The A to Z of carbon compliance
Carbon compliance schemes are becoming increasingly prevalent in the commercial landscape. Business leaders are having to ensure they are in the know for legislation that is consistently growing in both number and complexity. We have broken down four of the most important pieces of legislation to give a clearer understanding of where your business might stand.
1 December 2020
The Climate Change Agreements (CCA) are more an opportunity than an obligation regarding carbon compliance. Since all businesses are subject to the Climate Change Levy (CCL), this voluntary agreement allows you to avoid significant tax bills on your electricity and gas emissions. Organisations can save as much as 92% on electricity and up to 83% on gas from CCL payments.
Earlier this year, the CCA was extended, allowing for a fifth targeting period in which businesses could apply. This latest period runs from January 2021 until December 2022. As such, businesses should be sure to secure compliance guidance before the New Year to get the maximum savings possible from the scheme.
Now open for submissions until December 2023, the Energy Savings Opportunity Scheme (ESOS) is a mandatory assessment for certain UK organisations. The criteria which decide eligibility are if the organisation employs more than 250 people or has an annual turnover in excess of £50m.
As the name suggests, ESOS provides businesses motivation to audit their current energy expenditure and seek out guidance on where efficiency can be improved. Awareness of energy consumption and those operations with the highest appetite will pay dividends in the future as you are subject to increasing scrutiny around sustainable and conscientious energy use.
Finally, organisations that do fit the criteria, and fail to comply, face costly fines that are levied on a daily basis until compliance is achieved.
The Minimum Energy Efficiency Standards (MEES) were introduced in 2018 as a means to combat the severe inefficiency of UK building stock. Since their inception it has been illegal for landlords to offer new leases on buildings that have an Energy Performance Certificate (EPC) rating of F or G.
As of April 2023, this restriction will extend to all commercial leases as well as domestic properties. Landlords and their portfolios can be exempt from this scheme under one or more of the following conditions:
- Identified improvement measures are not cost-effective, meaning that they will not have broken even within 7 years or under the Green Deal’s Golden Rule.
- If, after reasonable efforts, the landlord cannot secure consent for the improvements from tenants, lenders and/or superior landlords.
- The improvements are expected to devalue the property in question by 5% or more, or installation will damage the property.
Streamlined Energy and Carbon Reporting (SECR) is, in many ways, very similar to ESOS. They both aim to incentivise improved energy efficiency in large commercial organisations.
As with ESOS, organisations required to comply are those with a workforce over 250 and with annual turnover above £36m. These firms are required to publicly disclose their annual report of energy use and carbon emissions and using a relative metric for measurement. For example the number of tonnes of CO2 equivalent emitted versus the number of employees.
Alongside these reports, an organisation must also supply proof of actions taken to improve efficiency during the reporting period.
Smith Bellerby provides a comprehensive carbon compliance service to its customers. Sourcing all of these services under a single umbrella means that your compliance process can be simplified by investing in one source of expertise and communications. To find out more about the guidance we can offer, get in touch.