Climate Change Policy Manager, Freight Transport Association Rachael Dillon Climate Change Policy Manager, Freight Transport Association

ESOS – countdown to 05 December, 2015

Agenda What’s ESOS? Policy landscape Main requirements Role of Lead Assessor Link with LCRS FTA ESOS Transport Audit Take action now!

What’s ESOS? UK response to EU Energy Efficiency Directive All large enterprises must conduct energy audits every four years covering buildings and transport, with the first taking place by 5 December 2015 Includes freight – where company purchases the fuel

Policy landscape Expected to cover over 10,000 UK organisations Adopting energy efficiency measures could deliver £2.8 billion savings a year Seen as relatively light touch to deliver energy savings BUT crowded area – CRC, Mandatory GHG reporting Concern over availability of auditors and rush to meet first deadline Lack of clarity on audit detail DECC confident demand will be met

Who’s in scope? Companies in scope…. More than 250 employees in the UK or Fewer than 250 employees but…. An annual turnover exceeding €50m (£39m)and A balance sheet exceeding €43m (£33.5m) Public sector exempt Don’t forget subsidiaries A 50 employees B C 300 employees Example 1 A is the parent of B and C. Together they form a corporate group together C qualifies as a large undertaking for the purposes of ESOS Because A and B are in the same corporate group as C, which is large, they must both also comply with ESOS Example 2 A does not qualify for ESOS because it is not an undertaking in the UK C qualifies as large undertaking for ESOS. Because B and C are in the same corporate group, by virtue of A being the parent, they must comply with ESOS Highest parent expected to take lead responsibility – you can take part separately as a subsidiary but you have to advise EA

How does ESOS work? Measure energy use (12 months) Appoint Lead Assessor Identify energy efficiency and energy management opportunities Store data and notify scheme administrator Implement savings and further disclosure in annual report Mandatory Voluntary

How does ESOS work? 90% of energy usage must be covered (de minimis rule) Companies required to appoint ESOS lead assessor to review and sign off audit Minimise cost by using in-house experts, using existing audits and schemes e.g. LCRS, CCAs, CRC, Mandatory GHG reporting ESOS lead assessor must be on a register with Professional Body that is approved by the Environment Agency e.g. Energy Institute ISO 50001 meets requirements There are 15 registers

Transport – new area for audit First time that transport has come into scope of legislation Transport will be fundamental part of some companies’ ESOS audits LCRS identified by DECC as a way to compile transport data for ESOS in Government best practice guidance Roadshow views Assessing scope of de minimis use is seen as a challenge Transport – ESOS might prompt them to develop new methodologies and practices

Transport specific requirements In scope Outside of scope Purchased fuel for hgvs/vans Company cars Grey fleet where company pays employee for using their vehicle on business UK part of international road journeys, though the entire journey can be covered For rail, aviation and shipping operators: Purchased fuel for trains, aircrafts and ships Fuel purchased either in the UK or overseas for all journeys that start and/or end in the UK, though the entire journey can be covered Any transport services that are sub-contracted to others (ie the company does not purchase the fuel for journeys) Personal use of company cars Staff commuting Train trips and flights - as no control over fuel for these journeys

Role of Lead Assessor As a minimum, ESOS Lead Assessor must approve and sign off company audit PAS 51215 In reality, may need more than one…. Use in-house expert – suitably qualified Company is liable for non-compliance Roadshow Lot of compliance work could be done internally without significant technical knowledge and before appointing a lead assessor A lead assessor must review your ESOS assessment before it is submitted to EA, there is no requirement that the lead assessor must be the same throughout your assessment process For in-house, must have a final assessment approved by at least 2 board level directors Government expectation that an Assessor can specialise across buildings and transport

FTA ESOS Offering LCRS recommended in DECC best practice guidance to help compile data for ESOS and take action to reduce energy in transport. FTA consultancy can help identify a plan of action and the best steps to meeting ESOS requirements FTA has a team of assessors that can provide specialised freight transport audits to ensure you meet compliance with ESOS FTA accredited ESOS Lead Assessors Working with buildings energy consultants

The audit No defined methodology BS EN-16247 known industry standard Lead Assessors would expect to assess Fuel consumption/efficiency Driver fuel performance/training Routing and scheduling Tyre management Aerodynamic improvements Reduction of empty running

Site visits Number of site visits should be sufficient for Lead Assessor’s audit to be complete and accurate Use sampling approach – identify types of site and visit one in each group Retain justification for why you did this

Prepare evidence pack Director sign off Details of Lead Assessor Total energy consumption De minimis allocation Routes to compliance Audit approach Hold on file

Notify Environment Agency Note Scottish Environment Protection Agency, Northern Ireland Environment Agency and Natural Resources Wales responsible for regulating ESOS in their respective devolved regions e.g. checking compliance and taking enforcement action where applicable

Take action now! 5 December is a Saturday! So 4 December 207 days to go Comply and explain Reasonable estimates for first phase can be made if actual data is unavailable Penalties of up to £50,000 for failure to meet ESOS requirements Non-compliance could be made public

And remember it starts again Phase Qualification date: Four-year compliance phase: Compliance date: Phase 1 31 Dec 2014 6 Dec 2011 – 5 Dec 2015 5 Dec 2015 Phase 2 31 Dec 2018 6 Dec 2015 – 5 Dec 2019 5 Dec 2019 Phase 3 31 Dec 2022 6 Dec 2019 – 5 Dec 2023 5 Dec 2023 Compliance briefing note in delegate pack FTA ESOS offering Contact – rdillon@fta.co.uk

Logistics Carbon Reduction Conference 2015