SECR: streamlined for success or a complexity nightmare?

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We’ve heard a lot recently on how the UK requires streamlined green reporting, in order to reduce burdens on business and build the carbon benefits we’re all keen to see.

Indeed, Claire Perry, Minister of State for Energy and Clean Growth, writes in the SECR (Streamlined Energy  Carbon Reporting) consultation response that government recognises today’s range of energy efficiency policies can create complexity and add burden to business.

The whole point of consulting, and indeed delivering on SECR itself, has been to offer a more streamlined and more effective energy and carbon reporting framework.

Sounds great, but there’s a catch.

More and more analysts, after trawling through the Government’s plans for SECR, have identified a number of areas that seem to suggest complex, burdensome reporting landscape.

This may not be the promised land that we were seeking.

SECR vs ESOS; a world of confusion

“Although the end of the CRC will be a relief to industry, the introduction of SECR will still leave them stuck with a complex and overlapping range of energy and carbon rules,” Roz Bulleid, Head of Climate, Energy and Environment Policy at EEF told the ENDS REPORT recently.

She went on to explain that SECR strips reporting duties from the public sector, while setting different requirements for listed and non-listed companies.

There’s more. SECR is set to replace the expiring CRC scheme. However, it is also likely to include at least those organisations that qualified for CRC, and will almost certainly include organisations that qualify for ESOS too. BEIS itself predicts an overlap of about 25%.

It’s important to note it will encompass much smaller enterprises than CRC (from and energy prospective), too.

BEIS predicts an overlap SECR / ESOS participants of about 25%

In this case, should SECR and ESOS be as one?

2019 will be a busy reporting year for some organisations. Not only will they be submitting their last CRC reports, the deadline for ESOS Phase 2 compliance is 5 December 2019. Qualifying companies will have little time to prepare for additional SECR reporting which is set to commence in April 2019.

A worrying capacity bottleneck, similar to the one which originally appeared with ESOS, appears on the cards.

Whether ESOS and SECR should eventually become one is a massive subject, and one we will examine better in the future. But right now, there are more pressing complexities for business to grapple.

What on earth is a ‘large’ business?

We wonder; why are the definitions of ‘large firms’ in SECR and ESOS different? You might think streamlining would avoid such confusion.

And what about the many complex and confusing SECR exemptions, the rules for parent companies and subsidiaries, or the potential for non disclosure/confidentiality if a business faces risk from disclosing?

Why are there no specific rules or guidance on which carbon intensity methodologies firms must use in their reporting?

These are top level examples of elements which frankly don’t feel streamlined, and don’t feel as though they have the good of UK businesses at heart.

Further, the Hub has discovered that ‘good practice’ guidance is coming on how firms should count issues such as on site generation, green and renewable energy tariffs, business travel, carbon offsetting and the increasing prevalence of ultra low emission vehicles in their reporting.

But what use is guidance? Why not legislate within SECR that, for example, if a firm can prove it generated and used a certain amount of energy from on site windpower, it can reduce the energy it reports under SECR by the same amount?

A return to the plain and simple

Don’t get us wrong; creating reporting legislation is an enormous, difficult task for Government. But it’s also a task one must approach with a level head.

If the goal truly is streamlining, then keep within the goalposts. In conclusion, the ENDS REPORT writes: ‘Despite its moniker, the scheme is perhaps not quite as streamlined as it might have been, disappointing some business groups that would have preferred a more straightforward regulatory landscape. A number of other measures that require the disclosure of energy data will continue to operate in parallel.’

Let’s see how the detail pans out in the Autumn when the Government publishes the detail. Meanwhile, here at the Hub, we will continue to research and report on SECR’s progress, and offer up straightforward, useful advice on the path to compliance for business.