Government is consulting on a streamlined carbon and energy framework for larger UK companies. It thinks firms could save over £2bn a year by being more energy efficient. But, alongside that carrot, it is potentially threatening some stick.
The department for business, energy and industrial strategy seeks views from firms around the threshold for annual reporting and how energy use and associated GHG emissions should be reported and disclosed. It is mulling the 6GWh threshold applied to the CRC, but may settle on other options.
The consultation follows several reviews that promised to simplify the UK energy and climate reporting landscape, often described as ‘an alphabet soup’ of policy.
With some policies, such as the CRC, already winding down, the government wants to design “simpler, better energy and carbon reporting,” according to business and energy minister Claire Perry.
She said the intention is to “facilitate a reduction in [business] bills, further rationalise the landscape and encourage action from energy audits, and support the transition to a low carbon economy which will deliver long-term benefits across the UK”.
‘Action from energy audits’ refers to Esos, one of the policies intended to improve awareness of energy use by mandating that larger firms undertake an energy audit carried out by a qualified assessor. While most firms completed their audits, it is not clear how many took subsequent action to improve energy efficiency. Some audits were also criticised as poor quality. Most required remedial action, according to Environment Agency sampling.
The government is therefore also interested in understanding which reporting elements could drive more action and whether to make companies report on identified energy saving opportunities and the action they have taken.
By making firms disclose consumption, emissions and, potentially, mitigation efforts (or otherwise), the government could bring a financial stick to bear: It could be argued that any company that fails to implement cost-effective efficiency measures is not working to deliver maximum shareholder value.
‘Increased and more consistent disclosure of energy and carbon data will raise awareness of energy efficiency, and improve transparency for investors so they are better able to hold companies to account,’ the consultation states.
However, the government appears to have resisted calls to bring the public sector into Esos.
The department wants feedback on its plans by 4 January.
See the consultation here.