Company Energy Saving Plans (France)

On 29th August ’22, the French Prime Minister speaking to MEDEF (Mouvement des Entreprises de France) called for all companies to put in place an energy saving plan in September. The link is here.

She said “In September, every company should put in place its own plan to save energy. If we act collectively, we can overcome the risk of shortages. But if each one of us fails to do our part, or if all negative outlooks come to fruition at once, we will have to impose a decrease in consumption.”

She said she had ordered every government ministry to put in place a plan to cut 10 percent of their energy use within the next two years and she suggested each company also put in place an “energy sobriety ambassador.”

She said corporate energy savings plans will be reviewed in October.

We will be looking out for the legislation that will underpin this, and update French systems accordingly.

Spain Energy Saving Plan (Spain)

On 1st August ’22 the Spanish Council of Ministers approved a new royal decree-law setting out at Title V a “Shock Plan” for energy saving and management in air conditioning to rapidly reduce energy consumption in administrative, commercial and public buildings, as defined in the Reglamento de Instalaciones Térmicas en los Edificios (RITE).

The instrument will have to be complied with by all administrations, both the general State administration and the regional and local ones, as well as the private sector: shops, department stores, cinemas, theaters, stations, airports, hotels and distribution centers. However, the president of the Community of Madrid has said it would not be applied in Madrid.

The third vice president, Teresa Ribera, explained that these measures may be relaxed in the event of waves of extreme temperatures and in duly justified cases.

The new instrument is here, scroll to Title V.

A description is found here.

The Spanish Government is also preparing a Contingency Plan, which will include energy saving measures and solidarity actions with the rest of the EU, which will be presented at the end of September.

The new instrument temporarily increases the obligations for management of the real estate of public buildings; commercial establishments, such as department stores or shopping malls; cultural spaces, such as cinemas or congress centers; and infrastructure intended for the transport of people, such as stations and airports. More details:

• These structures will have heating and cooling temperatures limited to 19 and 27 degrees Celsius respectively; building managers will have seven days from the publication of the rule to make the limitation effective, which will be in force until October 1, 2023.

• Building managers must display on posters or screens the mandatory saving measures, and other additional ones, that reduce consumption. They will have seven days to comply and this requirement will be effective until October 1, 2023.

• Before September 30, buildings must have automatic closing mechanisms on access doors to prevent them from being permanently open.

• The lighting of the shop windows will have to be turned off from 10:00 p.m. This provision will also apply to public buildings that are unoccupied at the time. Seven days is given for compliance and the measures will last until October 1, 2023.

• Those properties that have passed the energy efficiency inspection prior to January 1, 2021 must undergo an emergency review before December 31, 2022, so that all buildings with relevant boilers and air conditioning consumption have passed an inspection in the last two years.

We will add this document to Spanish systems, at their next update.

Pension Scheme Climate Focus (UK)

Yesterday (1st September 2022) the UK government commenced a consultation on obliging trustees of the £342bn Local Government Pension Scheme (LGPS) in England and Wales to report and address climate risks in the assets they manage. The consultation document is here.

This continues the climate focus commenced in 2021 across the UK for larger private sector occupational pension scheme trustees. The resulting Occupational Pension Schemes (Climate Change Governance and Reporting) Regulations 2021 (and similar in Northern Ireland) are in your systems (in ENV Energy), and there is an Audit Checklist question also. October will add an amendment to the Regulations in Britain. The statutory guidance for these obligations is here.

[you will note that certain larger UK private companies also have climate reporting obligations, which were enhanced this year, these instruments are in your Registers, as are the Audit Checklist questions]

After the phasing-in, in respect of the private (Occupational Pension) funds, the climate focus will extend to trustees of money purchase and non-money purchase schemes with £1bn or more in “relevant assets”. It will also include trustees of all authorised master trusts and authorised schemes (once established) providing collective money purchase benefits, in both the accumulation and decumulation phases. You are advised to re-check if the climate focus applies to the pension scheme in your organisation.

The (Occupational Pension) statutory guidance states – “To meet the requirements imposed by the Climate Change Governance and Reporting Regulations 2021, trustees should have a good understanding of the climate-related risks and opportunities that are relevant to their scheme. Trustees should understand that as a systemic risk, climate change risk could include risks outside of the obvious sectors, including those which are both directly and indirectly affected.”

And “Trustees have a legal duty to consider matters which are financially material to their investment decision-making. Trustees must not only consider the kinds of financial risks which might affect investments (and in the case of DB schemes, their liabilities and sponsoring employers’ covenant), they should consider where climate change, and action to address climate change, might contribute positively to anticipated returns or to reduced risk.”

And “Climate-related risk and opportunity is one of the major categories of financial factors of which trustees need to take account. Trustees also need to take account of other risks affecting the pension scheme, in line with their fiduciary duty. As such, trustees are expected to take a proportionate approach to managing climate-related risks and opportunities. The time spent by trustees on considering climate-related risks and opportunities, should not come at the expense of considering other major risks, including financially material social and governance factors.”

