Insights

Part one.

In October 2021 the government released its Heat and Buildings Strategy, building on their Ten Point Plan and Energy White Paper – released in 2019. This strategy sets out the vision for a greener future, which aims to create hundreds of thousands of green, skilled jobs, drive the levelling up agenda and generate opportunities for the growth of British businesses. It notes that the transition to high-efficiency low-carbon buildings can and must take account of individual, local and regional circumstances.

The Secretary of State for Business, Energy and Industrial Strategy stated:

“The strategy outlines a transition that focuses on reducing bills and improving comfort through energy efficiency, and building the markets required to transition to low-carbon heat and reduce costs, while testing the viability of hydrogen for heating. This will provide a huge opportunity for levelling up – supporting 240,000 skilled, green jobs by 2035, concentrated on areas of the UK where investment is needed most. The policy approach is simplified into three phases, the early 2020s, mid 2020s, and 2028 and beyond, and the key focus areas of this strategy are building performance and energy efficiency measures, heat pumps, hydrogen, heat networks and bioenergy.”

Greener growth.

Buildings accounted for around 30% of the UK’s total CO₂ emissions in 2019. Heating-related emissions represented 23% of those, and homes were the dominant contributor, accounting for around 75%. Decarbonising heat from our buildings, from over 80 MtCO₂/year to a target of 0-2 MtCO₂/year, will take a major shift in strategy and policy which this strategy sets out to achieve.

This means improving our buildings’ fabric efficiency, changing the way we heat and cool our buildings and improving the performance of energy-related products.

Sights are set: a major shift in policy.

The government strategy sets out the rationale behind the approach, principles and phasing of the policy package to deliver the overall targets. The main measures proposed for building performance and energy efficiency measures are: hydrogen, heat pumps, heat networks, and biomethane. Some of the proposals represent previously published funding or policies, while others come with additional funding/polices.

A question of circumstance. What do the measures mean?

New builds on the block.

The main driver for new builds will be the Future Homes Standard and Future Buildings Standard for domestic and non-domestic buildings respectfully, with the intention that all new buildings are constructed to be net zero-ready from 2025, by which point the government indicates an intention to be delivering 300,000 new homes a year.

The government is also aiming for at least 1/3 (circa 200,000 per year) of the 2028 heat pump target (600,000 per year) to be installed in new-build domestic properties. There are plans, too, for the government to consult on ending new connections to the gas grid as well as when this might occur.

Existing houses.

In 2019, 86% of homes were heated by gas central heating, with the remainder by electric storage, oil and heat networks. The strategy outlines the intention to phase out the installation of any new gas boilers by 2035 and to phase out installation of fossil fuel systems in domestic properties not connected to grid from 2026 (2024 for non-domestic buildings). In addition, the plan is for as many homes as possible to achieve an EPC band C by 2035 where cost effective.

The strategy goes on to indicate that fuel-poor homes will be expected to achieve a minimum EPC band C by the end of the 2030s. The government is also looking at how it can kick-start the green finance market. It has consulted on introducing mandatory disclosure requirements for mortgage lenders on the energy performance of homes on which they lend, and is looking at setting voluntary improvement targets to be met by 2030.

Social housing and low-income households.

A decarbonisation fund has been announced by the government, providing £800 million over 2022/23 and 2024/25 as well as a home upgrade grant, delivering a further £950 million across 2022/23 and 2024/25. The Decent Homes Standard will be reviewed on how it can support better energy efficiency and the decarbonisation of social homes.

With 4.4 million homes currently classed as social homes, this amounts on a simple basis, to be circa £400 per household which is clearly insufficient. More funding will be required in future years to decarbonise social housing stock.

Falling just short of the mark.

The Heat and Buildings Strategy doesn’t mention the challenges of retrofit and the reductions in CO₂ emissions required. The Construction Leadership Council (CLC)[1] estimates that 500,000 additional positions will need to be added to the existing workforce to meet even the EPC C minimum targets which, when compared with the 240,000 green jobs the strategy intends to create by 2035, suggests the government has severely underestimated the huge number of new jobs required to meet our carbon reduction commitments. A pathway to net zero, as outlined by the CLC, shows that massive private sector investment is required along with significantly more government funding. The measures have the potential to return, in income tax, more than double which will be spent as well as additional GDP savings and large CO₂ emission savings.

Public buildings front and centre.

The strategy indicates the intention for public buildings to lead the way in decarbonising the sector, and the government plans to reduce CO₂ emissions from public buildings by 75% over a 2017 baseline by the end of the Sixth Carbon Budget (end of 2037). There is already £1 billion available through the Public Sector Decarbonisation Scheme and another £1.425 billion will be provided to the scheme over 2022/23 and 2024/25.

Public buildings account for around 2% of the annual CO₂ emissions from heating yet the funding currently announced far outweighs any other sector’s funding. While this funding is welcome, it is clear to see where the governments priorities currently sit, compared with other sectors.

Commercial buildings.

All privately rented commercial buildings would be required to have minimum EPC band B by 2030 in England and Wales. The government also has a new performance-based energy rating scheme for large commercial and industrial buildings of >1000 m² floorspace in the pipeline. This would initially be commercial offices similar to a DEC based on actual energy consumption; further details are to come later this year.

It is now known that all commercial buildings >1000 m² will require an operational energy assessment, completed as part of the Part L2a 2021 update. However, this lists; for new buildings with a total useful floor area over 1000m², the information to be handed over to the building owner should include a forecast of the actual energy use of the building in kWh/year, broken down by fuel type. The energy forecast should include all metered energy uses, including unregulated loads. This should be recorded in the building log book and may be determined using any of the following methods: design calculations; energy benchmarks; an energy forecasting methodology such as CIBSE’s TM54; other building modelling or spreadsheet tools; any combination of these methods.