Energy efficiency rules may cost millions: Ricardo-AEA 20 February 2014

Government proposals to require all large companies in the UK to undertake mandatory energy efficiency assessments will be a major cost burden unless lessons are learned from the earlier CRC energy efficiency scheme.

That's the warning from Ricardo-AEA's Christine St John Cox, who says that, although the proposed Energy Savings Opportunity Scheme (ESOS) will require businesses to undertake energy efficiency audits, it won't compel them to act on any of the potential savings identified.

Experience with the CRC scheme suggests that the 7,300 companies affected by ESOS could spend more than £100 million over 15 years on complying with the scheme without generating any significant benefits, she says.

Evidence from the first CRC league table published in 2011 demonstrates that less than 25% of participating companies took full advantage of the scheme by covering a high percentage of emissions with accreditation for carbon reduction and automatic metering.

"Unless businesses embrace ESOS it could have even less impact than CRC, as ESOS carries no carbon tax," said St John Cox.

"We're concerned that companies taking a 'make do' approach to the legislation will incur the scheme costs, estimated to average £10,000—17,000 for each audit cycle, without any financial gain," she continues.

"In our experience of working with companies on CRC, preparation is the key to compliance and unlocking savings in the long run. The UK is likely to offer several routes to ESOS compliance so it is important for a business to explore the options that will minimise cost while still optimising impact."

Brian Tinham

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