Environment Feature Article

February 24, 2015

Energy management and carbon reduction

Latest research indicates that, in the UK, buildings are responsible for almost 50% of energy consumption, with over one-third of this use being in the commercial and public sector. Nationally and globally, this is having significant impacts, most notably in terms of carbon emissions and climate change, but also in terms of the cost of sourcing dwindling fossil fuels.

For both legal and business reasons, the management of energy and the reduction in carbon footprints is now seen as a boardroom issue, with more organisations having to give consideration to the management of energy and investment in energy-efficient measures.

Drivers for energy reduction

All commercial and industrial premises require and consume energy to enable them to function and carry out both primary and support business activities. The cost associated with energy consumption has often been seen as a fixed overhead by businesses.

However, there are now many influences that require organisations to consider how they may reduce energy consumption, not least the impact that carbon dioxide emissions associated with energy use are having in terms of climate change.

The Government has introduced legislation such as the Climate Change Act and Energy Acts and set ambitious targets for business to reduce carbon emissions. The main regulatory schemes include the CRC Energy Efficiency Scheme, Building Regulations and Energy Certificates (EPCs and DECs), Climate Change Levy (CCL) and Climate Change Agreements (CCAs), EU Emissions Trading System (EU-ETS) and Energy Savings Opportunity Scheme (ESOS) – the latest scheme.

Global energy consumption is increasing at a time when fossil fuel resources are reducing. As a consequence, the wholesale cost of fuels is increasing, with these rises being passed onto the consumer.

As such, good energy management and a reduction in fossil fuel use can have business benefits in terms of cost savings through reduced consumption and dependency on fuel, less risk to organisational profitability when fuel costs do rise, better financial management through understanding projected fuel costs, tax advantages through the Enhanced Capital Allowances scheme and a possible reduction in Climate Change Levy.

Good energy management can also bring enhanced reputational benefits as part of an organisation’s corporate social responsibility agenda, which in turn can give an organisation the competitive edge.

Energy management strategy

According to the Carbon Trust, “energy management is the systematic use of management and technology to improve an organisation’s energy performance”. To be effective, it needs to be integrated, proactive and incorporate energy procurement, energy efficiency and renewable energy.

This will require “commitment, planning, implementation and sustained effort” through the application of an energy management strategy. In terms of strategy, organisations can undertake the following steps.

Get senior management commitment and support by highlighting the business benefits of an energy management strategy. This should also include appointing an energy manager to lead on the strategy
Understand the issues; these include regulatory requirements, how the organisation is currently using energy, how this compares with similar businesses and attitudes towards adopting energy-saving measures
Plan and organise: carry out an energy survey to see where energy savings can be made and develop an energy policy that includes identifying long-, medium- and short-term energy-saving targets
Develop an action plan outlining the practical steps that will be taken to achieve the saving targets, giving individuals responsibility for specific tasks
Control, monitor and report on performance regularly to check that progress towards the energy-saving goals is made
Determining current energy consumption and costs, and mapping the ways in which energy is used, are important facets of the strategy – the more data is collected, the better the understanding of usage.

ESOS

With the introduction of the Energy Savings Opportunity Scheme Regulations 2014, the assessment of energy will be compulsory for qualifying organisations. Qualifying organisations will be known as “large undertakings”. For the purposes of ESOS, an undertaking is a large undertaking if it meets either of the following criteria:

It has 250 or more employees in the UK
It has fewer than 250 employees, but has an annual turnover exceeding €50m and a balance sheet exceeding €43m.

In addition to the qualification route set out above, an undertaking will also qualify for ESOS if it is part of a corporate group containing at least one “large undertaking‟ as determined by the criteria outlined above within the UK.

The regulations will require organisations to measure total energy consumption in kWh or expenditure terms, identify areas of significant energy consumption and appoint a lead assessor.

Compliance with the scheme can be through the use of the ESOS energy audits (first compliance date is by 5^th December 2015 and every 4 years thereafter), ISO 50001 certification, Display Energy Certificates and Green Deal Assessments.

The information collected can be used to set clear, measurable targets for reducing energy use. This can be expressed in a number of ways, including:

Reducing energy consumption for the building and/or specific activities
Reducing emissions of carbon dioxide equivalents
Increasing percentage of the budget invested in energy-saving measures
Improving the return on investment from energy efficiency activities
Increased staff awareness and energy efficiency training.

The Action Plan, when developed, should detail how all the energy-saving measures will be carried out in order of priority, ordered into short-, medium- and long-term projects as well as no-cost and low-cost measures and measures that need capital investment.

The Action Plan should also cover the target dates, costs and resources needed for each measure, the key roles and who will carry out the measures and the availability of financial assistance from external sources to implement measures.

Practical solutions

According to the Carbon Trust, most businesses can reduce energy costs by at least 10%, and often by 20%. The hierarchy approach can be adopted, based on:

Reduction of energy use by avoiding unnecessary use and implementing energy-efficiency measures
Replacing fossil fuels with renewable energy sources and/or use cleaner fossil fuel technology such as solar, wind or hydro power
Neutralising the remaining unavoidable emissions through carbon offsetting schemes.

In terms of the wider building, energy reduction/efficiency can include having:

Heating systems with efficient boilers combined with better system/building insulation to prevent heat loss and good thermostatic control measures
Ventilation and/or air-conditioning systems that reduce air volume supplied and are well maintained, combined with the use of natural ventilation
Lighting efficiency with low-energy/longer-life tubes and bulbs, as well as motion sensor lighting technology
Purchasing energy by minimising peak usage, rescheduling work to avoid high peak rates, checking alternative tariffs.

Other measures can include having a “green” purchasing policy for energy-efficient equipment, combined with a campaign to ensure that employees actually utilise the energy-saving equipment appropriately.

This will include ensuring that any energy saving devices fitted to equipment are activated and utilised and that equipment is turned off when not in use. Although turning off equipment is often seen as not being energy efficient, it is estimated, for example, that a computer, if turned off at night, will cut the annual energy bill for that one item by over 25%.

Clearly, energy-efficient measures will need to be tempered against the needs to keep certain systems and equipment running for both security and safety reasons.

Without a change in behaviour by employees at all levels, the above measures may not succeed in meeting the energy-saving objectives set. Behaviour change is likely to be achieved through awareness and motivation of energy management.

It is possible to raise awareness and motivate employees by promoting both the wider issue and the benefits to the business that energy management will bring. This can be through normal communication means (emails, leaflets, posters) as well as through more formal learning and development sessions.