Do you know the letter of the law for business energy?

An electric car connected to a charger
Clean working: businesses are being urged to reduce their emissions Credit: Getty

The UK has a legally binding target to reduce greenhouse gas emissions by 80pc by 2050. In the UK, it is estimated that business activities account for about half of all emissions, meaning companies and organisations have an overwhelming responsibility to address their energy efficiency.

The recent mandatory Energy Savings Opportunity Scheme is a comprehensive review and assessment of the energy consumption of UK businesses.

Those that qualify for compliance must appoint someone from the ESOS lead energy assessor register to conduct a review, which will produce a report measuring the total energy consumption for the business.

That includes buildings, industrial processes and transport. The assessor will recommend energy-efficiency measures, opportunities to cut wastage and flag any compliance issues with the Environment Agency.

Those that qualify for compliance must appoint an ESOS lead energy assessor register to conduct a review

ESOS regulations apply to any large UK business that employs 250 or more people and has a turnover of at least £38,937,777. While most public-sector bodies are excluded, many universities may qualify.

But while ESOS goes some way to ensuring that the larger users audit their energy, there is little in the way of statutory enforcement when it comes to doing anything about the results – it’s up to businesses and their energy partners to turn recommendations into energy-saving actions.

Worryingly too, research by YouGov and the Telegraph on behalf of E.ON reveals a surprising lack of awareness of the scheme among businesses, with 76pc of executives confessing to never having heard of it.

Measuring – and reducing – your business’s energy output is not only good for the planet, it can help you generate new business, build better relationships with customers and your supply chain, and make serious impacts on the bottom line, too. In a 2015 global CSR (corporate social responsibility) survey, 84pc of consumers said they sought out responsible products whenever possible, making a greener business a more appealing one.

More than that, reducing your energy usage and increasing the on-site generation of energy lowers a business’s exposure to energy price hikes in the current (and future) turbulent market, and lowers the long-term risk the business faces in the process.

But above and beyond these sensible reasons for increasing efficiency and cutting energy waste is a range of legislation and expectation that can vary dramatically, depending on what business you’re in.

Those are the rules

Energy rules and regulations can affect the way you approach energy innovation. For instance, if your business uses 33kWh power/145kWh of gas a day, you may have to pay the Climate Change Levy energy tax, which exists to encourage business users to become more energy efficient, and reduce their carbon dioxide emissions.

Reducing your energy usage and increasing the on-site generation of energy lowers a business’s exposure to price hikes in a turbulent market

Although choosing to use energy from a low CO2 source – such as solar, wind, geothermal, landfill gas or CHP (Combined Heat and Power) – doesn’t itself grant exemption from the Climate Change Levy (this was removed in August 2015 by the Government), as the costs to do so go down, it’s even more important for businesses to consider options such as on-site generation in order to lower the demand they place on the grid.

What’s more, businesses can benefit from on-site generation by selling any excess energy back to the grid, potentially creating a new income stream.

While the Government isn’t offering such incentives any more, some businesses are eligible for grants from other sources to make energy savings. For example, the Carbon Trust has recently launched the Green Business Fund, a national scheme to provide money and support for smaller businesses to replace their old equipment.

Building regulations

A key piece of paperwork for commercial landlords is the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015. This introduced measures to improve the energy efficiency of rented properties in England and Wales. These regulations cover domestic and non-domestic privately rented property.

As of 1 October this year, all private rented properties (including office space) must now have a minimum energy performance certificate of band E (the national average), and landlords are not permitted to take on new tenants without making these changes. All buildings requiring an Energy Performance Certificate (EPC) are obliged to comply. Building Energy Management Systems can create detailed feedback on how a building is performing, allowing you to work towards lower running costs and more efficient maintenance.

Manufacturing facilities

MCERTS (the monitoring certification scheme) is the Environment Agency’s standard for equipment, personnel and organisations. If your type of business means that you need an environmental permit, you have to comply with the standards specified within it, depending on the industry you’re working in or the chemicals you’re working with.

Building Energy Management Systems can create detailed feedback on how a building is performing, allowing you to work towards lower running costs

The permit relates to current directives regulating industrial emissions, monitoring data, equipment and personnel. Elsewhere, tools such as the E.ON Energy Toolkit allow you to track how much energy you’re using across business sites.

Vehicles and emissions

All businesses listed on the LSE’s Main Market are required to report their greenhouse gas emissions in their annual Director report, in accordance with Climate Change Act requirements. That includes transport and employee travel across its various scopes, and companies need to establish the emissions under their control, report emission levels and an emissions intensity ratio, such as turnover or tonnes per km.

You can measure your business’s greenhouse emissions through business travel, owned or controlled vehicles and staff commuting. To calculate the greenhouse gas emissions associated with each activity, you will need to convert your own data using emission factors, which can be calculated using the formula: “data x emission factor = greenhouse gas emissions”.

You can do this using the greenhouse gas conversion factors and spreadsheets of the Department of Energy and Climate Change (DECC) and the Department for Environment, Food & Rural Affairs (Defra). These are updated annually and convert supplied data into kilograms of carbon dioxide equivalents. The Carbon Trust also has a carbon calculator tool on its website, which also uses the DECC/Defra conversion factors.

Another option is to change your transport method entirely. The Go Ultra Low scheme is a joint government and industry campaign aiming to help motorists and fleets understand the benefits and cost savings of electric vehicles (EVs). Sixty-five organisations have pledged to increase the number of electric vehicles by 5pc in their fleets by 2020. The initiative incorporates any vehicle eligible for its plug-in grant scheme, which provides grants towards the cost of a range of different types of EV.

Registered EVs increased by more than 45pc in the first half of 2016 compared with the same period the previous year and, according to the Society of Motor Manufacturers and Traders (SMMT), businesses have made up 72pc of the registrations volume for the year so far.

Opting into a scheme such as this can offer your business a competitive advantage, both financially and in terms of your reputation. Electric cars and vans are cheaper to run than petrol or diesel vehicles, they benefit from tax breaks, low fuel costs and currently come with a sizeable grant.

The Go Ultra Low scheme reports that businesses that already operate electric vehicles are saving £1,250 a year per vehicle. And with the publication of the Government’s Mission-Led Business review in the offing (putting social impact further up the executive agenda), switching to low-energy schemes could be a breath of clean air for your business’s branding strategy.

Download a free energy report here and for more information on energy saving solutions, visit eonenergy.com

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