Decarbonisation compliance · UK
Decarbonisation compliance consultancy: the rules that actually bind
A decarbonisation compliance consultancy should start by separating the rules that bind your company from the ones that bind only the government.
The net zero target and the carbon budgets are duties on the Secretary of State.
What reaches a company is narrower and more specific: SECR, ESOS, the UK ETS, UK CBAM from 1 January 2027, and Carbon Reduction Plans for in-scope public contracts.
Start here
Exists, applies, compels
Decarbonisation compliance is the part of a company’s climate work that is required of it, as opposed to chosen.
The useful discipline is to ask three questions of every rule: does it exist, does it apply to us, and does it compel us to do anything.
Many rules exist without applying to a given company, and some apply without compelling anything more than a disclosure.
A good decarbonisation consultancy maps those three states for you before it proposes any work.
The first step is usually the carbon legislation readiness check, which screens the main regimes against your size, listing and activities.
“All UK businesses must contribute to net zero under the Climate Change Act” is wrong.
Section 1 and section 4 place their duties on the Secretary of State.
The regime map
Which UK decarbonisation rules bind companies
| Rule | Who it reaches | What it compels | Status |
|---|---|---|---|
| SECR | Quoted companies (any size); unquoted companies and LLPs exceeding two of £36m turnover, £18m balance sheet, 250 employees | Energy and emissions figures in the directors' report (LLPs: an energy and carbon report) | In force since 1 April 2019 |
| ESOS | Large undertakings: at least 250 employees, or turnover over £44m and balance sheet over £38m | An energy assessment every four years, an action plan and progress updates | Phase 4: qualification 31 Dec 2026, compliance 5 Dec 2027 |
| UK ETS | Covered installations (combustion over 20 MW rated thermal input, and listed activities), aviation, domestic maritime | Monitor, report, have emissions verified and surrender allowances | In force; Phase II 2031–2040 |
| UK CBAM | Importers of aluminium, cement, fertilisers, hydrogen, iron and steel goods, above a £50,000 registration threshold | A tax on emissions embodied in the goods | From 1 January 2027 |
| PPN 006 | Bidders for in-scope central government contracts above £5m a year | A published Carbon Reduction Plan as a condition of participation | Procurements from 24 February 2025 |
| Climate-related financial disclosures | Certain companies and LLPs with more than 500 employees, including high-turnover companies over £500m | Eight TCFD-style disclosures in the strategic report | In force for years from 6 April 2022 |
| UKLR 6.6.6R(8) | Commercial companies in the FCA's listing category | A TCFD consistency statement, comply or explain | In force; UK SRS rules apply from periods beginning 1 January 2027 |
| UK SRS via PS26/19 | Listed companies in UKLR 6, 14, 15, 16 and 22 | UK SRS S1 and S2 reporting, on comply or explain; one-year Scope 3 and two-year S1 reliefs | Final; accounting periods from 1 January 2027 |
Climate Change Agreements sit outside this table because they are voluntary: a facility opts in to energy targets in return for a discount on the Climate Change Levy.
Minimum energy efficiency standards for let property are a landlord’s duty, apply in England and Wales only, and set band E as the current minimum; band C by 2030 is a proposal, not law.
The detail of each reporting regime is on the carbon compliance page, and the data behind them on the emissions compliance consultants page.
Carbon budgets
National ceilings, not company quotas
Under section 4(1) of the Climate Change Act 2008 it is the Secretary of State’s duty to set each five-year carbon budget and keep the net UK carbon account within it.
The current year falls in the fourth budget, 1,950 million tonnes for 2023 to 2027.
The seventh, 535 million tonnes for 2038 to 2042, was set by the Carbon Budget Order 2026 on 25 June 2026.
The 2050 target of at least 100% below 1990 was set by the 2050 Target Amendment Order 2019, whose draft was laid before Parliament that year.
The government announced the sixth budget as a 78% cut against 1990 by 2035, while the UK’s 2035 Nationally Determined Contribution commits to at least 81% — two different instruments.
The Climate Change Committee advises on each budget and reports on progress, as in its 2023 progress report to Parliament.
Budgets matter to a company indirectly, because they shape the policies — the UK ETS cap, procurement rules, building standards — that do reach it.
| Budget | Period | MtCO2e | Order |
|---|---|---|---|
| CB4 | 2023–2027 | 1,950 | SI 2011/1603 |
| CB5 | 2028–2032 | 1,725 | SI 2016/785 |
| CB6 | 2033–2037 | 965 | SI 2021/750 |
| CB7 | 2038–2042 | 535 | SI 2026/695 |
Carbon pricing
UK ETS, CCL and CBAM: three instruments, no “carbon tax”
The UK Emissions Trading Scheme covers heavy industry, power, aviation and domestic maritime — about a quarter of UK territorial emissions.
