ESOS 2.0

February 2015

Discussion about how ESOS is a missed opportunity for gathering data, benchmarking and sharing good practice. Is there potential for developing a new, revised approach to ESOS? How can we get energy efficiency measures to be implemented? Should designers be more involved to enhance the feedback loop and bridge the performance gap?

A lot has been said about ESOS running the risk of being a missed opportunity and that the full savings just won’t be achievable. However it is a policy with a great deal of potential and should we really wish to see £1.6bn of savings really come to fruition then the question is, what could ESOS become and what enhancements should we be focusing on?

Benchmarking and incentives  By now, the majority of stakeholders are aware of the potential shortfalls of ESOS. In short, the scheme does not mandate the implementation of energy savings, lacks direct financial incentives and does not require public disclosure of energy data. Beyond this one of the most significant missed opportunities is the lack of feedback into benchmarking, which is actually recommended within the EPBD text. In an age where data is collected on almost everything, to not collect performance data on buildings when the work is being carried out anyway seems absurd. Whereas disclosure could do a lot by means of engagement to incentivise the implementation of energy saving measures, benchmarking could go a long way in terms of enhancing knowledge about how buildings perform in use. What if there was a way of establishing an incentive for those who choose to share their data? Could businesses be rewarded for disclosing detailed energy use data in a way that the capital cost to carry out comprehensive audits is leveraged? Could this be deployed via providing access to a no-interest fund for putting energy efficiency measures in place?
ESOS 2.0 will also need to tackle the omission of unconsumed supplies in landlord’s audits whereby tenant energy consumption is excluded. How can we encourage landlords to invest in energy saving measures in cases where fuel bills are paid by tenants? Could agreements be set out ensuring the savings revert back to the landlord for paying back their investment? As an alternative, can this be delivered via green leases, non-domestic green deal or another mechanism?

SMEs  The lack of incentive for small undertakings to take action on energy efficiency is alarming for UK competitiveness in the global market. Given that SMEs represent about 90% of UK businesses, shouldn’t ESOS – or a lighter version of it – be targeting all companies, particularly those that are potentially on the verge of fuel poverty? In that way, with criteria based on the magnitude of energy bills (i.e. proportion of energy bills as part of company overhead), a portion of the SMEs would be in ESOS because they actually need to do something about their energy use, whereas large undertakings would be looked at due to their big energy spend and overall impact. Whereas a good number of the other member states still haven’t developed a full framework in response to Article 8 of the EU directive, some of them do have financial incentives for SMEs companies to carry out thorough energy audits.

Climate change policy  From a business perspective, wouldn’t it be good if the plethora of mandatory and voluntary schemes in place could interact in a clear and concise way? Whereas it is certainly commendable that ESOS was put in place as a light touch regulation, on a second phase it might be logical to consider integrating it with other bits of climate change legislation in order to set out a cohesive framework, one that really fosters energy efficiency in the non-domestic sector. Could ESOS be the one piece of regulation that ties policy together and bridges the gaps, incentivising a flexible approach that engages businesses in reducing their environmental impact via energy efficiency? In a future where the criteria and scope for, say CRC and ESOS, could be consistent, CRC just might work as an annual reporting mechanism that also gauges progress in implementing energy audit recommendations? Further alignment between these and other schemes, beyond shared data collection, would mean companies spend less with compliance freeing up funds to invest in energy efficiency – optimistically speaking. In fact, if the cost of carbon allowances does increase, the case for action will be strengthened. Conversely, rather than buying allowances, would we rather prefer to encourage direct investment in energy saving measures, in monitoring their impact as we go, and potentially attribute rewards to successful implementation?

People and skills  A frequent comment on energy saving measures is that our efforts should be concentrated on simple, sensible things. This is not only common sense but it also builds upon the evidence that simple recommendations, with short payback periods, are much more likely to be put in place. As a starting point, should a hierarchy be established for energy saving opportunities in which the implementation of all “zero cost” measures is mandatory? Should these be followed up by awareness campaigns to engage building occupants?
Furthermore, there is overwhelming evidence that health and wellbeing has a major impact in productivity in the workplace. Therefore, knowing that any measures that have a positive impact in those metrics can yield significant tangible and intangible benefits, could energy audit schemes be set out in a way that these aspects are taken into account?
It is our strong belief that part of the answer to these questions relies on guaranteeing that the right skills are in place. It is about engaging the relevant people and providing them with specific training. In that sense, professionals engaged in building design, post-occupancy and the human factors in buildings should be in a good position to deliver a revised, more holistic approach. Thinking of that, could the professional bodies incentivise building performance evaluation as part of the professional development requirements for their members? In its current shape, ESOS is a missed opportunity for building designers to better understand how buildings perform in use, how occupants perceive them, and to feed this back into new design, closing the loop. The industry would greatly benefit from further learning from existing buildings and operational practices, and to disseminate knowledge that supports better design and operation. Without a clear understanding of the building and the original design intent, it could be the case that, even if the measures are implemented, these fail to yield the predicted savings.

Ultimately, a revitalised ESOS would be in a prime position to contribute significantly to the UK’s, post Kyoto, targets on CO2 reduction. ESOS 2.0 needs to address the missing links between benchmarking and financial incentives, act as an umbrella for the climate change policy for businesses and ensure the right people and skills are engaged with the scheme.

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Tags EU Policy Post Occupancy Evaluation UK policy BPE EED EPBD ESOS Health and wellbeing SME

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