The EA is strengthening its approach to ESOS enforcement – here’s what you need to know

As ESOS is now in Phase 3, the Environment Agency (EA) has announced a more consistent approach to penalising non-compliant organisations.

ESOS was introduced in 2014 and requires all large businesses to carry out an energy audit every four years.  In earlier stages of the scheme, the EA said it took “a highly flexible approach” to enforcement, to reflect participants’ lack of familiarity. However, it says this resulted in some organisations “who came into compliance at the last possible moment, escaping any penalty at all, despite the regulatory effort required to deal with their persistent breaches”.

The EA is now making its enforcement position clearer. Each breach of the Regulations will receive a separate penalty. Companies that failing to notify the EA of compliance, even if the energy audit has been undertaken correctly, are still liable to receive a penalty.

Overview of ESOS non-compliance penalties

For each separate breach of the ESOS regulations, a penalty will be imposed as follows:  

  • Failure to notify: an initial penalty up to £5,000, plus a daily penalty of up to £500 for each working day the organisation remains in breach. This penalty will apply regardless of whether (or not) the organisation has undertaken an energy audit.
  • Failure to maintain records: an initial penalty of up to £5,000, plus a “sum representing the cost to the compliance body of confirming that the responsible undertaking has compliance complied with the scheme”. The organisation must also take steps to remedy the breach.
  • Failure to undertake an energy audit: an initial penalty of up to £50,000, plus a daily penalty of up to £500 for each working day the organisation remains in breach. The organisation must also take steps to remedy the breach. Note that there is a more lenient approach for new entrants, however: a lower initial penalty of up to £5,000.
  • Failure to comply with an enforcement/penalty notice: an initial penalty of up to £5,000; plus up to £500 for each working day the organisation remains in breach.
  • False or misleading statement: up to £50,000.

Consultation considers widening of ESOS criteria

In July 2021, UK government published a consultation on proposed changes to the scope and scale of the current ESOS scheme. The changes, which would be implemented during Phase 3 (compliance deadline of December 2023), could include extending the scheme to include medium-sized enterprises, as well as introducing net zero carbon assessments into the audits to drive decarbonisation activity.

We’ve got an overview of the proposed changes to ESOS – and what they mean for organisations in scope.

    Question? Ask the Energy Advice Experts

    Get in touch with BiU’s advice team on 01253 785409, email energy-hub@biu.com or complete the form below.