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Turn Pain Into Gain: EED/ESOS Compliance

Published Date
Author Jenna Bieller

Compliance with EED/ESOS can be hard, Schneider is here to help

Below is an example of one of 300+ enforcement notifications on EED/ESOS[1] compliance sent out in the United Kingdom (UK) before the summer break and there are, no doubt, more to come. In the UK, only 15% of affected organizations were compliant with energy audit obligations ahead of the Phase 1 deadline in 2015. The majority had to undertake remedial actions, or did not engage with the scheme at all. Experts report that this high rate of non-compliance is consistent across the entire European Union (EU). Excerpt from an Notification letter sent from UK`s Environmental Agency ESOS Compliance Enforcement Team

In large part, businesses were not at fault; EED’s Article 8 energy audit obligation went into effect with very short deadlines, leaving organizations almost no time to coordinate the necessary resources and budgets. The late rush for EED audits also impacted the availability of consultants and vendors, leaving even companies with an implementation plan in non-compliance.

With Phase 2 deadlines fast approaching, regulators have assumed that companies learned their lesson the first time around. Thus, the level of enforcement is expected to be greater in most EU countries. Transposed national legislation, firm guidelines and practical tools now established provide a stable legal framework in almost all countries, which means companies should take immediate action.

Be aware of key changes for EED Phase 2

It’s critical for all business to be aware that affected organizations and requirements in Phase 2 are different from Phase 1; companies should not assume the same actions will suffice. Many EU countries have taken the opportunity to update national regulatory requirements, meaning compliance will continue to be complex this round. In fact, 13 out of 28 countries updated their legislative requirements after 2016.

Consider Greece, where new regulations on energy audits, effective May 2018, resulted in a change of qualification rules and obligation requirements for large companies. The deadline to carry out audits has been pushed back until late 2018, and companies are expected to review their historical audits to ensure compliance with the new regulation. The Netherlands has only temporary regulation in place on energy audits, with new regulations expected in late 2019. This situation leaves many questions for how to comply with Phase 2 audits.

Varying timelines across Europe add an additional layer of challenges. While December 2019 is the date most companies have in mind, the actual phase 2 deadline to comply in most countries is four years from the date of the first audit. In addition, some countries have announced their own timelines. Sweden has provided two options to comply: either A) completing audits over a four-year period and reporting annually on progress; or B) auditing and reporting once in four years, with the next deadline to report by March 2021. This will likely create a scheduling predicament for those with a complex site portfolio across multiple countries.

Prepare data early to overcome the complexity of EED

Despite the country by country complexity, the main framework for EED is well established. The key to success is taking action well before deadlines. The first step is to ensure data availability across your portfolio, which will likely take 4 to 6 weeks on average. Data collection should start immediately as some countries have approaching deadlines. In the UK, for example, the qualification date for ESOS Phase 2 is December 31, 2018. If an organization meets the qualification criteria by this date, then it must participate in the scheme and measure energy consumption across a 12-month reference period including this date. To avoid the late rush and a painful audit process, there is still time to prepare for data collection on a site level, including the site’s highest consuming assets.

Be proactive about compliance in a holistic way to gain added benefits

Embedding EED obligations into larger sustainability or compliance strategies can have real financial and operational benefits. For example, some companies are using ISO 50001 as an alternative compliance route for EED Phase 2. In addition, many of the 50,000 German companies affected by EED secured compliance with new or existing ISO 50001 certification and gained tax benefits at the same time. These organizations are moving beyond the pain of compliance to realize the gains in performance it can bring.

So, remember these top tips to take compliance from pain to gain:

  • Understand that EED Phase 2 is different from Phase 1. Start research now about how EED Phase 2 will impact your business and facilities, including the various requirements and timelines across Europe.
  • Capture energy data of your facilities and their highest consuming assets. Consider early in in the process how to use data collected for other reporting schemes, programs or initiatives to avoid redundant efforts in time and resources.
  • If you’re considering ISO 50001, bear in mind that gaining certification for the energy management standard can take 12-to-24 months, so factor this in when planning.
  • Start now to realize savings. Starting now will allow you time to prepare strategies, resources and budgets to act on the energy efficiency recommendations uncovered by the EED audits, and ultimately drive change across your entire company.

Get started . . . Use our EED Compliance Risk Map to start assessing the impact of this complex legislation on your portfolio. Download the map.

 

[1] Energy Efficiency Directive (EED), Energy Saving Obligation Scheme (ESOS, the UK specific regulation)