Pre-Budget: Rethinking the Energy Efficiency Taxation Landscape

With the energy efficiency taxation review just around the corner, it is expected that the CRC Energy Efficiency Scheme will be scrapped or at least changed significantly.  Below, we make three key predictions:

What are the key predictions for the upcoming budget review?

  1. A simpler energy efficiency taxation landscape: A single new tax based on the climate change levy and a single reporting framework
  2. Scrapping of the CRC Scheme
  3. Further developments based on ESOS supported by an incentivisation scheme to drive the implementation of improvement measures.

Moving away from the older policy environment, the translation of theory to practice will present new opportunities to utilise ESOS to spur the uptake of energy efficiency measures. Following on from our reflections on ESOS, it makes sense for businesses to develop strategies to address energy regulations in a coordinated fashion and to reap the benefits of a combined approach. A good example of this is having a combined approach to ESOS and MEES, where meeting minimum energy efficiency requirement aligns with the broader achievement of reducing energy costs in the building.

Please stay in tune for the budget announcement on the 16th of March 2016 and our post-budget review.

Links:

Reforming the business energy efficiency tax landscape

http://www.lse.ac.uk/GranthamInstitute/wp-content/uploads/2015/11/Consultation_reforming_the_business_energy_efficiency_tax_landscape1.pdf

http://uk.practicallaw.com/3-623-4911?source=rss#

 

 

Reflecting on ESOS: The Next Steps

Going forward, what are the prospects for ESOS? EVORA highlights the next steps for the scheme.

A Coordinated compliance and improvement approach?

EVORA recommend that clients should consider the establishment of a collective approach to address all regulatory risks and opportunities. It makes sense for example, for real estate businesses to develop a strategy addressing both ESOS and the Minimum Energy Efficiency Standards (MEES).

ESOS: a burden or an opportunity for businesses?

On the whole, we believe that businesses have found the compliance process more challenging than regulators anticipated. ESOS is new and businesses will certainly feel that they had a short period of time in which to prepare. Nevertheless, EVORA is already seeing evidence that assessment results are being incorporated into energy action plans. Overtime, ESOS has the ability to deliver the energy savings the UK industry needs. However, ESOS needs to form part of a structured and stable energy policy framework.

ESOS and ISO 50001

In the latest round of ESOS, only 0.9% of businesses chose ISO 50001 as a route to compliance. EVORA believes that, over time, an energy management system approach will help deliver the best results. However, the ISO 50001 approach is also the most time and resource intensive. Nevertheless we believe that, ISO 50001 will grow in popularity over time. The low level of initial uptake will have been restricted by the long time it takes to gain certification and the lack of available certification assessors.

For more information, Paul Sutcliffe will be speaking at the UK Green Building Council (UK-GBC) ESOS Showcase Event in London on the 15th of March. The link to the event can be found on the website: http://www.ukgbc.org/event/esos-showcase

Stay in tune for further updates on the energy efficiency taxation review budget to be announced soon!

Reflecting on ESOS: The EVORA Experience

Over the last six months, EVORA has supported a broad range of clients to meet ESOS requirements. Through our support programmes we have engaged with 27 companies from Real Estate to a Big Six energy provider.

Energy spend assessed equated to £55m and saving opportunities of £2.8m (5.2%)  where identified (this equated to 27,000 MWh per annum).

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ESOS routes to compliance

It was also interesting to explore the ESOS routes to compliance. From an analysis of all ESOS participants and responses to the notification questions (excluding personal data) across the UK and a selection of industry sectors, 65% of the notifications were made during or after December 2015.

The breakdown by compliance routes was as follows:

  • ISO 50001 – 0.9%
  • DECs – 5.3%
  • Green Deal – 0.2%
  • Audits -90%
  • De Minimus – 3.6%

Audits formed the main route to compliance; although ISO 50001 could become a popular option in the future.

EVORA predicts an increase in the take-up of ISO 50001, although significant time investment is required. This reflects the opportunities that energy management system frameworks present for target-setting and monitoring for continual improvement in the long-term.

How about transport?

This is often neglected since traditionally businesses have focused on health & safety when considering travel. Many opportunities exist including training, installation of tracking-systems, promotion of alternatives to travel including video conferencing and introduction of site-specific green travel plans. Focusing on transport could present new ways to achieve significant energy and cost reductions.

Please check out our Reflecting on ESOS: The Next Steps article for more on our reflections on ESOS and the next steps going forward.

For more information, Paul Sutcliffe will be speaking at the UK Green Building Council (UK-GBC) ESOS Showcase Event in London on the 15th of March. The link to the event can be found on the website: http://www.ukgbc.org/event/esos-showcase

Stay tuned for further updates on the energy efficiency taxation review budget on the 16th of March.

 

 

70% of organisations on the road to ESOS compliance

Latest figures from the Environment Agency show 6000 organisations have complied with the Energy Savings Opportunity Scheme.

In the two days before 29 January deadline, the agency received a further 1,015 notifications of compliance. This last-minute action reflected earlier fears of a slow start to compliance by organisations covered by the scheme.

More information via The Environmentalist

DECC launches Energy Innovation Consultation

A new consultation published by the Department of Energy and Climate Change invites the energy sector to contribute thoughts and ideas to encourage innovation across the sector.

