News Archive - Monthly Archives: November 2021

Scope 3 Greenhouse Gas emissions and net-zero targets

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Greenhouse Gas (GHG) emissions are divided into three different groups or ‘scopes’ by the most widely-used international accounting tool, the Greenhouse Gas (GHG) Protocol.

For Scope 1, companies need to report on emissions relating to owned and controlled aspects of their business such as company vehicles and fuel consumption.

Scope 2 broadly covers indirect emissions from the purchase of energy that is necessary for a business to function.

Meanwhile, Scope 3 includes all other indirect emissions that lie outside their own organisation and occur upstream and downstream in the corporate value chain instead.

Scope 3 emissions may represent as much as 80% of a business’s total emissions, from the goods it purchases to the disposal of the products it sells. This means to truly target carbon net-zero, a business will need to assess the emissions through their entire value chain and identify where to focus activities.

In our experience, most businesses are finding it relatively straightforward to calculate their Scope 1 and Scope 2 GHG emissions, but meeting the internationally accepted Scope 3 Standard may be a different matter altogether due to the complexity of the process.

That’s certainly the view of John Laban, EU Representative for the Open Compute Project. He predicted: “When businesses start reporting on Scope 3 GHG emissions all of hell will be let loose … Pandora’s box is opened.”

If you need further information on how to best meet the Scope 3 Standard, please get in touch with one of our consultants on 01225-867722.

Don’t be scammed by false EII Compensation claims

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Recently there have been calls for the government to introduce measures to alleviate the problems faced by industry in the face of the current energy crisis.

Hit by four-fold increases in the cost of electricity and natural gas over the course of the past year, it goes without saying these are difficult times for businesses so any help is welcome.

Capping business energy bills, the temporary removal of VAT and the short-term suspension of non-commodity costs (in particular green taxes) have all been mentioned as possible options.

Another option is to open up eligibility for the EII Compensation Scheme, which awards exemptions to eligible Energy Intensive Businesses for up to 85% of the costs in their electricity bills due to the Contracts for Difference, Renewables Obligation and small-scale Feed-in Tariffs.

At present, a business must pass a 20 per cent electricity intensity test to be considered for the scheme. Eligible sectors are defined by a four-digit NACE (Nomenclature des Activites Economiques dans la communaute Europeenne) Code.

As things stand, however, the Department for Business, Energy and Industrial Strategy (BEIS) have rejected proposals to reduce this threshold and ‘capture’ more companies, which makes a mockery of wild claims by some unscrupulous energy brokers that your company could be set to save anything up to £200,000.

The reality is that very few EII companies qualify for the scheme – based on the latest figures published by BEIS – so it is prudent not to be drawn in by the headline figures, and risk giving your energy data away without due diligence says Energy Management National Account Development Manager Ian Scattergood.

“Don’t be scammed into providing contract or energy supply information without sense checking the details with us first,” he advised

“From the applications we have processed so far, it would appear that those businesses that are run profitably and efficiently are less likely to be successful.”

Cold calls could land you in hot water

You may also be approached about other schemes introduced by the government to encourage the decarbonisation of the economy.

One is the Industrial Energy Transformation Fund (IETF) which is now in Phase 2 and provides around £220 million in funding between Autumn 2021 and 2025. It is designed to support the development and deployment of technologies that enable businesses with high energy use to transition to a low carbon future.

Meanwhile, certain companies operating mineralogical and metallurgical processes (MinMet) will be exempt from the Climate Change Levy (CCL). This measure was introduced in April 2014 to ensure a competitive playing field exists across the European Union for manufacturers of glass and concrete, for example.

But it is important to note that this scheme is run through HMRC, who must be notified of your participation and require annual assessments. Any misclaims are treated as fraud and it would be you, the business, not the consultant who signed you up to the scheme claiming eligibility, that would have to pay all money back plus interest and run the risk of a wider HMRC audit.

“We have heard of some cold calls of this nature where businesses have been signed up to schemes they aren’t eligible for. It is the responsibility of the business to ensure they are happy the claim is appropriate,” added Mr Scattergood.

Energy Management provides you with independent, unbiased advice on all aspects of energy procurement and energy cost control including any exemption claims you may be eligible for.

For further information please email Ian Scattergood (is@energymanagementled.com) or call on 01225 867722’