Clean Energy, Waste and Sustainability
Key contacts
Kirstin Roberts FCIWM
Director
Key anticipated events
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Timeline under development
Timeline under development
Legislation
Energy - preparing for heat network regulation going live in 2026
From 27 January 2026, the heat network sector will undergo a significant transformation as it becomes regulated for the first time. This new framework is designed to give heat network customers protections similar to those enjoyed by gas and electricity consumers. Any landlord or owner of a building containing or connected to a heat network will need to understand the extent to which it may become a newly regulated entity and have to comply with minimum standards.
Heat networks distribute heat and hot water from a central source to multiple properties, often providing a low-carbon alternative to individual gas boilers. Under the Energy Act 2023, Ofgem was appointed as the heat network regulator, with oversight powers commencing on 27 January 2026. Ofgem’s principal objective is to protect the interests of heat network customers by requiring all operators and suppliers to register and obtain authorisation, ensuring compliance with mandatory Authorisation Conditions. Existing operators and suppliers will benefit from deemed authorisation until 26 January 2027, after which formal registration and authorisation will become mandatory.
The regulations introduce two new defined roles. If your organisation falls into either category, compliance with the Authorisation Conditions will be required:
- Network operator: the entity that controls the operation of the network and directs maintenance and upgrades
- Heat supplier: the entity responsible for supplying heat or cooling to customers under a supply agreement, lease, or tenancy agreement
It is anticipated that only one operator will be registered on behalf of all operators and suppliers along the network.
Ofgem is currently consulting on the final form of the Authorisation Conditions, but we expect they will cover areas such as:
- fair treatment for all residential and small business customers
- minimum contractual supply terms
- protection for vulnerable customers
- fair pricing and transparent billing processes
- debt management protocols
- effective complaints handling
In addition, during 2026, minimum technical standards will be introduced under the Heat Networks Technical Assurance Scheme (HNTAS), which is currently also subject to consultation. These standards will set benchmarks for design, operation, and maintenance to ensure reliability and efficiency. These obligations will apply to both new and existing networks, so early preparation is essential.
Implications for businesses
In due course, these changes carry significant consequences for the applicable developers, landlords, and existing heat network operators. Over the next few years, failure to comply will not only attract corporate and individual liability but will also constitute a criminal offence if an organisation undertakes either heat network operator or supplier role without Ofgem’s authorisation. Non-compliance could lead to enforcement action, substantial financial penalties, and serious reputational damage.
The Government’s heat network strategy is also expected to introduce defined heat network zones in due course, geographical areas identified as suitable for heat networks. These zones will influence planning and development decisions, as certain buildings within them may be required to connect. Organisations should factor in zoning requirements, alongside technical standards under HNTAS, into any investment or infrastructure strategies.
Actions for business to consider
- Review existing arrangements and contracts: identify whether you operate or supply a heat network and ensure agreements reflect the new obligations. If you have appointed or are planning to appoint an energy services company on a long-term basis, consider whether regulatory responsibilities can be contractually allocated
- Prepare for Ofgem registration and compliance: familiarise yourself with the authorisation process and start gathering the information required for registration
- Budget for compliance: factor in costs for technical upgrades and assurance certification under HNTAS
- Monitor zoning developments: keep up to date with local authority consultations on heat network zones and plan for mandatory connections where applicable
- Train your teams: ensure staff understand the new regulatory framework, including reporting and consumer protection requirements
- Register with the Energy Ombudsman: the Consumer Redress Scheme is already operational, so all heat suppliers should register promptly to handle complaints effectively
Further details
For further details you can visit the Ofgem website which includes guidance, consultations and latest news here.
To read more about this topic please see our dedicated page on the Freeths website here.
Waste - EU will introduce Extended Producer Responsibility for textiles
On 10 September 2025, the European Parliament and Council approved Directive (EU) 2025/1982 (Directive), a revision to the Waste Framework Directive (Directive 2008/98/EC) that introduces new measures to prevent and reduce waste from food and textiles across the EU.
For food waste, the Directive sets binding food waste targets for Member States that by 31 December 2030 there will be:
- a 10% reduction of food waste from food processing and manufacturing; and
- a 30% reduction of food waste per capita in retail, food services and households
For textiles, the Directive introduces a mandatory Extended Producer Responsibility (EPR) regime that requires textile producers to cover the costs of the collection, sorting, and recycling of textile waste.
Implications for businesses
The Directive will apply to all producers who make textiles available in the EU, including producers that are established outside of the EU, for example a UK company placing any of the following into the EU market: clothing and accessories, hats, footwear, blankets, bed and kitchen linens or curtains.
In terms of next steps, Member States have until 17 June 2027 to transpose the Directive into domestic legislation with requirements to establish an EPR scheme by 17 April 2028. While the UK is still in the process of rolling out its first EPR legislation for packaging, we anticipate that EPR for textiles is likely to be next. Therefore, watching how the EPR regime works in Europe will guide business on what is going to happen in the UK.
Actions for business to consider
- Check if business activity will be captured within the scope of the EU’s EPR regime
- Follow the adoption and implementation of the EU’s EPR regime and the expected parallel UK developments
Further details
For further details you can visit the Directive on the European Union website here.
You can also visit the European Parliament’s news article on the approved Directive here.
Sustainability - new standards of sustainability reporting incoming for the UK
The Task Force on Climate-related Financial Disclosures (TCFD) regime for sustainability reporting will shortly be augmented and replaced by the UK Sustainability Reporting Standards (UK SRS). The UK SRS derives from the globally recognised International Financial Reporting Standards (IFRS) standards. The UK intends to formally endorse the IFRS standards through the introduction of UK SRS into domestic legislation.
On 25 June 2025, the Government published a now closed consultation on the exposure drafts of UK SRS (UK SRS S1 and UK SRS S2), alongside consultations on introducing an oversight regime for providers of third-party assurance services for sustainability-related financial disclosures and options to take forward climate-related transition plan requirements.
Implications for businesses
The Government has not yet confirmed the entities which will be impacted but we expect this will include entities which are already in scope of the TCFD regime as well as listed companies. The exposure drafts consultation also sought views on whether ‘economically significant private companies’ should report against UK SRS where there is likely to be ‘strong public and investor’ interest.
The Government was due to make a final decision on whether to endorse the exposure drafts of UK SRS in autumn 2025, so we expect this has been delayed until early 2026. If endorsed, final versions of UK SRS will be made available for any entity to use initially on a voluntary basis. The Government will then separately assess whether to introduce any legal or regulatory requirements in relation to the adoption of UK SRS.
Actions for business to consider
Any business that may be directly affected needs to start getting ready now. If you are a private company, evaluate whether you are ‘economically significant’ (size, market footprint, public/investor interest) and the benefits of voluntary early adoption to meet stakeholder expectations and lender/investor information needs. However, all businesses should keep a watching brief on UK SRS as the trickle-down effect of all ESG related disclosure requirements are that even where you are not directly affected, if your customers or suppliers are, they will require you to provide the data to enable them to fulfil their reporting obligations.
Further details
For further details you can visit the following:
Key contacts
Kirstin Roberts FCIWM
Director
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