As environmental professionals, staying abreast of regulatory changes is crucial. The Energy Savings Opportunity Scheme (ESOS) is undergoing significant modifications in its fourth phase, presenting both challenges and opportunities for businesses. This blog post delves into the key changes and their implications for businesses in the UK.
Legislative Background
The UK government’s commitment to strengthening ESOS required new legislative underpinning post-Brexit. The Energy Act of 2023 provides the necessary powers to enhance the scheme, as government looks to strengthen audit requirements, add a mandatory net zero element, improve the ESOS audits themselves and require public disclosure of high-level assessment recommendations.
Notably, the Act also allows for potential extension to medium-sized businesses, not just large companies, and requiring that energy efficiency measures are undertaken, though these are still under consideration.
Net Zero Assessments: A Game-Changer
The most significant addition to ESOS Phase 4 is the mandatory net zero assessment element. This requirement will push all participating businesses to critically evaluate their path to carbon neutrality. The British Standards Institute (BSI) has released 2 Public Consultations: PAS 51215-1 and 2 for energy and net zero assessments, and competency of lead assessors and assessment teams respectively, which eventually will form the standards ESOS phase 4 participants will be required to meet.
Implications for Businesses
- Long-term strategic planning: Businesses must now think beyond quick wins in energy efficiency and map out viable routes to net zero.
- Holistic decision-making: Energy efficiency measures should be evaluated in the context of long-term decarbonisation goals.
- Risk assessment: Companies need to consider potential risks and costs associated with different net zero trajectories.
What else to expect in Phase 4
- Adjusted scope thresholds: Aligning with Streamlined Energy and Carbon Reporting (SECR), more businesses will fall within ESOS scope. New thresholds are:
- 250 or more employees (unchanged)
- Annual turnover over £36 million (previously £44 million)
- Balance sheet over £18 million (previously £38 million)
- Mandatory action on recommendations: Businesses must either implement suggested measures or publicly explain their decision not to do so.
- Standardised auditing: ESOS reporting must now adhere to existing auditing standards like ISO 50002.
- Compliance route changes: Display Energy Certificates and Green Deal Assessments are no longer valid compliance routes.
Looking Ahead
ESOS Phase 4 commenced on 6 December 2023, with a compliance deadline of 5 December 2027. As environmental professionals, we must guide our organisations or clients through these changes, ensuring compliance while leveraging the new requirements to drive meaningful progress towards sustainability goals.
In order to ensure you are kept aware of changes to legislation affecting you, and can plan for maintaining future compliance, keep checking our website or socials, and give EHS Management a call on 07764302858, or drop us a line here.