The consultation is open until 11th February and asks the following three questions:

  • How can legislation and enforcement frameworks help support new technologies and business models to encourage growth?
  • How is new technology likely to shape the energy sector?
  • How can regulators better utilise new technologies to generate energy savings and reduce burdens on business?

The final Innovation Plan will be published in spring 2016.

More information via Business Green.

How Energy Efficiency Cuts Costs for a 2°C Future

A new report (from a consortium of groups led by Fraunhaufer ISI) — “How Energy Efficiency Cuts Costs for a 2° C Future” — analyses how energy efficiency policies and programs in Brazil, China, Europe, India, Mexico, and the U.S. can reduce the cost of economy-wide de-carbonisation by up to $250 billion per year for these regions, with no net cost to society through 2030.

About 40% of global greenhouse gas (GHG) emissions originate from energy use in industry, transport, and buildings, and another 25% from power generation (IPCC 2014). A highly efficient use of energy is thus fundamental to limit GHG emissions. Yet, energy efficiency receives much less attention than the de-carbonisation of the energy supply.

The report explains how energy efficiency can be a low-cost pathway to keeping global warming to the critical 2 degrees Celsius mark. They stress it’s benefits compared to a highly expensive energy intensive pathway that focuses primarily on de-carbonising energy supply with more limited energy efficiency policies to help achieve a 2° C future.

Read related articles via Greenbiz and ClimateWorks

FiT cuts: The Impact on the Solar Industry

The Department of Energy and Climate Change (DECC) is proposing to cut the feed-in tariff rates for solar PV installations by as much as 87%. Construction News looks into what this means for the Solar Industry.

Article can be viewed via Construction News here.

Regulatory Energy Regime under Review

Last week, the UK Government announced plans to review the business energy tax landscape to consider approaches to simplify and improve the effectiveness of the regime.

This message was circulated to all CRC, Energy Savings Opportunity Scheme and Climate Change Agreement participants (who have been further advised to continue to participate in the various schemes until further notice).

This news is in part welcome but also worrying.  Current energy legislation is confused and uncoordinated – this must be addressed.

By way of example, last year, the Government issued consultation on plans to (amongst other options) scrap use of Display Energy Certificates.  At the same time the ESOS scheme was in process of being rolled out.  One of the core compliance approaches referenced in ESOS is … use of Display Energy Certificates!

The structure of regulatory requirements surrounding energy is confusing and a revised coordinated, and structured approach designed to help business understand energy and carbon emissions, whilst appropriately incentivising improvement, would be welcome from me.

However, over-simplification will ultimately make UK business less competitive. Furthermore, if the Government take a similar approach to that taken for Zero Carbon homes plans last week (i.e. scrapping everything) then we should be very worried indeed.

The Government has committed to launching a formal consultation in the autumn and I strongly encourage participation.

 

GRESB Deadline Approaching!

With just over a month left before the submission deadline, there is still time to sign up for GRESB (Global Real Estate Sustainability Benchmark) and complete the sustainability survey that is fast becoming the benchmark for portfolio performance in the real estate sector.

EVORA has helped a wide range of institutional investors to complete the survey. Our experience and relationship with the GRESB team has enabled us to provide comprehensive client support. Our services extend beyond basic GRESB support. In many cases, we have worked with clients to improve sustainability practice and performance. This has been demonstrated by significant year on year improved GRESB results.

We can provide support to complete the submissions and understand your scoring, as well as develop a sustainability plan that will improve your future GRESB performance and align with your organisation’s key environmental objectives.

Our sustainability management software, SIERA, enables full GRESB Performance Indicator reporting. With SIERA, you have the confidence of a robust database to hold and model your data, combined with the familiarity and flexibility of Excel for all your reports.

Contact EVORA today to discover how we can help with GRESB and other sustainability benchmarks.

info@evoraglobal.com


GRESB Premier PartnerAs a GRESB Real Estate Premier Partner, we are perfectly positioned to provide GRESB support. View our official Premier Partner profile.

We can work with you to complete the submission and understand your scoring, as well as develop a sustainability plan that will improve your future GRESB performance and align with your organisation’s key environmental objectives.

SIERA: Your Perfect Software for GRESB

Transform your GRESB data capture and reporting with SIERA, a powerful sustainability and asset management software tool designed for the real estate industry.

SIERA manages environmental data for billions of pounds worth of real estate and is being rapidly adopted by organisations across the globe.

“We chose SIERA because it has been specifically designed for the commercial real estate investment market. It is practical and intuitive to use and helps simplify the many complexities of sustainability analysis and reporting, especially GRESB.”

Charlie Jacques, Head of Sustainability

Schroder Real Estate

Learn more

SIERA EPC reporting image

SIERA is a practical, innovative and simple environmental management software system, designed to deal with today’s stringent reporting requirements.

SIERA holds all your environmental data in one secure database with powerful validation tools to ensure the accuracy and completeness of your data. Intelligent modelling capability achieves a range of reporting requirements, which are otherwise complex and resource-intensive to produce such as GRESB and CRC.

And while you can be confident you have a unique and robust database to hold and model your data, all reports are fully formatted into Excel, giving you familiarity and ease of use.

Find out how SIERA can transform your environmental data capture and reporting.

Contact Chris Bennett, Founder & Managing Director

cbennett@evoraglobal.com

+44 (0)7810 631 599

+44(0)20 3326 733

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