Covered operators follow the compliance cycle set out in Participating in the UK ETS, including verification by a UKAS-accredited verifier.
Expansion of the scheme to waste incineration will not happen in 2028 as first intended, and no new date has been set.
The UK carbon border adjustment mechanism is a tax on the emissions embodied in certain imported goods from 1 January 2027, and the importer is liable.
The government’s Industrial Decarbonisation Strategy of 2021 sets out the policy thinking behind these instruments for industry.
By sector
Where the compliance focus usually falls
| Sector | Rules that commonly reach it |
|---|---|
| Energy-intensive manufacturing | UK ETS for covered installations; ESOS; Climate Change Agreements (voluntary); UK CBAM for imported inputs from 2027 |
| Transport and fleets | ESOS includes transport energy; SECR for unquoted companies covers fuel used for transport; UK ETS covers aviation and domestic maritime |
| Real estate | MEES for let property in England and Wales (band E today); ESOS for large landlords |
| Financial services | Climate-related financial disclosures; the FCA TCFD-aligned listing rule; UK SRS on comply or explain for listed issuers from 2027 |
| Public-sector suppliers | PPN 006 Carbon Reduction Plans for in-scope contracts; NHS England's own requirement |
| Construction | PPN 006 on public contracts; ESOS and SECR by size |
Sector bodies publish their own material on decarbonisation, including the UK Green Building Council on buildings and the Green Finance Institute on financing building retrofit.
That material is useful context, but it is not a source of legal obligations.
Choosing a decarbonisation consultancy
What good decarbonisation compliance support looks like
The only credential UK law requires for any of this work is registration as an ESOS lead assessor on an approved register, which applies to the ESOS assessment alone.
For everything else, judge a decarbonisation consultant on method: which instruments they cite, how they build the inventory, and whether they distinguish proposals from law.
A consultancy that says it will “ensure compliance with carbon budgets” has misread the Climate Change Act.
For targets and reduction plans, see net zero consultancy; for the footprint itself, carbon consultancy.
Carbon Legal is an independent reference and not a law firm; it does not carry out compliance work itself.
A service is in development, and you can book a free 15-minute call or get in touch to talk your position through.
Ask for these in writing
- A regime map naming the provision that brings you into scope
- The dates that follow from your year-end
- One inventory that feeds every regime
- Which work needs a registered ESOS lead assessor
- What is proposed, not yet law
Frequently asked
Questions people ask
What is decarbonisation compliance consultancy?
Decarbonisation compliance consultancy helps an organisation work out which UK carbon and energy rules actually apply to it, meet them, and build a reduction plan on the same data. The rules that bind companies are specific: SECR in the directors' report, ESOS energy assessments, the UK ETS for covered installations, UK CBAM for importers of certain goods from 1 January 2027, and Carbon Reduction Plans for in-scope public contracts. UK SRS is a voluntary standard; the FCA's final rules require listed companies in scope to report against it, or explain, from 2027.
Do carbon budgets apply to my company?
No. Section 4 of the Climate Change Act 2008 makes it the Secretary of State's duty to set each five-year carbon budget and keep the net UK carbon account within it. A carbon budget is a national ceiling, and it places no obligation on any individual company. The 2050 net zero target in section 1 has the same shape.
Does the UK have a carbon tax?
Not an instrument by that name. What exists is the UK Emissions Trading Scheme for covered installations, aviation and domestic maritime; the Climate Change Levy on business energy, with a discount for facilities in Climate Change Agreements; and, from 1 January 2027, the UK carbon border adjustment mechanism, a tax charged on the emissions embodied in certain imported goods.
What regulations drive decarbonisation compliance for a large UK company?
Usually SECR, if it is quoted or a large unquoted company or LLP; ESOS, if it qualifies as a large undertaking on 31 December 2026; and PPN 006, if it bids for in-scope public contracts above £5 million a year. Depending on its activities it may also be in the UK ETS or liable to UK CBAM. Listed companies face the FCA's TCFD-aligned rule today and, under its final rules in PS26/19, UK SRS on a comply-or-explain basis for accounting periods beginning on or after 1 January 2027.
What are the penalties for getting it wrong?