The government proposal for the LGPS scheme takes as it’s starting point the above Occupational Pension trustee obligations, but hints at extending it with more specificity on fund investment.

For example, the consultation document points to the UK Energy Security Strategy published in April 2022 (which highlighted energy investment opportunities for the private sector to improve energy security and support the transition to clean energy). The consultation document states the LGPS has an important role to play as a major investor with a commitment to stewardship and engagement.

The consultation document states “These proposals seek to support that approach to addressing high carbon emissions and discourage any pursuit of lower emissions through withdrawing investment from energy companies.”

Another difference with the private sector scheme is the proposed requirements will apply to all LGPS AAs (fund managers) from 2023/24 regardless of fund size. Currently the assets held by LGPS funds range from around £0.5 billion to £25 billion with 65 funds holding less than £5 billion and 8 funds holding less than £1 billion.

It is also proposed that data quality is a mandatory metric (for reporting). The consultation states this is in order to help the LGPS use its scale and market power to drive improvements in the quality of emissions data, which will be a critical factor in raising the quality of climate risk management.

Statutory guidance will be produced. Consultation closes on 24th November 2022.

Energy Sector (UK Brexit Preparedness)

As with the Financial Sector, the UK government has advised it will issue Regulations to ‘onshore’ energy legislation. This communication is here.

Unless the forthcoming changes to energy legislation relate to the Climate Change Levy or other climate related areas, this Blog post will be the only Blog post I will write about the matter.

UK exits the EU (more EU Notices)

Reminder : more EU Notices are issued – please find all EU Notices and Notices issued by EU Bodies (such as ECHA) here.

Please note the latest ones include EU Notices on Aviation and the internal Energy Market.

Unless a ratified Withdrawal Agreement establishes another date, the UK will become a third country (as respects the EU rules and participation in EU institutions and bodies) from midnight CET on 29th March 2019. These Notices set out the changes that will apply from that date. The changes are subject to any transition arrangements that may be contained in any ratified Withdrawal Agreement at the date above.

ESOS II (UK)

ESOS is a UK law that gives effect to EU Law concerning the energy audits of large companies (an article of the Energy Efficiency Directive). An equivalent of ESOS is in place in each of the other EU-27 member state countries.

Under ESOS, large UK organisations were required to carry out ESOS energy assessments before the deadline of 5 December 2015, using one of four compliance routes:

• ESOS Energy Audit

• ISO 50001 Certification

• Display Energy Certificates

• Green Deal Assessments.

By the deadline, qualifying organisations should have carried out their energy assessment(s) and notified the Environment Agency (EA). The assessments should then be repeated at least once every 4 years.

If an organisation has a UKAS-accredited ISO 50001 certificate that covers the full scope of ESOS, then this will suffice as ESOS compliance. All organisations need to do then, is notify the EA and provide proof of compliance via that route.

However, if ISO 50001 is not used as a route to compliance, then an ESOS energy audit will be needed as the next best and most common available route to compliance.

ESOS II or ESOS 2 ?

Every four years, a new compliance period starts. The qualification date for compliance Period 2 is 31 December 2018, with proof of compliance covering the period (from 6 December 2015 to 5 December 2019) being required by 5 December 2019. This is known as ESOS II or ESOS 2. It is not a change in the law, it is a new compliance period starting.

If your organisation has chosen an ESOS energy audit as the compliance route for Period 1 then you will now have an ESOS evidence pack that will include:

• the calculation for your total energy consumption

• a list of your identified areas of significant energy consumption

• details of the energy saving opportunities identified.

However, you won’t be able to use this information to demonstrate Period 2 compliance, so this exercise will need to be repeated – see earlier for the ESOS 2 deadlines.

Alternatively, information from your first ESOS energy audit can be used as the basis for implementing an energy management system (EnMS) to allow realisation of the energy saving opportunities.

If your system is then certified to ISO 50001 during the first four years, your organisation will automatically demonstrate Period 2 ESOS compliance.

Clean Growth Strategy (UK)

Published this morning, 165 pages setting out the areas of new policy and rules for all UK, the BEIS Clean Growth Strategy (persuant to sections 12 and 14 of the Climate Change Act 2008) is here. 

Key points of relevance to industrial energy and environment (your ISO compliant Energy Registers) are as follows :

(1) Re the EU Emissions Trading System (EU ETS) covering the “traded sector” (power, heavy industry and intra EEA aviation) which collectively account for around 40 per cent of UK emissions under carbon budgets – the document confirms commitment to reducing emissions in these sectors and states the UK already has a “range of domestic policies in place to support this”. 

The document statement is “we will seek to ensure that our future approach is at least as ambitious as the existing scheme and provide a smooth transition for the relevant sectors”.

