Life after the Energy Performance of Building Directive

The process for Energy Performance Certificates (EPCs) looks like it is now settling down as the number of qualified assessors increases in the UK and the technical issue’s that plagued the implementation of the directive are now being ironed out.

Communities and Local Government estimate that there will be over 120,000 EPCs required in 2009. However, with a recession looming, this figure could increase due to a greater need to sell property or search for new tenants. Remember it is not at point of sale but a point of marketing a property that an EPC is required, so make sure you have access to an accredited company to provide these services. (See contact details)

The final rollout of the directive involves an assessment of buildings with air-conditioning systems over 250KW by January 4, 2009. The air conditioning assessment could provide the greatest energy saving for companies as air conditioning systems account for as much as 60 percent of the energy use in a building. This should be welcomed by all Finance Directors or Managing Directors in the current economic climate.

The legislation does not stop there though. November 27, 2008 was an important date for environmental law with the assent of the Bill that gives us the Climate Change Act 2008. While most discussion has focused on the reduction targets that should be set for 2050, the Act also confers powers to set up trading schemes that support the reduction of greenhouse gas emissions.

An early initiative arising from the Climate Change Act is the Carbon Reduction Commitment. This scheme is a mandatory emissions trading scheme that applies to non-intensive energy users such as banks, insurers, local authorities, schools, hotels and retailers.

While some of these companies already have carbon management programmes in place and are already preparing for CRC it seems likely that quite a number of the 5,000 organisations likely to be affected are still unaware of this impending requirement.

An organisation will be included in the Carbon Reduction Commitment if its annual half hourly metered electricity consumption is greater than 6,000MWh – which broadly means that if your annual electricity spend is more than £500,000 per annum you are likely to be included.

One of the key questions with reference to this new piece of legislation is who will be responsible for managing compliance? Unlike the major process industries, many of the affected companies will not have faced significant green legal compliance issues to date. Not only is there a significant budgeting requirement but there is also the strategic and reputational element that may be even more important. This means it is much more likely to concern the Finance Director (in terms of cost and cashflow) as well as the Board itself.

In July the Environment Agency will be sending out registration packs with a requirement for participants to monitor and report their total energy use emissions from October 2009. Eventually the Carbon Reduction Commitment will be an auction based cap and trade scheme in which organisations will be required to purchase carbon allowances equivalent to their annual energy use and trade them with other members of the scheme. Recycled payments from the sale of carbon credits will be subject to whether a company reduces or increases its annual energy use. Increasing your energy usage will mean that you will have to buy additional credits at additional cost. The Government will then start reducing the overall cap on emissions to ensure overall reductions which will no doubt increase the cost of credits.

In April 2008 RSA issued a list of top tips on how to comply with the EPBD. Continuing our commitment to our customers and UK industry, we have compiled a list of what companies should do to start working towards complying with the Carbon Reduction Commitment.

• The first action should be to assess whether your organisation is subject to the scheme. This may be relatively simple however reference should be made to organisational structures. The counterparty for the electricity bills will be responsible for submission of the figures for the CRC – i.e if you are a property owner and you buy the energy on behalf of your tenants you could be subject to the submission of their energy figures unless otherwise agreed.

• Ensure there is senior level engagement and visibility for the scheme – the public league table and the ongoing financing requirement should be at the forefront of Managing Directors and Financial Directors minds.

• Budget for compliance costs and purchase of carbon credits for the trading scheme.

• Initiate action to get good quality consumption data across all your sites – particularly where there are currently estimated bills.

• Consider the value of early action metrics including gaining the Carbon Trust Standard.

• Review what actions you are currently completing as part of existing carbon reduction strategies and see how this fits in with the requirements of the scheme.

Look at how you will monitor your energy use and report against energy reduction targets.

At a time when there is real pressure on budgets and workforces, some organisations might be tempted to think about compliance only when it becomes absolutely necessary. Our advice is to talk to a competent body that can provide you with good clear advice on energy reduction and compliance. At RSA we can provide advice and services to comply with the EPBD and the Carbon Reduction Commitment. Our award winning proposition will enable you to understand your obligations in what are increasingly difficult times for UK businesses.
ENDS

Contact details
RSA can provide a range of energy management services to help businesses to meet their obligations. For more information please contact: Tom Cass, Energy Development Consultant for London and South, tom.cass@uk.rsagroup.co.uk TEL- 07733 312 201

Chris Hurst, Energy Development Consultant for Midlands and North christopher.hurst@uk.rsagroup.co.uk

You can access the landmark database for details of accredited assessors. https://www.ndepcregister.com or contact RSA on energy.management@uk.rsagroup.com
TEL- 07834 944 227

Source information
Alex Matthias – Energy Management Leader
Paul Pritchard – Corporate Responsibility Manager