Making sense of ESOS, Brexit and EU Law

Added: July 05 2017

Since we first discussed the Energy Savings Opportunity Scheme (ESOS), a lot has changed in the political climate that may or may not have fundamentally changed the impact and implications of energy-related targets set by the EU. As ESOS stems from the EU's Energy Efficiency Directive, businesses are left wondering if the Brexit vote means the scheme will no longer apply to UK businesses.

ESOS is a mandatory compliance scheme in the UK that came into force in 2014. We’re now already in Phase 2 of the scheme which means businesses have until December 5, 2019 to complete compliance. However, given the current political climate, many are time-wasting. One opinion is that Brexit means we won’t have to comply with any EU law once we’ve left the union, which could happen before the Phase 2 deadline.

Is ESOS not simply EU law?

ESOS is the UK’s implementation of Article 8 of the EU’s Energy Efficiency Directive. In line with the Paris Agreement, the directive, and consequentially ESOS, are motivated by the aim to reduce EU energy consumption by 20% by 2020 by introducing regular energy audits that will highlight energy savings for large organisations.

As long as your business has over 250 employees or an annual turnover in excess of €50 million (£38,937,777), and a total annual balance sheet in excess of €43 million (£33,486,489) (as of December 2014), then ESOS applies to you.

Public bodies are not affected. ESOS regulations were transposed to UK law so, unless revoked, the scheme is mandatory for UK businesses.

Does Brexit not mean we won’t have to comply with EU law?

Yes, Brexit could mean we no longer have to comply with EU law. However, seeing as the earliest Brexit could happen is by April 2019, we must still comply with ESOS until we officially leave the EU.

However, with at least 7,000 businesses needing to ensure they’re up-to-date with complying with ESOS and many of them stalling their efforts, we could see many would be far down the line with compliance by the time we are to leave the EU, with less than eight months until the deadline.

Will the Great Repeal Bill be used to remove all EU laws?

This Bill will “repeal the European Communities Act and convert EU law (as it applies in the UK) into domestic law on the day we leave. This means that, as far as possible, the same laws and rules will apply immediately before and immediately after our departure, ensuring a stable and smooth transition,” therefore even when we leave the EU, the same laws will continue in the UK.

Environmental concerns are of the utmost importance and, in fact, the Great Repeal Bill will keep all EU Environmental law. This means ESOS will continue to be part of UK law.

The Bill states:
“The Government is committed to ensuring that we become the first generation to leave the environment in a better state than we found it … The Great Repeal Bill will ensure that the whole body of existing EU environmental law continues to have effect in UK law”.

Therefore, as a UK business you must comply with ESOS - it’s not just a tick-box exercise.

ESOS isn’t a burden – it’s a fantastic opportunity to improve the energy efficiency of your business, and lower your costs and carbon footprint. As the scheme occurs in four-yearly phases it’s a great way to ensure continuous improvement.