The Streamlined Energy and Carbon Reporting (SECR) will be discussed at EMEX in the Strategy, Regulation & Compliance theatre on both days. Please refer to the full programme for details.
Until now, most Energy Managers have not seen transport as a core part of their responsibilities. This is changing. It is a mandatory requirement to record all fuel used in transport if your organisation needs to undertake SECR (Simplified Energy and Carbon Reporting). What makes your company or LLP qualified for SECR?
There are three criteria which are based on the qualification for large company status under the Companies Act 2016:
- They have a turnover of £36 million or more,
- Reserves of £18 million or more,
- Or 250 employees.
If you satisfy two of the three criteria you qualify.
If you are in the SECR bracket, what do you need to do? There are five mandatory reporting requirements as part of SECR, all of which will apply to your company’s transport use.
Record and report on all energy use and carbon emissions through the use of electricity, gas and transport fuel
This means in the case of transport, all fuel that your company purchases to undertake its activities, will need to be recorded. This includes not only your vans, trucks and forklifts, but also grey fleet. The simple rule of thumb is, if you pay the fuel bill you report. For example, say you are a construction company and you TUPE over a fleet of vehicles and their drivers from another company, if you pay the fuel bill, you will need to report the fuel use as part your SECR report.
One of the most frequently asked questions following this example is, do I need to include fuel used in my supply or logistics chain? The simple answer is, if companies you work with pay for the fuel, even if they are working exclusively for you, then you do not need to report on fuel used by those companies in your logistic chain.
Transport for unquoted companies includes sea and air freight and travel inside the UK but excludes international airline travel and shipping. If your company is quoted, then you will need to report all underlying energy use, but you will probably do that already under scope three emission recording.
For reporting purposes fuel used by transport has to be converted into kilowatt hours and the kilowatt hours used in the report. This will mean that the recorded figures for transport can easily be compared with energy used in buildings or processes. For many companies this may well be an eye opener as if they have a fleet of trucks or a large grey fleet, their transport fuel emissions could be far greater than emissions from their buildings.
The recorded transport emissions will need to include other GHG gases such as NOX emissions, however this figure can be calculated using the DEFRA conversion table.
The way that fuel use can be calculated for inclusion in the report can be done through one of three methods, either:
Multiply the distance travelled by BEIS-listed C02 emissions conversion tables.
Use total fuel spend during the reporting period to determine the consumption. This can be done by using the BEIS issued weekly average fuel prices. For example: Fuel Use = Fuel spend / Average fuel price; Total Emissions = Fuel use × Emissions factor
The EMA recommended method is to multiply the volume of fuel consumed, by BEIS provided emission factors to reach precise energy consumption and GHG emission figures. Total Emissions= Fuel Consumption × Emissions factor.
All principal energy efficiency actions must be recorded
The report must include all principal energy efficiency actions undertaken in that financial year. If none have been undertaken, that must also be stated. The question of what a principal measure is will vary from company to company but in the case of fleet vehicles, examples would fall broadly but not exclusively into the following categories:
- Moving fleet to electric vehicles;
- Improving servicing maintenance;
- Replacing older or inefficient vehicles;
- Behaviour change programmes that could include analytic tools.
The measures must be based on the financial reporting year linked to that report, so rolling programmes should only include elements paid for in that financial year. Deciding what is a principal measure should be based on proportionality. Does the principal measure have a significant impact on energy used? Claiming that the company has taken a principal measure by buying one electric vehicle whilst running a fleet of a hundred vehicles could, as the report will be published as a public document, lead to reputational risk through a charge of green wash.
The obvious measures would be to move to an entirely electric fleet but understanding the knock-on effects and the infrastructure requirements will need to be thought through. If there are not enough charging points in your car parks, just increasing the numbers may have electricity capacity issues. There is also no electric version of Heavy Goods Vehicles as yet.
One of the measures that will have the greatest impact, would be to institute low carbon training across the entire fleet drivers, including grey fleet drivers backed by the use of telematics. Training on average can save 10% of fuel used. This should be supported by telematics which can analyse drivers’ routes and behaviour. The change in behaviour brought about by training only lasts a period of months before old habits reassert themselves and thus a programme of ongoing training is essential. Telematics can not only make sure journeys by grey fleet are for business purposes but can identify heavy footed driving and also vehicles that are inefficient through lack of maintenance or engine type.
A quick win would be to divert fuel spend by helping employees where possible to use public transport and help improve cycling facilities.
Include an intensity metric
A metric must be used and submitted as part of the report. The metric used is not prescribed and you could even make up your own metric, and so use and state as many metrics as you like, however good practice would be to use the usual metric used by organisations in your sector. An example would be Tonnes of CO2 per miles/kilometres travelled, or Tonnes of CO2 per total £m sales revenue. The most common is often based on square meterage, but if fuel accounts for the highest energy use, then that metric might be the most appropriate to use.
Report the methodology used
You can decide to use any methodology or an amalgamation of a number; however, the GHG Protocol should be part of any methodology. The EMA has produced a concise methodology that can be used as the stated methodology. This is also incorporated into the EMA SECR reporting tool that has been designed to help companies report on SECR as cost effectively as possible. BEIS stated that best practice at this stage is to have the report verified by a third party and the EMA will be running a verification process that companies can use. This will not only ensure the report meets all regulatory requirements but that it is presented to the company’s accountants in a form that they can audit easily, cutting down their costs.
Sign off by accountants, Board and include in company report
This process should be straight forward, especially if you use the EMA SECR reporting tool which will create a report with all the evidence recorded and easily accessible. Once the auditors have signed off on the report, the Board will need to approve the report, and this is a stage where energy managers can make the case for increased spending on energy efficiency measures including the company’s transport infrastructure. Putting the case for principal energy efficiency measures should be compelling as SECR needs reporting year on year and improvements or failures can be tracked. SECR will force companies to try and improve their energy efficiency actions because the final part of the process is publishing the main elements of the report either in the company’s report or in a separate submission to Companies House. Companies will need to publicly set out through the SECR report what they are doing around Climate Change and companies that are not taking this seriously could suffer reputational and financial risk.
Transport is an area that has often been ignored in an energy management context. However, ESOS helped audit the scale of the energy used by transport and SECR will make it an energy manager’s responsibility to implement fuel efficiency as a company priority. Transport is key to combatting climate change, and now is the time for you to become an expert.