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Compliance | 
05/02/25

Important ESOS updates: Phase 4 and 5

On February 4, 2025, the Environment Agency released an update regarding the Energy Savings Opportunity Scheme (ESOS) Phases 4 and 5. 

The key points are as follows:

Mandatory Net Zero requirements postponed to Phase 5

The government has decided to delay the introduction of mandatory Net Zero considerations in ESOS audits until Phase 5 (2027-2031). This postponement aims to provide businesses with adequate time to prepare for these significant changes and allows the Department for Energy Security and Net Zero (DESNZ) to assess the impact of recent modifications implemented in Phase 3.

Qualification thresholds remain unchanged for Phase 4

Proposed adjustments to align ESOS qualification thresholds with the Streamlined Energy and Carbon Reporting (SECR) requirements will not proceed in Phase 4. Consequently, the existing qualification criteria and the qualification date of December 31, 2026, remain unchanged.

Upcoming changes in Phase 4

Subject to parliamentary approval, the following modifications are anticipated for Phase 4:

  • Removal of certain compliance routes: Display Energy Certificates (DECs) and Green Deal Assessments (GDAs) will no longer be accepted as compliance methods.
  • Action Plan accountability: Organisations will be required to report progress against their action plan commitments within their ESOS assessments. If specific commitments are unmet, participants must provide explanations.

DESNZ plans to release further details on these changes in the near future. The necessary legislative adjustments, comprehensive guidance, and updates to the Manage your Energy Savings Opportunity Scheme (MESOS) IT system are expected to be completed by early 2027, ahead of the Phase 4 compliance deadline on December 5, 2027.

Voluntary Net Zero reporting option in Phase 4

While mandatory net zero assessments are deferred until Phase 5, organisations are encouraged to voluntarily incorporate net zero considerations in Phase 4. DESNZ, in collaboration with the British Standards Institution (BSI), has developed two Publicly Available Specifications (PAS) to guide this process:

  1. 51215-1:2025: This standard outlines the process for conducting combined energy and decarbonisation assessments, resulting in an implementation plan to achieve net zero emissions.
  2. PAS 51215-2:2025: This standard specifies the competencies required for lead assessors and assessment teams involved in these evaluations.

Both standards are scheduled for publication on February 7, 2025.

Organisations opting to follow PAS 51215-1:2025 can assess greenhouse gas emissions related to their energy use, evaluate governance and risks associated with achieving net zero, and develop a plan to reach net zero emissions by 2050.

DESNZ will provide accompanying guidance to ensure compliance with ESOS audit requirements under current regulations.

These developments reflect the government's commitment to enhancing the effectiveness of ESOS and supporting businesses in their transition to net zero emissions.

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