As consultants, we understand that energy efficiency and carbon reduction are essential aspects of any business strategy. The latest update from the Department of Energy Security and Net Zero (DESNZ) regarding Phase 4 of the Energy Savings Opportunity Scheme (ESOS) has important implications for businesses aiming to meet regulatory requirements and contribute to the UK’s broader sustainability goals.
Mandatory Net Zero Requirements Delayed to Phase 5
One key development is the delay in the mandatory inclusion of net zero considerations in Phase 4 audits. Initially, Phase 4 (2023-2027) was expected to require businesses to integrate net zero strategies into their ESOS assessments. However, due to delays with Phase 3 legislation and guidance, the government has decided to postpone these requirements until Phase 5 (2027-2031). This decision allows businesses more time to prepare for the changes.
No Change To ESOS Qualification Criteria for Phase 4
The qualification criteria for Phase 4 will remain unchanged, with the qualification date set for 31 December 2026. Any proposed changes to thresholds, aimed at aligning with the Streamlined Energy and Carbon Reporting (SECR) requirements, will be reviewed as part of ongoing efforts to streamline business energy and emissions reporting.
Smaller Phase 4 Changes
Several changes are still planned for Phase 4, subject to parliamentary review:
- Removal of Display Energy Certificates (DECs) and Green Deal Assessments (GDAs) as valid compliance routes.
- Companies must now need to demonstrate progress against their action plans during the assessment.
- Where commitments have not been met, an explanation will be required.
Voluntary net zero reporting option in phase 4
For businesses looking to show a commitment to net zero, DESNZ has partnered with the British Standards Institution (BSI) to introduce two new PAS standards, which will be published on February 7, 2025:
PAS 51215-1:2025: This standard outlines the process for conducting an energy and decarbonisation assessment, integrating both energy use and carbon emissions into a comprehensive net zero implementation plan.
PAS 51215-2:2025: This standard specifies the competencies required for lead assessors and assessment teams to handle both energy efficiency and carbon emissions within the ESOS framework.
By following PAS 51215-1:2025, organisations can voluntarily include:
- greenhouse gas (GHG) emissions related to their energy use in their ESOS assessments
- governance and risk assessments for net zero, to achieve net zero by 2050.
Looking Ahead To Phase 5
Although the mandatory net zero requirements are postponed, businesses that choose to use the PAS 51215-1:2025 process during Phase 4 will contribute valuable feedback to ESOS, especially for Phase 5. The DESNZ plans to provide more information about the implementation of these standards and opportunities for public consultation later in the year.
As consultants committed to sustainability, we encourage businesses to continue prioritising energy management strategies in anticipation of the upcoming changes.
