A Tropical Paradise
Yesterday I visited the Grand Turk and Caicos Isles where I started thinking about Climate Change and the implications of rising sea levels; not just on this beautiful archipelago in the Atlantic Ocean but other vulnerable outposts and nations in our small and beautiful world.
Rising Sea Levels
Increased temperatures, leading to rising seas, would mean a mass movement of people, populations and nations. The catastrophic results of our inability to control our Greenhouse Gas emissions, CO2 levels and globally embrace carbon reduction, wholly and unilaterally has a direct effect. Even those countries looking smugly on, believing perhaps it is something ‘happening to other people’, will not be unaffected. They will see unprecedented numbers of refugees and survivors moving towards safe havens until borders are forced to close, public opinion sours and politicians debate how many thousands of people will be allowed to settle in their “unaffected” country.
UN Climate Change Talks Paris 2015
Today, 10th December 2015 the UN Climate Change Talks in Paris, came to a historic agreement to limit global warming to 2 Degrees, with a target of a 1.5 Degrees, monitored over a 5 year reporting cycle to ensure that all is on track. This is historic. Since all 220 countries in attendance have agreed in principle with the targets on the table then, once ratified, this will become law around the globe.
How Will The UK Comply?
Thinking ahead and musing out loud, what impact would it have on the UK, if this agreement is ratified by the world’s nations, and how would we comply with the legal and binding target? The area with the greatest impact on our CO2 levels is our energy consumption and is undoubtedly where the biggest opportunities for savings will come. If the UK ratifies this treaty, our programme of generating energy from renewables might get an injection of enthusiasm, from an otherwise lukewarm and hitherto pro-gas administration.
However, the first and most fundamental step would be to understand how much, as a country, we are currently consuming and thus where the reductions can be made. Presently, we have various mechanisms and diverse methods of accounting for our CO2 and energy consumption. Many businesses view this as a laborious box ticking, time consuming, toothless, data reporting exercise to comply with red-tape. With the most recent piece of environmental and energy legislation being “The Energy Savings Opportunity Scheme” which, I can vouch personally, has been received by some within the business community with much rolling of eyes, tutting and, in some cases, baulking at the need to provide evidence of compliance.
Legislation Review 2015
However, during November 2015, the Government quietly carried out a review of the current legislation for energy consumers and the mechanisms for reporting and collection. They said that they wanted to understand whether the current methods were too complex and could be simplified. The suggestion was that ESOS could be used as a vehicle, adapted to catch commercial energy-consumption data.
Energy Savings Opportunity Scheme?
For those who are unfamiliar with it, ESOS is a formal UK energy consumption reporting mechanism, in full compliance with current EU regulations. Companies with UK-based operations involving more than 249 employees, or a balance sheet of in excess of 38m euros, are all affected.
Companies meeting these criteria must carry out a formal energy assessment of their business, identify where energy is paid for by them and report this to the Environment Agency. To support this submission, an evidence pack must be produced which shows how the figures were calculated. This includes energy-profiling and audits of consuming operations, buildings, plant equipment and transportation. It is expected that they identify areas of opportunity to reduce their consumption and the cycle for reporting is once every 5 years.
Vehicle for Compliance?
Sound familiar? The Climate Change agreement hammered out at Paris, December 2015 has a challenging clause to reduce global warming by 2 Degrees with a target of no more than 1.5 Degrees. Nations which ratify this treaty will have to report every 5 years on their position against the agreed target. ESOS is a legal reporting requirement on a 5 year collection cycle which collects current consumption and areas for improvement and reduction.
Energy Consumption Accounting, the Future?
I am speculating but, given the fact that the government has recently carried out a ‘consultation’ exercise to look at the effectiveness of current UK energy and environmental reporting legislation, it seems not unlikely that ESOS will become the preferred mechanism for reporting business consumption. However, this would be need to be conducted regardless of the size of the business and be appropriate to any business, within the UK, paying for energy directly.
Could there be a new strand of corporate returns and taxation based around Energy Accounting? We wait to see.