Within previous blogs we have set out the requirements of Phase 3 of the Energy Savings Opportunity Scheme (“ESOS”) – see Key changes to Energy Savings Opportunity Scheme, Michael Barlow and ESOS Phase 3: Navigating ESOS Action Plans and Annual Progress Updates, Michael Barlow.

ESOS is a mandatory energy assessment scheme for organisations in the UK that meet the qualification criteria, with the Environment Agency acting as the scheme administrator.

As of this month, the government has issued an update stating that they will be postponing some of the changes for Phase 4 announced in the previous government’s response to the ESOS consultation. 

In this article, we aim to set out what those changes are and how they will affect participants in ESOS, as well as which elements of Phase 4 have not been changed by the announcement.

Delay of Mandatory Net Zero Requirements

One of the most significant changes to Phase 4 is the postponement of mandatory net zero requirements. The previous government had intended to align ESOS Phase 4 audits with net zero targets. The government’s response to the ESOS consultation outlined the introduction of a net zero assessment, and associated reporting requirements, to identify potential risks to the business in transitioning to net zero, along with possible emission reduction pathways. It was also intended to ensure that current investments in energy efficiency do not impede progress towards these net zero trajectories. 

The current government has decided to delay these requirements until Phase 5 (2027-2031) to allow time for the Phase 3 changes to take effect. Delays to Phase 3 legislation and guidance mean that it will take longer than originally envisaged for changes to take effect.

Voluntary Net Zero Assessment Option

While mandatory net zero reporting has been delayed for Phase 4, organisations can voluntarily follow the net zero assessment process for ESOS compliance. The Department of Energy Security and Net Zero (DESNZ) has collaborated with the British Standards Institution (BSI) to develop new PAS standards PAS 51215-1:2025 and PAS 51215-2:2025.

PAS 51215-1:2025 outlines the process for conducting combined energy and decarbonisation assessments. This includes identifying opportunities to enhance energy efficiency, reduce greenhouse gas (GHG) emissions, and developing an implementation plan to achieve net zero within the assessment boundary. PAS 51215-2:2025 specifies the competencies required for lead assessors and assessment teams, respectively. Further guidance from DESNZ will be published to accompany PAS 51215-1:2025. 

Organisations that follow the PAS 51215-1:2025 process on a voluntary basis in Phase 4 can provide feedback to DESNZ to inform decisions on Phase 5. PAS 51215:2014 will continue to be used as the competency standard for ESOS leas assessors for Phase 4. DESNZ will communicate further on opportunities for feedback on the implementation of the PAS standards later in the year.

Unchanged Qualification Criteria

The qualification criteria for ESOS Phase 4 remain unchanged. Proposed changes to align the qualification thresholds with Streamlined Energy and Carbon Reporting (SECR) requirements have not been implemented. The qualification date for Phase 4 is set for December 31, 2026. 

Changes that will go ahead for Phase 4

At present, the following changes will go ahead in Phase 4:

  • removal of Display Energy Certificates (DECs) and Green Deal Assessments (GDAs) as compliance routes;
  • progress against action plan commitments to be included in the ESOS assessment; and
  • where action plan commitments have not been met, participants must provide an explanation.

Further guidance on these changes will be provided in due course.

ESOS Phase 4 Deadline

The deadline for ESOS Phase 4 compliance is December 5, 2027. Organisations are encouraged to begin preparing for this deadline by working on their Phase 3 ESOS Action Plans, which are due by March 5, 2025. Full government guidance for Phase 4 is expected to be released in early 2027, providing further clarity on the requirements and expectations for compliance.

Conclusion

The changes introduced in ESOS Phase 4 highlight the ongoing evolution of the scheme, particularly with regard to net zero requirements. While mandatory net zero requirements have been postponed, organisations may want to consider voluntarily engaging in the combined energy and decarbonisation assessment under the new PAS standards. This will not only help them prepare for future requirements but also offers an opportunity to provide feedback to shape the net zero requirements for Phase 5. Companies should stay informed and begin preparations to meet the upcoming Phase 4 compliance deadlines, ensuring they remain aligned with ESOS requirements moving forward.


If you require further advice on ESOS and how to comply with the scheme, please contact Michael Barlow and Annalise Slocock.

Written by Annalise Slocock and Charlotte Colvin