From April 2019 the rules on energy and carbon reporting are changing. What does this mean for you and your organisation?
BEIS’ Head of Business and Industrial Energy Efficiency, Tax and Reporting, Gary Shanahan will be at EMEX to offer guidance on how organisations can prepare, what will be the qualifying criteria and how the new reporting framework will benefit the companies.
There are currently around 4,000 companies (and 1,200 other public and private sector organisations) that are obliged to report their annual carbon emissions under the CRC Energy Efficiency Scheme. Under the new SECR framework, the government estimates that around 11,900 businesses will be required to report annually on their energy and carbon performance with many that will have to do it for the first time!
The Government has a number of policies in place to encourage organisations to invest in energy efficiency and decarbonisation, and individual organisations can be in the scope of multiple policies with similar levers, for example mandating reporting of energy use/ emissions or creating a price signal.
To simplify the policy landscape and reduce administrative burdens on participants, a package of changes were announced at Budget 2016, consisting of closing the CRC Energy Efficiency Scheme, increasing Climate Change Levy (CCL) rates and rebalancing these to gas, and a consultation on a streamlined energy and carbon reporting framework (SECR).
The SECR consultation built on responses from the 2015 consultation on the Business Energy Efficiency Landscape, which found significant stakeholder support for a reformed reporting framework. You can find the government’s full response on their website as well as the Final Impact Assessment
The new framework aims to reduce the overall administrative burdens on participants, whilst improving the incentive for organisations to save energy through energy efficiency – thus reducing energy bills and carbon emissions. The is objective is that the SERC framework will enable businesses and industry to improve energy efficiency at least 20% by 2030.
Proposals for mandatory carbon reporting apply to all unquoted organisations that employ at least 250 people or have an annual turnover greater than £36 million and balance sheet above £18 million. Those companies quoted on the stock exchange have been required to report on their carbon performance since 2013. Currently, such large businesses are already required to manage their energy use under the Energy Savings and Opportunity Scheme Regulations, however, there is no current requirement for public disclosure of ESOS reports.
There will, of course, be exemptions to this new reporting requirement if it would not be practical to obtain some or all of the SECR information or if directors believe disclosing information would be seriously prejudicial to the interests of the company, but this would only apply in exceptional circumstances.
Organisations that use low levels of energy will not be required to disclose if they can demonstrate that they used 40,000kWh or less over the 12 month period. For greenhouse gas emissions, Scopes 1 and 2 will be required with Scope 3 reporting remaining voluntary. For the GHG calculations, details of the methodology and a suitable carbon intensity metric is also needed. Energy in the scope of the new SECR legislation includes all UK electricity, gas, and transport (road, rail, air and shipping) energy use.
The Government argues that mandatory reporting will drive behaviour change by raising awareness of energy efficiency with organisational decision makers and increasing the importance of energy efficiency to organisations through reputational drivers. Increased transparency for investors and others will make them more able to hold companies to account.