MPs propose ESOS overhaul amid “failing” UK energy efficiency policy

A select committee has advised energy efficiency measures be made mandatory for UK organisations in order to drive business investment in carbon reduction.

The Energy Saving Opportunities Scheme (ESOS) is one of several keystone energy efficiency policies that MPs have warned must be drastically overhauled if the UK is to meet its emissions reduction targets, including net-zero by 2050.

A report by the Business, Energy and Industrial Strategy (BEIS) Committee states that improving the energy efficiency of buildings will be vital to meeting climate change obligations, however concludes that the UK government is currently way off-track to meet these targets due to “failing policy”.

Highlighting that our UK building stock remains the most inefficient in Europe due to shrinking public investment and falling installation rates, the report says that if Government does not give greater backing to energy efficiency – one of the cheapest ways to reduce our carbon emissions – then “it will not bode well for the other, costlier actions required for decarbonisation.”

The BEIS committee concludes that energy efficiency is a “national infrastructure priority” and calls on the Government to designate it as such, making it clear that if it is serious about achieving its climate targets, then it will need to fill the substantial investment gap and allocate more central funding for energy efficiency.

Energy Savings Opportunities Scheme

Besides calling for more robust building regulations, including ratcheting up of the minimum energy efficiency standards, the mandating of operational performance ratings, and improved standards for new commercial buildings, the BEIS committee recommends an overhaul to ESOS.

A key policy towards building awareness and stimulating the uptake of energy-efficient measures amongst businesses, ESOS mandates large organisations in the UK to undertake comprehensive assessments of energy use and energy efficiency opportunities at least once every four years.

However, qualifying organisations are not legally obliged by ESOS to carry out any of the opportunities identified, leading to concerns that businesses treat the scheme as an “administrative burden”, rather than an opening to realise energy savings.

Though measuring the success of ESOS has proved challenging due to a lack of public information on the scheme, available evidence indicates that just five per cent of businesses are taking forward their audit recommendations in full.

Therefore, the BEIS committee suggests the Government should “improve the Energy Saving Opportunities Scheme so that it is more obviously geared towards driving business investment in energy efficiency.”

These improvements would mandate qualifying businesses to:

• demonstrate that they have acted on the energy saving opportunities identified; and
• make their ESOS audits publicly available.
  

What does this mean for businesses?

Though the purpose of the BEIS Committee – a group of MPs selected to examine UK energy policy – is to offer recommendations only, pressure on the government continues to build from within parliament and the wider public for stronger climate policy, especially since the announcement of the net-zero carbon 2050 target.

The speed with which the UK government reacted to the Committee on Climate Change’s report on net-zero 2050 in particular – enacting the CCC’s recommendations within a matter of weeks – goes to show how much sway government advice groups can have, and how quickly things can turn around if there is the willpower.

While the net-zero 2050 target only really amounts to a written pledge from government – enabling it to be enacted as swiftly was – the overhaul of major energy efficiency polices like ESOS will likely take much longer to legislate.

However, if government and businesses are serious abount meeting carbon commitments and avoiding the most catastrophic impacts of climate change, we all need to be prepared for these changes to happen.

The SMS View

It remains to be seen whether ESOS-qualified organisations will be obligated to implement their energy saving opportunities following the current ESOS Phase 2 period, however – given the BEIS committee’s strong recommendations – it cannot be ruled out.

Though this would put extra pressure on large UK businesses with regards to compliance, it is something that we – as an ESOS-qualified organisation – believe should be roundly welcomed.

The onus remains on the government to lead decarbonisation through strengthened policy and investment, however the private sector too has an increasing responsibility to reduce carbon emissions through improved energy efficiency.

Environmental impact isn’t the only issue to consider. The cost of modernising and decarbonising our energy system is being passed on to businesses and consumers through rising energy bills and is therefore set to increase financial strain on organisations over the next decade.

Investing in energy efficiency now will make your organisation more financially and environmentally sustainable in the long run, lessening your exposure to costs, as well as reducing your contribution to climate change.

Are you an ESOS-qualified organisation? Contact us for more advice on how  these potential changes to ESOS and how it might affect you.

At SMS, we are committed to helping business customers improve their understanding of energy performance in their operations and to plan energy reduction programmes. Through high-grade energy audits and consultancy, we make achieving compliance with regulations such as ESOS an integral element of a wider energy management strategy.