is proposed that “large enterprises” are those: (i) employing over 250 full-time equivalent employees (ii) with an annual turnover exceeding €50 million and/or an annual balance sheet total exceeding €43 million and (iii) which are registered for VAT/PAYE.

Whilst many organisations may have reviewed energy use in buildings an interesting aspect of the consultation is that the audit must also cover industrial processes and transportation. The extent to which such audits must be disclosed is raised in the consultation and it is not inconceivable that they may form part of company reporting or be disclosable to the public depending on legislative developments in the future.

Energy Audits

Minimum criteria

The minimum criteria require energy audits to:-

  • be based on up-to-date, measured, traceable operational data on energy consumption and (for electricity) load profiles;
  • include a detailed review of the energy consumption profile of buildings or groups of buildings, industrial operations or installations, including transportation (this may include building fabric, lighting, heating systems, vehicle types and fuel efficiency and process review);
  • build, wherever possible, upon life-cycle cost analysis instead of simple payback periods in order to take account of long-term savings, residual values of long-term investments and discount rates; and
  • be proportionate, and sufficiently representative to permit the drawing of a reliable picture of overall energy performance and the reliable identification of the most significant opportunities for improvement.

Energy audits are to allow detailed and validated calculations for the proposed measures so as to provide clear information on potential savings.

The data used in energy audits shall be maintained for historical analysis and tracking performance.

Frequency

Energy audits must be undertaken by 5 December 2015, and then at least every four years from the date of the previous audit.

Scope for flexibility

While the Directive prescribes the minimum criteria, there is some limited scope for flexibility and interpretation. Member States may create more comprehensive requirements and may choose the form of the implementation.

UK Consultation

The UK Government’s proposed approach to implementing Article 8 is through the establishment of the “Energy Savings Opportunity Scheme” (“ESOS”).

The consultation seeks views on how to develop the scheme. It includes a number of options on compliance reporting of ESOS assessments. Depending on the compliance route chosen, organisations may need to notify the scheme administrator that they have conducted an energy audit. The consultation also raises questions on whether and how disclosure of the findings and responses to the audits should be made.

Extent of ESOS assessments

It is proposed that the scope of ESOS assessments will extend to:

  1.  buildings (it is estimated that up to 200,000 buildings may be affected);
  2.  industrial processes and use of energy (including where it is directly produced by an  organisation). Of course some larger industrial and trade facilities will already be covered by  environmental /PPC permits which contain energy efficiency requirements (including 4 yearly  reviews); and
  3.  transportation (fleets of vehicles and energy usage from international aviation and shipping).

The consultation should be of interest not only to large enterprises but also to property investors, owners, lenders and those operating in the energy efficiency market. SMEs will be able to carry out ESOS assessments on a voluntary basis.

Exemption

The Directive provides an ‘exemption’ from the energy auditing requirement for ‘enterprises that are implementing an energy or environmental management system certified by an independent body according to the relevant European or International Standards’, the principle being to avoid double regulation. On this basis, the Government proposes that any organisation with a current EN ISO50001, EN 16247 or ISO14001 certificate would be deemed in compliance with ESOS (providing the approach taken to ISO14001 has included an energy audit that meets the minimum standards of the Directive). Whether the Carbon Trust Standard is so recognised is a question raised in the consultation.

The consultation closes on 3 October 2013. It is available here.

Katy Abrahams