ESOS Phase 3: Improvements and Changes

The UK government, after consulting with the Department for Business, Energy and Industrial Strategy (BEIS) in 2021, has announced several updates to ESOS aimed at enhancing its effectiveness within ESOS Phase 3 and Phase 4.

The primary objectives of these improvements are:

• To increase the number of participants taking action to reduce energy use by improving the quality of ESOS audits.
• To boost carbon and cost savings by expanding the number and scope of ESOS recommendations taken up by participants.
• To ensure that ESOS recommendations remain consistent with the UK’s Net Zero commitments.

Key changes for ESOS Phase 3 include:

• Introduction of a standardised template for compliance information in ESOS reports, which will be developed with stakeholders.
• Reduction of the 10% de minimis exemption to up to 5%, encouraging greater coverage of the scheme and improving data quality.
• Inclusion of an energy intensity metric (kWh/m2 for buildings, kWh/unit output for industry, kWh/miles travelled for transport) in ESOS reports to better align with Streamlined Energy and Carbon Reporting (SECR).
• Requirement for sharing ESOS reports with subsidiaries to facilitate better dissemination of information and promote energy efficiency.
• ESOS reports to provide more information on next steps for implementing recommendations.
• Participants will need to set a target or action plan following the Phase 3 compliance deadline, reporting progress annually through SECR reports or the ESOS web portal.

From Phase 4 onwards, if the target has not been met, participants will be required to explain why. Furthermore, additional data will be collected for compliance monitoring and enforcement, including information on corporate structure, energy consumption and emissions, and energy intensity metrics.

For more information, please visit the UK government’s official page on strengthening the ESOS Scheme