They differ by regime. ESOS carries civil penalties set in the 2014 Regulations, up to £50,000 for failing to undertake an assessment plus up to £500 per working day for up to 80 working days. SECR has no penalty of its own; a defective directors' report is caught by the general Companies Act 2006 offences. Missing a PPN 006 requirement means failing a condition of participation in that procurement.
Is third-party assurance of emissions data required?
Not for SECR, ESOS or UK SRS disclosures today. No UK entity is under a legal duty to obtain sustainability assurance. The FRC's ISSA (UK) 5000 is for voluntary use from 15 December 2026, and the FCA's final rules in PS26/19 require only that a listed company which obtains assurance names the provider, which disclosures were assured and the assurance standards used. The UK ETS is different: verifiers must be UKAS-accredited.
How much does decarbonisation consultancy cost in the UK?
This page gives no fee figures. No regulator publishes a cost schedule for consultancy, and characterised market ranges are not sourced figures. Scheme charges and statutory penalties are published by their owners; for consultancy, ask for a written quote against a defined scope.
Is Carbon Legal a law firm?
No. Carbon Legal is an independent reference on UK carbon and energy reporting, published by Fractional Quest Ltd. It is not a law firm, is not regulated, and nothing on the site is legal advice.
Sources
Primary sources
Every figure, date and status on this page traces to the instrument’s owner. Secondary commentary is never the source for a number.
- legislation.gov.ukClimate Change Act 2008, section 4 — carbon budgets
The duty on the Secretary of State; no duty on companies.
- legislation.gov.ukThe Climate Change Act 2008 (2050 Target Amendment) Order 2019 (SI 2019/1056)
The 2050 target raised from 80% to 100%.
- legislation.gov.ukThe 2050 Target Amendment Order 2019 — draft as laid
The draft affirmative instrument, later made as SI 2019/1056.
- legislation.gov.ukThe Carbon Budget Order 2026 (SI 2026/695), article 2
CB7: 535,000,000 tCO2e for 2038–2042.
- GOV.UKUK's 2035 Nationally Determined Contribution
At least 81% by 2035 against 1990.
- GOV.UKNet Zero Strategy: Build Back Greener (October 2021)
The 2021 strategy; no longer the current delivery plan.
- DESNZIndustrial Decarbonisation Strategy (17 March 2021)
The government's 2021 strategy for industrial emissions.
- legislation.gov.ukThe Greenhouse Gas Emissions Trading Scheme Order 2020 (SI 2020/1265), Schedule 2
Combustion installations with total rated thermal input exceeding 20 MW.
- UK ETS AuthorityUK ETS: a policy overview
Coverage of about 25% of UK territorial emissions; Phase II 2031–2040.
- GOV.UKParticipating in the UK ETS
Who participates and the compliance cycle.
- legislation.gov.ukFinance Act 2026, Part 5 — carbon border adjustment mechanism
s.158(1): goods imported on or after 1 January 2027.
- legislation.gov.ukFinance Act 2000, Schedule 6, paragraph 44 — Climate Change Agreements
A reduced-rate CCL supply for facilities in an agreement.
- legislation.gov.ukEnergy Efficiency (Private Rented Property) (England and Wales) Regulations 2015, Part 3
Minimum level band E, England and Wales only.
- legislation.gov.ukSI 2018/1155 — the SECR Regulations
The instrument that created SECR, from 1 April 2019.
- legislation.gov.ukSI 2008/410, Schedule 7 Part 7A — large unquoted companies
The ¶20B exemption table: £36m, £18m, 250 employees.
- legislation.gov.ukESOS Regulations 2014 (SI 2014/1643), Schedule 1
At least 250 employees, or turnover over £44m and balance sheet over £38m.
- legislation.gov.ukESOS Regulations 2014, Part 8 — civil penalties
Regs 43–47 and their maxima.
- legislation.gov.ukCompanies Act 2006, section 414CB
Climate-related financial disclosures in the strategic report.
- FCAPS26/19: Aligning listed issuers’ sustainability disclosures with international standards (30 September 2026)
The final rules: UK SRS on comply or explain for listed companies in scope, accounting periods starting on or after 1 January 2027.
- FCACP26/5 — the consultation on UK SRS listing rules
What was proposed, including mandatory UK SRS S2; the final rules in PS26/19 did not adopt it.
- Cabinet OfficePPN 006: Taking account of Carbon Reduction Plans
A condition of participation above £5m a year, from 24 February 2025.
- Climate Change CommitteeCarbon budgets and targets
The statutory adviser's account of the budgets.
- Climate Change Committee2023 Progress Report to Parliament (28 June 2023)
The CCC's statutory progress assessment for that year.
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