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Mandatory Energy Audits: less than 2 months to comply

Global
09/10/2015
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Article 8(4) of the Energy Efficiency Directive (2012/27/EU) (the “EED”) requires all Member States to introduce legislation obliging all organisations that are not SMEs to undertake mandatory energy audits by 5 December 2015, and every four years thereafter. Implementing legislation should have been introduced during the summer of 2014; however, many States did not meet this deadline and some have still not implemented the requirements fully, or at all. In light of this, some Member States have taken the decision to push back the compliance date (from 5 December 2015) but where this has not been done, non-SMEs and in some cases, their corporate groups, may still be required to undertake the audit by 5 December 2015.

The requirements of Article 8 of the EED have not been uniformly implemented across Member States. For example, some States, as well as obliging non-SMEs to undertake audits, have also extended the obligation to those organisations which meet certain energy use thresholds or which are undertaking particular activities. In the UK, the obligation to comply technically extends to all members of a global corporate group who use energy in the UK. In these circumstances, the legislation may bring in a much wider range of participants than the EED originally envisaged. The relevant implementing legislation and guidance should therefore be carefully checked to determine whether and where an organisation (and its group) is in scope and if so, what are its routes to compliance and any risks/liabilities associated with any non-compliance (this could be monetary penalties, sanctions or reputational risks).

Where an organisation determines that it is not able to comply by the relevant compliance deadline, consideration should be given to risk management and limitation strategies. This may involve negotiation to achieve an enforcement/regulatory position. Organisations should also bear in mind the impact of these requirements in any transactions/M&A (costs of compliance, residual liabilities etc), both in respect of the first compliance phase (ending 5 December 2015) and for subsequent phases.

CMS has created a high level snapshot, in the form of an interactive e-guide across 18 Member States. The e-guide (updated as at October 2015) is available here.

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