On 28^th July 2022, the UK Government published their response to last year’s consultation, detailing their intentions to strengthening the Energy Savings Opportunity Scheme (ESOS). Following the current landscape of ESOS compliance, the consultation explored areas to improve the quality of ESOS audits, mandating ESOS recommendations, whilst ensuring that it aligns with the UK’s Net-Zero commitments. The UK Government provided a summary of optimistic feedback and decisions that indicated potential changes to phase 3 compliance requirements ahead of 5^th December 2023 Phase 3 deadline. Other ambitious changes are to be elaborated in later Phases.
The Phase 3 changes relate to:

• A standardized template for participants to include compliance information in the ESOS report.
• The de minimis exemption to now 5% (previously 10%).
• The addition of an overall energy intensity metric in ESOS reports – This also fills the existing requirements for SECR.
• Requirement to share ESOS reports with subsidiaries.
• Requirement for ESOS reports to provide more information on next steps for implementing recommendations.
• Requirement for participants to set a target or action plan following the Phase 3 compliance deadline, on which they will be required to report against for Phase 4.
• Collection of additional data for compliance monitoring and enforcement.
• There will be an increased penalty for non-compliance – an initial penalty of up to £50k and an additional £500 per day until the company complies.

These changes will require additional ESOS reporting, and some businesses will have to go the extra mile in matters like auditing additional sites to comply with the reduced de-minimis. Furthermore, businesses can voluntarily integrate Net-Zero elements into audits and fulfil other Phase 4 requirements in pursuit of earlier ESOS compliance. The UK Government and ESOS Professional Bodies will also work together to improve ESOS report quality through active monitoring and assessment of lead ESOS assessors. Whilst these changes are subject to parliamentary scrutiny, it’s in the best interest for businesses to comply ahead of the Phase 3 deadline. Businesses will need considerable amount of time to ensure that they are fully compliant and prepared for any developments to ESOS and regulatory implementation from the UK Government.