Note : the document states “the Government is considering the UK’s future participation in the EU ETS after our exit from the EU and we remain firmly committed to carbon pricing as an emissions reduction tool whilst ensuring energy and trade intensive businesses are appropriately protected from any detrimental impacts on competitiveness”.  

Carbon prices for the 2020s will be set out in the 2017 Autumn Budget. 

(2) For sectors not covered by the EU ETS, the document states two sector policies operate at EU rather than UK level and are particularly important for driving emissions reductions – new car and van CO2 regulations, and EU “fluorinated gas quotas”. 

The document statement is “we remain committed to reducing emissions in these areas and will offer certainty to industry as soon as possible on our future relationship with the EU. We will seek to ensure our future approach is at least as ambitious as the current arrangements”. 
(3) Re EU products policy which sets minimum standards for a range of products such as white goods and lighting, which improve energy efficiency (NB: I put a recent post about EU Ecodesign) –

The document statement is “we continue to support these policy measures, which cut energy bills, increase energy security, reduce emissions and help customers make informed choices, and we will keep step with equivalent standards wherever possible and appropriate, or even exceed them where it is in the UK’s interest to do so. This may include products not yet covered by European legislation, such as smart appliances”. 

(4) Re Non-energy and climate EU frameworks and policies which affect the UK, such as the Common Agricultural Policy. 

The document statement is “for instance, we will take the opportunity of leaving the Common Agricultural Policy to address climate change more directly by designing a new system to support the future of farming and the countryside, with a strong focus on delivering better environmental outcomes, including tackling climate change”.

Note : the proposal is to work with the British Standards Institution (BSI) to develop a set of voluntary green and sustainable finance management standards to promote responsible investment practices globally. The BSI will have completed the necessary standards scoping exercises and have the first standard in production by the first half of 2018.

Note : the document states the Government will put in place a “simpler, more ambitious and long-term policy and regulatory framework“, to –

(A) “make it easier for businesses to identify where they can save energy by simplifying the energy and carbon reporting framework” (this will entail changes to local law – please follow this Blog – when the law changes occur – please look out for Email Alerts)

(B) “ensure that those who lease premises to businesses, including in the service sector, continue to refurbish and improve the performance of their buildings. In parallel, all new commercial and industrial buildings should be more energy efficient”.

(C) “help to understand how we can encourage greater investment in energy efficiency measures and technologies, including establishing an Industrial Energy Efficiency scheme to help large companies install measures to cut their energy use, and working with the financial sector to identify how such measures can be taken forward”.

“Energy intensive industries will require steps beyond energy efficiency. Out to 2030, this will require industry to make progress in switching from fossil fuel use to low carbon fuels such as sustainable biomass, in line with broader Government priorities on delivering clean air, and clean electricity. Beyond 2030, this switching will need to substantially increase in scale and be coupled with the deployment of new technologies, for example carbon capture, usage and storage (CCUS). Over the course of this Parliament, we will therefore also develop a framework to support the decarbonisation of heavy industry. Overall, one possible pathway to 2032 could involve emissions from business and industry falling by around 30 per cent on today’s levels to as low as 83 Mt by 2032″.

Summary Local Schemes – the document states the Government will :

(1) continue with plans to close the CRC Energy Efficiency Scheme following the 2018-19 compliance year. “We will drive energy efficiency by implementing the previously announced increase to the main rates of the Climate Change Levy from 2019.” (see the 2016 changes to the Finance Act 2000 (as amended) – I did not send out an Email Alert at the time).

(2) undertake an evaluation of the Climate Change Agreements to inform any successor scheme from 2023.

(3) build on existing schemes such as the Energy Savings Opportunity Scheme (ESOS), undertaking a comprehensive assessment of its effectiveness and consider any future reforms.

(4) (alongside this Strategy), consult on a new and streamlined energy and carbon reporting framework to replace some existing schemes, such as the reporting element of the CRC Energy Efficiency Scheme, and align with mandatory annual greenhouse gas reporting by UK quoted companies. This will improve the way in which businesses report their energy use, and provide businesses with the information needed to identify how they can reduce energy bills. (The document states this consultation is underway – please check with BEIS). 

(5) establish an Industrial Energy Efficiency scheme to help large companies install measures to cut their energy use and their bills.

Note : The Government has commissioned an independent review of Building Regulations and fire safety, being led by Dame Judith Hackitt. The review will report in spring 2018. Subject to the conclusions of that review, the Government intends to consult on making improvements to Building Regulations requirements for new and existing commercial buildings where there are “cost- effective and affordable opportunities, and it is safe and practical to do so”. This will look to promote low carbon and higher energy efficent heating, ventilation and air conditioning systems in new commercial buildings.

COP21 and other developments

I am conscious of time elapsed since last posts. A lot of developments, both in the UK, and elsewhere, which I am working on. 

COP21 is underway today and through next days. Please look out for my posts on this and other developments coming soon.