Businesses have just a few weeks to complete their first mandatory audit to meet the government’s Energy Savings Opportunity Scheme (ESOS), which includes reporting on company cars, vans and trucks as well as privately-owned vehicles driven on work-related trips.
Critical to accurately calculating the amount of energy used by vehicles on business-related journeys are detailed fuel purchasing and mileage records, although the government has said ‘averages’ and ‘suitable assumptions’ can be used.
The audit requires qualifying companies* - SMEs and the public sector are exempt - to measure their total energy consumption across their transport, buildings and industrial activities over a 12-month period with the first report sent to the Environment Agency by December 5, 2015.
Leading fleet, leasing and rental management software supplier Jaama says solutions such as its Key2 Vehicle Management system are an essential tool for businesses to efficiently collect fuel purchasing and mileage data which can then be converted into an energy consumption figure using official emission conversion factors. Energy consumed must be measured in energy units (such as kWh) with the exception of grey fleet mileage which can be measured in expenditure terms (£).
Jaama managing director Martin Evans said: “Carbon reporting is already a major issue for many businesses in respect of their corporate social responsibility agenda and the Greenhouse Gas Emissions (Directors’ Reports) Regulations 2013, which applies to almost 2,000 companies listed on the London Stock Exchange.
“Using fuel purchasing records and reported mileage, organisations can use Jaama’s technology to ‘slice and dice’ reports to show CO2 emissions and energy consumption for an individual vehicle, a group of vehicles or the entire fleet for any specific period of time linked to past, current and projected mileage.”
As non-business mileage is excluded from ESOS audit, it is imperative that employers are able to differentiate between work and private journeys.
Government ESOS guidance explains that companies may make “reasonable estimations” based on verifiable data, which could be total litres of fuel used, total miles travelled by the fleet or the number of expensed miles multiplied by an average fuel consumption factor to estimate usage. However, where reports are submitted with non-verifiable data, for example, where there is a lack of tangible data and therefore a benchmark is used, the audit will need to outline a reason for the estimate submission along with the methodology and calculations used.
Additionally, businesses must outline smarter ways of operating through energy efficiency measures with estimated costs and benefits quantified as part of the audit. However, there is no regulatory requirement for organisations to implement such measures.
Nevertheless, Mr Evans said: “ESOS should be viewed by businesses as an opportunity to further promote energy efficiency which will also enable them to save money and reduce carbon emissions as part of this process.
“We know that many fleets are already focused on reducing fuel use by introducing more efficient vehicles, improving driver behaviour by encouraging employees to adopt a more disciplined driving style and better journey planning.”
He also suggested non-ESOS qualifying employers should voluntarily embrace the regulations because the good discipline and business practice yields its own rewards.
ESOS rules dictate that areas of energy consumption - for example business travel - that account for 10% or less of a company’s energy consumption do not need to be covered by an energy audit under de minimis compliance rules.
Non-compliance could trigger penalties of up to a maximum of £50,000 and/or an additional fine of £500 per day, until compliance is achieved, for a maximum of 80 days alongside the publication of an organisation’s non-compliance.
ESOS operates in four-yearly compliance phases. Company qualification date for ESOS is December 31, 2014. The first ESOS audit covering a consecutive 12-month period starting no earlier than January 1, 2014 must be completed and submitted to the Environment Agency by December 5, 2015. The second compliance date is December 5, 2019 and the third December 5, 2023.
* Qualifying companies are those with more than 250 employees; or fewer than 250 employees but with an annual turnover exceeding €50 million and a balance sheet exceeding €43 million; or part of a corporate group which meets either of the aforementioned criteria.