What is the Energy Savings Opportunity Scheme (ESOS)?

With the U.K. Environment Act of 2021, the Ten Point Plan, and the CMA’s new guidelines for the U.K. to meet their environmental goals – the U.K. has been putting their best foot forward to be at the top of their environmental impact reduction game as of late, and the Energy Savings Opportunity Scheme, or the ESOS, adds on to the list of climate change efforts by the United Kingdom. 

What is the Energy Savings Opportunity Scheme, or ESOS, and how can it help the U.K. reduce their energy consumption and ultimately, fight against climate change?

In accordance with the EU Energy Directive, the Energy Savings Opportunity Scheme, ESOS – was implemented back in 2014 prior to Brexit as a programme to promote compulsory energy assessments for organisations throughout the United Kingdom that meet specific criteria. The U.K. Government requires larger companies to comply with ESOS in correlation with the country’s newfound efforts to significantly reduce carbon emissions and employ energy-saving tactics. 

In short, if companies reduce their energy consumption, it means they will also directly reduce their carbon emissions – ultimately leading to more business revenue, investor interest, and security while avoiding waste at the same time.

Not all companies throughout the United Kingdom are instructed to comply with the Energy Savings Opportunity Scheme, such as small to medium enterprises. Therefore, if you’re the co-founder of a start-up with ten employees in the U.K. – you’re free from needing to report to ESOS.

Currently, any company that has an annual revenue of over €50 million, a yearly balance sheet of €43 million, over 250 employees, and a deadline to comply with ESOS phase 3 by 5 December 2023 are required to continue reporting to ESOS. Companies that are required to provide ESOS with an energy report should convert their income in British pounds to the Euro to determine if they qualify for ESOS. 

ESOS mainly refers to large businesses that are established in the United Kingdom, but it doesn’t exclude large non-profit organisiations from complying on occasion as well.  

The Energy Savings Opportunity Scheme doesn’t require small to medium sized businesses to comply with ESOS. This can be seen as one of the inherent downsides of the Energy Savings Opportunity Scheme. Many companies who remain as small to medium enterprises can still emit excessive amounts of carbon emissions and use an exorbitant amount of energy. 

Think of it this way: a watermelon, while massive, isn’t very calorically dense – but a chocolate chip cupcake with peanut butter frosting and sprinkles may have more calories than several pieces of watermelon. Long story short, the size of a company doesn’t determine the amount of energy they use. ESOS should strive to require companies of all sizes to comply with the Energy Savings Opportunity Scheme, and the good news is – ESOS is trying their best to change this. 

If a company is covered by an ISO 50001, an ESOS assessment isn’t needed – but your organisation must notify the Environment Agency to prevent getting into trouble with ESOS.

Otherwise, if your company qualifies for the Energy Savings Opportunity Scheme, then an ESOS assessment is required. Your company should appoint someone to be in charge of completing the ESOS assessment. This assessment is done in a few steps, the first one being to calculate your company’s total energy consumption – which must include the energy used by your organisation’s office spaces, industrial activity, and transportation methods. Next, your organisation should strive to recognise the areas for energy consumption improvement. In other words, clearly specify in your ESOS assessment the activities that account for the most energy consumption in your organisation. Lastly, it’s imperative to send your ESOS assessment before the proposed deadline, and that your company keeps records of submitted your assessment to ESOS. 

Given one of the primary goals of the Energy Savings Opportunity Scheme is to reduce energy consumption, and that the programme has been intact for nearly a decade – it would seem probable to say that ESOS has made a difference in the energy consumption across large businesses throughout the United Kingdom. Unfortunately, ESOS presents a vital flaw that prevents companies from actually doing anything to reduce their energy consumption – despite the fact that all companies required to comply with ESOS must delineate the areas where energy consumption could be reduced, ESOS does not mandate them to actually implement these new measures.

Think of ESOS as getting a test score back on a test. Completing the ESOS assessment will inevitably require the company to be evaluated on their energy consumption reduction tactics, but illustrating where improvement can be made does not mean that they will make the changes necessary to mitigate excessive energy consumption. 

ESOS has certainly made energy consumption reporting and monitoring the new norm for large businesses throughout the U.K., but since it doesn’t actually require those energy consumption reduction tactics to be made – there is no tangible evidence that ESOS has helped to reduce energy consumption throughout the United Kingdom.

