ISO 50005 - Implementing an energy management system

CONTENTS

• ISO 50005 - A four-level maturity model
• ISO 50005 and its hands-on Annexes A and B
• Financial compensation in fuel emissions trading (EU/Germany only)
• More legal background (EU/Germany only)
• Introducing energy management with ISO 50005 - conclusion
• What we can do for you

The introduction of an energy management system (EnMS) initially involves effort. During implementation, the company must assign an energy team, which will be missing elsewhere. In addition, simple changes such as process adjustments or training are usually not enough to improve energy performance.

Quite often, there is a need to invest in new, more efficient technology. A reliable profitability calculation based on the EN 17463 (VALERI) standard can be helpful here.

Against this background, it is not surprising that organizations avoid implementing a holistic EnMS according to ISO 50001 and continue to rely on their previous, often rather unstructured approach. Support for implementation is provided by the new ISO 50005 standard, which was published in English in 2021 (ISO 50005:2021).

The guide, which cannot be certified, enables users to make a gentle, step-by-step introduction to energy management. Ideally, this later leads to a fully comprehensive management system in accordance with ISO 50001. ISO 50005 is consistent with the international standard ISO 50001:2018, but does not cover all the requirements of the energy standard.

ISO 50005 - A four-level maturity model

The new ISO 50005 guide is based on a phased implementation approach with twelve elements, the respective individual topics and four maturity levels per element. The content of the requirements relates to the corresponding sections in ISO 50001.

In the first step, companies determine their current energy status. This enables them to identify the level at which they can enter into energy management. On this basis, they set concrete goals adapted to the respective company situation in order to continually improve their energy performance.

ISO 50005 is thus also an effective tool for a realistic self-assessment of the energy-related maturity level of your organization.

The four maturity levels of ISO 50005

The four maturity levels, which build on each other, are described in Clause 4 of ISO 50005:

Level 1 - Enablement

• No systematic energy management practices

Level 2 - Improvement

• Energy policy in place
• Energy team in place
• Analysis of energy consumption and energy cost data
• Evaluation of energy saving opportunities
• Sporadic systematic energy management practices in place

Level 3 - Emergence

• Systematic energy management practices
• Strategic energy management
• Improvement of monitoring and evaluation
• Legal compliance as EnMS requirement
• Learning organization

Stage 4 - Establishment

• Continual improvement of the EnMS
• Continual improvement of energy performance
• Implementation of the core elements of ISO 50001
• Readiness for gap analysis towards ISO 50001

For example: Clause 5.4

Element 4 - Energy assessment, Significant Energy Use (SEU) topic.

The twelve elements

The twelve core elements of ISO 50005 are based on the international standard ISO 50001.

Element no. and name
Element 1 Context of the organization
Element 2 Leadership
Element 3 Resources
Element 4 Energy assessment
Element 5 Energy performance indicators and energy baselines
Element 6 Targets, Energy Goals and Action Plans
Element 7 Competence and Awareness
Element 8 Operations and Maintenance
Element 9 Procurement and Design
Element 10 Process for Communicating and Directing Documented Information
Element 11 Monitoring, Measuring, Analyzing, and Evaluating Energy-Related Performance
Element 12 Management Assessment and Improvement

Clause 5 of the standard assigns criteria to a single topic of each element, corresponding to the above four maturity levels in terms of degree of achievement. The criteria build on each other and indicate what an organization must do to achieve each maturity level. If no criterion is specified, the respective topic plays no role in the classification.

Meeting the requirements of Level 4 already indicates a higher level of energy efficiency. Here, a gap analysis can indicate which steps are still necessary to reach the level of a fully comprehensive, certifiable management system according to ISO 50001.

ISO 50005's annexes are hands-on

In Annex A, ISO 50005 contains a wide range of assistance and implementation examples for each of the twelve core elements. This makes it much easier for companies to determine the energy efficiency status that applies to them and to implement step-by-step measures to continually improve their energy performance.

Annex B details the criteria for each level and provides a link between the sections and subsections of ISO 50001 and the respective elements. This comparison is particularly helpful because the guide is not structured according to the High Level Structure (HLS). This makes a direct comparison with the clauses and requirements from ISO 50001:2018 - for example, for a gap analysis - more difficult.

