Energy audits directive & ESOS: have you considered your group’s other entities?

The Energy Savings Opportunity Scheme (ESOS) regulation is the UK’s response to Article 8 of the EU Energy Efficiency Directive (EED). The EED is a European-wide Directive which mandates that all large EU organisations must undertake a number of steps, including performing energy audits, once every four years on 100% of the energy the organisation consumes. All qualifying organisations will have to comply with Phase 2 by 5th December 2019. Whilst the EED applies to every EU Member State, there is a degree of flexibility for Member States in terms of qualification criteria, the percentage of energy which must be audited and so on. Requirements therefore vary from one country to another, which can make it difficult for pan-European organisations to understand their what they need to comply with and how best to proceed.

If your group has activities across the EU, you may want to coordinate across your European entities, to evaluate where you need to comply, assist those qualifying regions with their response and ultimately ensure your organisation meets its legal obligations in each market. Some of the key variables from Member State to Member State include:

Compliance threshold

Whilst the qualification thresholds are broadly based on the financial performance or headcount of the business, the specific threshold and relevant organisational boundaries for compliance are different from one country to the next, so it is worth checking whether you are caught in multiple Member States. For example, whilst in the UK you need to meet the qualification thresholds with regards to headcount and financial performance, in Sweden you qualify if you are part of a group which meets the qualification thresholds elsewhere. Similarly, the UK legislation requires the turnover to be over 50M Euros and the balance sheet to be over 43M Euros to be caught. France only requires one of the two, for instance.

It is also worth noting that in France, unlike in the UK, aggregated numbers are the ones taken into account to determine whether organisations need to comply. So, for example, a consolidated set of accounts is used in France, not in the UK. In countries with similar requirements, separate entities that are below the threshold should still check whether they are caught, as they could be above the threshold when aggregated with other entities in the same country.

Energy audits

The percentage of energy that needs to be audited varies: 90% in Germany and the UK, versus 65% in France this time round, going up to 80% next time.

Requirements for the energy auditor specify certain levels of experience and sometimes a qualification from a national body. Spain requires a certificate from the Entidad Nacional de Acreditacion (ENAC), whilst registration with the nominated body BAFA in Germany is not mandatory. Outside of the UK, many other Member States don’t mention the need for a Lead Assessor in their legislation.

In all EU countries, large organisations with an ISO 50001 management system are exempt from carrying out energy audits – with the caveat, in some countries like Italy, that the management system itself includes energy audits.

Reporting compliance

Regardless of whether you are supporting entities in other EU Member States, your compliance response should be done on a country-by-country basis. In the UK, your organisation can choose whether it wants to aggregate with other UK entities that have the same parent organisation as you, and report together to the Environment Agency.

We have worked with many clients to:

  • Review European-wide operations, engaging internal stakeholders to obtain relevant headcount and financial information
  • Assess which Member States the organisation needs to comply in based on our in-depth understanding of the intricate requirements of each country
  • Designed a compliance plan laying out the specific obligations in each country, the different routes to compliance (i.e. ISO 50001 vs energy audits), key deadlines, penalties and the required steps to achieve compliance.

We are already offering our support to large companies with entities across several EU Member States. We can help you too to navigate your way across compliance in different EU countries. Get in touch at 0207 048 0450 /  esos@carbonsmart.co.uk to find out what you need to do to comply. 

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