Besides the fact that ESOS doesn’t require companies to actually implement the energy consumption reduction methods provided in their ESOS assessments, the Energy Savings Opportunity Scheme has a few other setbacks. 

The U.K. recognises that there is room for improvement concerning ESOS, and in fact – they have recently published a detailed report in September 2021 delineating all of the components to be adjusted for better energy-consumption management. For instance, the report explains how ESOS reports could be improved and conveys the need for more standardised information – such as making the reporting requirements stricter, requiring participants of ESOS to use metrics, and address the discrepancies that could occur given companies are only meant to comply with ESOS every four years.

Other components of ESOS that the U.K. is seeking to improve includes how ESOS complies with the United Kingdom’s goals of achieving net-zero emissions, and how companies required to comply with ESOS can discover new ways to use clean energy and reduce their emissions even further. Also, the U.K. government wants ESOS to contribute to the increase of transparency throughout companies to help prevent allegations like greenwashing and promote trustworthy business relationships. 

Currently, ESOS only requires companies with over 250 employees to participate, but given the United Kingdom’s new goals to drastically reduce emissions and their overall environmental impact – ESOS has delineated in their new report their desire to extend ESOS to medium-sized companies as well in order to increase the efforts to reduce the country’s overall carbon footprint. 

ESOS isn’t the only method intact by the U.K. government as a method to reduce emissions and the country’s impact on the environment, but rather, it joins a long list of many programmes already put in place. For instance, the U.K. Environment Act of 2021 is an environmental plan put in place to help the country bridge the gap between central and local governments to better implement regulations to benefit the overall state of the environment: like reducing waste, improving measures for recycling by introducing fines for British citizens who don’t, improving air and water quality, and preserving nature and biodiversity. The U.K. has also had their Greenbelt in place for a long time, which is a large body of land protected by local planning authorities to ensure that urbanization does not make it subject to deforestation – which only causes more carbon emissions and a plethora of environmental issues. In fact, the U.K.’s Greenbelt Policy has encouraged other countries around the world to implement their own Greenbelts to help prevent further urban sprawling and deforestation.

Another strategy created by the U.K. government as a country-wide effort to reduce emissions and lead the way towards net-zero activities is The Ten Point Plan. This emission reduction plan initially implemented by Boris Johnson provides an overwhelming £12 billion to promote a Green Industrial Revolution throughout the United Kingdom, and set new impressive goals towards increasing the use of clean energy, encouraging carbon-free transportation, and building sustainable offices and residences to increase energy efficiency throughout the country. The Ten Point Plan is meant to help the U.K. achieve their net-zero emission targets by 2050, and help the country recover financially following the Covid-19 pandemic.

The Energy Savings Opportunity Scheme is certainly a step in the right direction for the U.K. to encourage large businesses to reduce their energy consumption and overall emissions, but it presents some flaws that prevent it from begin as successful as it could be – most notably, the fact that only large companies are required to comply with ESOS, and that they only have to do it once every four years. 

The improvements to be made for ESOS expressed in the recent report by the Department for Business, Energy & Industrial Strategy could help the country to reduce energy consumption and ultimately lower their emissions of greenhouse gasses – but truthfully, reducing emissions has to be a team effort from every sector. Small and large enterprises alike must seek new ways to utilize many of the ideas expressed in the Ten Point Plan to mitigate the use of fossil fuels, like the use of nuclear or clean energy. In addition to this, U.K. citizens need to take responsibility and opt to renovate their homes to be more energy efficient.  

ESOS can only do so much to help the U.K. reduce their energy consumption, and while it is good for companies across the United Kingdom to have this compulsory incentive – the country, let alone the world, won’t see an improvement in regards to climate change unless more stringent measures are taken towards any and all guilty parties. 

The rest of the world and the U.K. is trying to up their environmental game in order to fight against climate change, and ESOS should too. 

If reading this article about the Energy Savings Opportunity Scheme, ESOS, and how it can help to reduce electricity consumption and overall emissions has made you interested in reducing your carbon emission to further fight against climate change – Greenly can help you!

Greenly can help you make an environmental change for the better, starting with a carbon footprint assessment to know how much carbon emissions your company produces.

Click here to learn more about Greenly and how we can help you reduce your carbon footprint.