ISO 50005 - financial compensation in case of fuel emissions trading

ISO 50005 also has a political relevance: in Germany, for example, internationally operating companies that are active in a sector that is particularly affected by the issue of carbon leakage*, and that are disadvantaged by fuel emissions trading, can obtain financial compensation. This is provided for in the " SESTA Carbon Leakage Regulation - BECV" of July 28, 2021. One of the prerequisites is that affected companies have introduced an energy management system and thus implement savings measures that result in a reduction of energy consumption and their greenhouse gas emissions.

*Carbon leakage → Shifting_{CO2 emissions} covered by the European Emissions Trading Scheme to countries outside the EU in order to circumvent European greenhouse gas emissions requirements.

For companies consuming less than 10 GWh of energy per year of fossil fuels, proof of an EnMS according to ISO 50005 (Level 3) is a possible counterpart to get the offset. Proof of offsets must be confirmed by an auditing body such as DQS.

More legal background (EU/Germany only)

Energy Financing Act (EnFG)

Law for financing the energy turnaround in the electricity sector through payments by the federal government and levying of charges

This special equalization scheme is an exceptional provision under which electricity-cost-intensive companies and other eligible parties can receive a cap on levies1 on electricity to ensure competitiveness. The basis for this has been the Energy Financing Act since January 1, 2023.

The Act is intended to standardize the limits on the amount of levies payable in the electricity sector and bundle them in a single law. It replaces the previous regulations on the "special equalization scheme" in the EEG (elimination of Section 63 EEG). Section 28 ff EnFG contains the main new regulations for electricity-cost-intensive companies.

The aim of the special equalization scheme continues to be to limit the levies* payable by electricity-cost-intensive companies in order to maintain international competitiveness.

*Levies= KWKG levy plus offshore network levy, the EEG levy has been abolished since July 2022.

Electricity price compensation (SPK)

Payment of aid to electricity-intensive companies to compensate for indirect_CO2 costs; directive of August 24, 2022.

According to Article 10a, paragraph 6 of Directive 2003/87/EC, as amended on March 14, 2018, Member States may grant State aid in favor of sectors or subsectors deemed to be at significant risk of carbon leakage due to greenhouse gas emission costs passed on to the electricity price, in order to compensate for these costs.

By addressing the risk of carbon leakage, an environmental objective is pursued since, in the absence of a binding international agreement on the reduction of greenhouse gas emissions, the aid aims to prevent an increase in global greenhouse gas emissions caused by the relocation of production activities outside the European Union.

Thus, electricity price compensation also serves to achieve the objectives of Directive 2003/87/EC. In order to reduce the risk of relocation of production activities outside the European Union, this Directive grants aid to compensate for the costs of greenhouse gas emissions passed on to the electricity price.

Requirements in terms of the SPK

As a requirement of the BECV, an EnMS according to ISO 50001, an environmental management according to EMAS and ISO 50005 also apply here for the electricity price compensation. The following investments in energy efficiency measures are required:

Since 2021 up to and including 2024: Investments in measures to improve energy efficiency with a payback period of max. 3 years. The investment amount must correspond to the sum of the aid from 2021 - 2024, provided that sufficient measures have been identified.

From 2025: Investments in energy efficiency improvement measures with payback period of max. 3 years. The investment amount must be the complete previous year's aid, provided that enough measures have been identified. If less than 50% of the aid amount is invested in measures, the measures must be evaluated using the net present value method with DIN EN 17463, as in BECV §11.

Implementing energy management with ISO 50005 - Conclusion

ISO 50005 is a guideline for the step-by-step introduction of a fully comprehensive energy management system, which particularly addresses small and medium-sized companies as well as public authorities. The core of the international standard is the twelve elements, which are based on ISO 50001 and simplified in terms of content. The corresponding individual topics are assigned to a maturity level from 1 to 4 depending on the degree of fulfillment.

By reaching level 4 for all elements, a company comes quite close to the level of an effective management system. To achieve this in full, a gap analysis is required and the gaps identified must be eliminated.

In Germany, for example, If a company meets Level 3 of the guideline, this can serve as evidence for financial compensation based on the Carbon Leakage Regulation BECV.

DQS - Your Certification Partner

DQS is accredited by DAkkS for all common management system standards such as ISO 9001, ISO 14001, ISO 45001 or ISO 50001. In the run-up to certification, a pre-audit can serve as an initial performance evaluation to identify strengths and potential for improvement.

For larger certification projects, a project planning meeting is a valuable opportunity to get to know DQS and its auditors. The subsequent system analysis (stage 1 audit) serves to record your management system with its processes, regulations and documents. In the certification audit (stage 2 audit), the actual system assessment takes place. If all standard requirements are met, you will receive an internationally recognized certificate from DQS.