Energy Audits to Hit All Businesses

March 2014               The government’s decision to implement energy audits on all non-SMEs before 5 December 2015 will cause a headache for every company relying on road transport - regardless of their size.

Nick Radcliffe, MD of FreightArranger, warns that the new Department for Energy and Climate Change directive will put pressure on the transport sector to cut emissions, but there are minimal savings left to be made on road vehicles and alternatives will need to be sought.

The Department for Energy and Climate Change says the new audits, which will be repeated every four years, must cover transport, buildings and industrial operations and be carried out in accordance with the EU Energy Efficiency Directive.

The transport sector listed as the second largest contributor to total UK carbon emissions, emitting some 120 million tonnes per year, or a quarter of the UK total, and will be a target for businesses looking to reduce their output. And not just large businesses directly audited, but also those in the supply chain.

Radcliffe is a logistics industry insider and has studied the economics and environmental impacts whilst developing FreightArranger, a revolutionary new system which is making logistics more efficient by making the most of both road and rail by organising transport via a web-based system.

Radcliffe said: “Much has been done to make road vehicles more fuel efficient through improved aerodynamics, improved engine efficiency and less resistant tyres. However, basic economic theory tells us that although further improvements can be made, each additional step yields a smaller benefit.

“Rail freight, however, helps considerably in reducing fuel consumption: metal wheels running on metal rails are near-frictionless. The result is to reduce fuel consumption per tonne mile by some 67%.  Heavier commodities such as coal and aggregates achieve even higher savings.”

Use of rail freight is a mode which is growing, but is still relatively unexplored with fewer than 10% of freight tonne miles in UK being by rail. 

The new energy audits are intended to influence behaviour change by businesses and will be structured in a way that advice is given on energy consumption reduction. Such a scheme is already in place for UK companies quoted on the stock exchange and includes mandatory reporting in the annual directors report.

Radcliffe said: “All sizes of company will be affected by this decision. Although the audit and reporting burden falls only on large companies, they outsource many aspects of their activities to others and so there will be a definite knock-on effect.”

Radcliffe also contests the perception that businesses need to be really large or to have a train load of freight to consider using rail: “With intermodal freight, this is not so: consignments as small as a single 20 foot container can be taken.

“When fuel use is being squeezed and monitored more than ever before, it is time for companies to look to explore new ways of undertaking tasks and I would strongly encourage them to look to rail as a simple and effective method of slashing fuel consumption.”

Radcliffe added: “Many of our larger companies are retailers and manufacturers who are dependent on purchasing services like transport along with products and components from an array of suppliers. So, for large companies to achieve energy saving, they have to push the initiative through the supply chain into medium-sized and small companies too.”

Of course, reducing energy consumption also means reducing costs, so participating companies can expect to obtain a long running cost benefit, and one that it is likely to increase in value in the future.