Energy and utilities: which regimes actually apply

One company, several regimes

There is no single “energy sector reporting rule”.

Instead, several distinct regimes apply in parallel, each with its own legal basis and its own scope test.

The most useful first distinction is between carbon pricing and sustainability disclosure. The UK Emissions Trading Scheme prices emissions through tradable allowances; SECR, ESOS and the UK SRS are reporting and audit obligations.

A large, listed power company can be inside all four at once.

The table below maps which is which.

The UK Emissions Trading Scheme

The UK Emissions Trading Scheme replaced the UK’s participation in the EU ETS on 1 January 2021^[1]. It works on a cap-and-trade basis: a cap is set on total emissions from covered sectors, and operators must surrender allowances to cover their verified emissions each year^[1].

For the energy sector, the key inclusion test is combustion. The scheme covers the combustion of fuels in installations with a total rated thermal input exceeding 20 megawatts, alongside the specified industrial activities listed in Schedule 2 of the Greenhouse Gas Emissions Trading Scheme Order 2020^[2].

In-scope operators must hold a permit, monitor and report their emissions through a verified annual report, and surrender allowances to match^[1]. Unlike disclosure regimes, the UK ETS carries a direct financial cost: emissions that are not covered by free allocation must be paid for through purchased allowances.

Power generation has historically received little free allocation, which is why carbon pricing weighs more heavily on generators than on many other sectors^[1].

Why Scope 1 dominates

The GHG Protocol classifies emissions into three scopes: Scope 1 (direct), Scope 2 (purchased energy) and Scope 3 (value chain)^[7].

For power generators and many utilities, direct combustion is the business, so Scope 1 usually dominates the footprint. That reverses the typical pattern in service or financial sectors, where Scope 3 leads.

Three categories of Scope 1 emission matter for energy companies, and each is measured differently:

Scope 2 — typically electricity drawn for a company’s own operations — is usually small relative to the generation it sells, but it still needs reporting under both SECR and UK SRS S2.

For the wider supply-chain picture, our Scope 3 emissions guide covers the value-chain categories that are harder to estimate.

SECR and ESOS: what already applies

Before the UK SRS arrives, two reporting and audit regimes already bind most large energy companies.

SECR. Streamlined Energy and Carbon Reporting applies to quoted companies of any size and to large unquoted companies and LLPs, and has been in force since 1 April 2019^[4]. A company is “large” if it exceeds two of three thresholds: turnover over £36m, balance sheet over £18m, and more than 250 employees^[5]. SECR disclosure sits within the Directors’ Report.

ESOS. The Energy Savings Opportunity Scheme requires qualifying large undertakings to carry out energy audits. The Phase 4 notification deadline is 5 December 2027^[6]. Energy-intensive operators are squarely in scope, and the audit findings often surface the efficiency measures that later feed a transition plan.

We cover each in depth in the SECR requirements guide and the ESOS for the energy sector page, with the deadline detail in our ESOS Phase 4 guide.

UK SRS S2, asset disclosure and transition planning

For listed energy companies, the most consequential change ahead is UK SRS S2. The FCA’s CP26/5 proposed that in-scope listed companies report against UK SRS S2 climate disclosures for accounting periods beginning on or after 1 January 2027^[3].

CP26/5 closed on 20 March 2026, and the FCA is expected to publish a Policy Statement with final rules in autumn 2026^[3]. Until then the dates are proposals, and the standards are available for voluntary use.

UK SRS S2 keeps the four TCFD pillars — governance, strategy, risk management, and metrics and targets^[3]. For asset-heavy businesses, the strategy pillar carries the most weight: energy infrastructure has multi-decade lifespans, so physical risk, transition risk and the resilience of the business model all have to be addressed against assets that will still be operating well past 2050.

The standard is judgement-based and uses an enterprise-value materiality lens, so asset-level depth follows from what is material to investors rather than from a fixed schedule.

Transition planning — how the company moves its asset base toward a lower-carbon position — is the connective tissue between the strategy pillar and the operational decisions an energy company is already making.

For the full mechanics of the standard, see our UK SRS requirements guide.

How to prioritise the work

With several regimes in play, sequencing matters more than trying to do everything at once.

First, the obligations that already bite. UK ETS permitting and SECR disclosure are live, and ESOS Phase 4 has a fixed deadline of 5 December 2027^[6]. These are not optional and they have hard dates.

Second, build one Scope 1 dataset. The same combustion and process measurements underpin UK ETS verification, SECR and UK SRS S2^[7]. A single, well-governed dataset removes duplicated effort and reduces the risk of inconsistent figures across reports.

Third, prepare for UK SRS S2. Map climate risk and transition planning into the governance and strategy pillars ahead of the proposed 2027 start, so the first mandatory report is a refinement rather than a standing start^[3].

For a parallel example in another asset-heavy sector, see our manufacturing sector guide and the broader UK carbon reporting requirements overview.

Energy and utilities reporting: frequently asked questions