The Environment Agency has effectively extended the deadline for Esos submissions by confirming that firms are unlikely to face punitive action provided they have complied by 29 January. It has also confirmed that only the most serious cases will face civil penalties.
Legally the deadline remains 5 December and firms must complete an Esos audit and notify the Agency by then or be in breach of the regulations. However, the amendment to the Esos guidance, updated yesterday (8 October), now says companies will “not usually” face fines if they notify the Agency of compliance by 29 January and stick to the original deadline for notification of late completion.
Companies will be able to disclose their non-compliance via a form which the Environment Agency hopes to soon make available.
It is inevitable that thousands of businesses will miss the December deadline, given that at the end of August only 152 had complied of 14,000. Today, the Agency confirmed that 371 companies are compliant.
Assessors are unlikely to be able to manage the outstanding volume of audits within the remaining time frame and industry participants have begun to question whether Esos can actually be enforced.
The Environment Agency confirmed today that penalties for thousands of firms are highly unlikely. But it wants businesses to take the initiative and discover how no- or low-cost energy efficiency measures could significantly reduce their energy bills and carbon emissions.
“We plan to normally use enforcement notices where necessary and serve civil penalties only in the most serious cases,” a spokesperson told The Energyst.
However, Esos is a European-led initiative and therefore not something the government can currently ignore. The recent HM Treasury consultation on green energy taxes suggests that Esos may yet become central to broader business energy tax and energy efficiency policy.
Part of the consultation also raised the prospect of better financial incentives for energy efficiency.
Options mooted in the consultation include feed-in-tariff style subsidies, supplier obligations and competitive fund allocation. The consultation also hinted that “government could match-fund’ investments in energy efficiency and low carbon measures; and/or that there could be a link to audits (e.g. ESOS) whereby businesses could claim an incentive to cover the cost of implementing actions highlighted by audit reports, or in return for more reporting”.
The consultation states that government is open to considering such proposals, which would be funded through increases in taxation and would have to represent best value for money.
Businesses and energy managers will likely welcome any such moves.
A spokesperson for the Environment Agency told The Energyst in a statement:
“The 5 December 2015 deadline for compliance is set in the EU Energy Efficiency Directive and the Energy Savings Opportunity Scheme (ESOS) Regulations 2014 and cannot be changed.
“However, we are listening to the concerns of businesses and are aware that in some instances firms may struggle to meet this deadline and, as regulators, we are able to waive or modify enforcement action and penalties. The regulations have not changed, this is about giving organisations clarity about how we will look to enforce them.
“Organisations that believe they cannot comply fully by 5 December 2015 will need to inform us of this by the same date via an online portal, giving information on why they have been unable to comply and when they expect to submit their notification of compliance. We will be issuing an online form to do this in due course.
“We do not expect to normally take enforcement action on organisations that submit an ESOS notification of compliance by 29 January 2016 providing they have told us by the 5 December that they are going to be late.
“We will look more favourably on firms that can show that they have taken serious and timely steps towards compliance so organisations should do as much as they can before the deadline even if they know they will not be in a position to comply fully by 5 December 2015.
Such steps could include:
- Evidence of booking an ESOS lead assessor
- Starting to collect or analyse data for ESOS
- Beginning to conduct site visits for an assessment
“Where an organisation submits a notification after 29 January 2016 the situation will be reviewed on a case by case basis. We plan to normally use enforcement notices where necessary and serve civil penalties only in the most serious cases.
“We are continuing to work constructively towards measures that benefit participants and the environment. Government has calculated that if businesses covered by ESOS reduce their energy use by just 0.7 per cent, they will save around £250m each year.”