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Paving the way to UK Net Zero Carbon Buildings Standard

20 May 2024

Leading organisations have joined forces to support the development of the UK Net Zero Carbon Buildings Standard for new, existing and retrofit buildings.

The idea for the UK Net Zero Carbon Buildings Standard came about in response to industry demand for science-based performance targets, and a core, agreed methodology to define what ‘net zero’ means for UK buildings.

We agree the term ‘net zero’ warrants stronger definition in the context of the built environment. It’s one of the most charged phrases currently bounding about the commercial real estate sector.

With so many different standards, regulations, and targets in play, it can also be a challenge to prove whether an asset can truly be classed as ‘net zero carbon’. Or to work out how to get it there.

Most building owners and developers see a need to be more sustainable. Barriers and challenges making the move far from straightforward. Not least, confusion over definitions. For example, when to use carbon neutral vs net zero. This is compounded by the fact regulations are built around these terms, and building owners must comply. Can they be used interchangeably?

It’s also important to consider that many organisations and businesses will be aiming for net zero by 2030, if not sooner. And without a sustainable building to call home, it will be a difficult target to achieve.

If the UK is to reach its 2050 net zero goals, let alone the interim 2030 targets, sustainability will have to become an intrinsic element of the built environment.

We’re mapping out what the pathway towards net zero in the built environment is likely to involve.

In this article, we are going to explore:

  1. What’s driving the need for sustainability in the built environment
  2. Defining a net zero building
  3. Growing importance of a net zero growth plan
  4. Smart buildings delivering net zero now and in the future
  5. Government schemes supporting smart buildings delivering net zero

What’s driving the need for sustainability in the built environment?

Let’s start with some facts:

  • The built environment contributes to almost 40% of all carbon emissions globally
  • Buildings are the UK’s second largest source of climate emissions after surface transport
  • The UK Green Building Council(UKGBC) says that 80% of buildings that will be standing in 2050 exist already

These statistics show that sustainability consideration must be woven into the fabric of all new builds going forward. And due to their sizeable presence, it’s clear there’s an urgent need to retrofit existing buildings.

Graph showing greenhouse gas emissions from 1990 to 2050

In its report, Building the Case for Net Zero: Retrofitting Office Buildings, the UKGBC opened with some hard-hitting facts:

  • There are around 6,500 office buildings of over 20,000 square feet in London. Retrofitting them could save over £1 billion annually in electricity costs, and drive up their investment value by 15-20%
  • At around 1-1.5% of commercial property stock per year, the current pace of retrofit is nowhere near fast enough to hit 2050 goals
  • If action is not taken now, increasing numbers of old buildings will become “unlettable and obsolete”

It’s worrying to learn that retrofitting take up is so low. Especially given the potential savings on the table.

Operating costs in larger buildings run into the millions. Plus, with sustainability reporting now mandatory for the larger organisations that occupy them, demand to future-proof these buildings is going in one direction.

As Basil Demeroutis, Managing Partner of Fore Partnership working in conjunction with the UKGBC, put it: “We must decisively accelerate the pace of retrofit”.

But if that’s to happen, barriers will need to be overcome. Not least:

  • budget constraints
  • lack of clarity around tangible benefits to building owners
  • ambiguity in terms of what actually constitutes a ‘net zero carbon building’

Addressing budget and benefits

These two factors are simple to justify.

Take the UKGBC statement around London office buildings. If retrofitting saves so much in electricity costs every year, and increases investment value, we can see that budgets will be well invested.

So why not the same with new stock? Design that factors in cost savings, resource optimisation and waste reduction from the ground up will make buildings more sustainable and attractive to investors from the outset.

A report suggests that office buildings with sustainability certifications earn a 6% rental premium over non-certified buildings.

We also know that 62% of property owners saw an overall increase in property value as a result of implementing WELL standards.

Research from Massachusetts Institute of Technology (MIT) reveals that healthy buildings in the United States deliver a better return on investment for landlords, attracting between 4.4% and 7.7% more rent per square foot than similar, uncertified buildings.

But capital outlay for retrofitting can be prohibitive, regardless of potential returns and long-term benefits. Grants and incentives are slow to emerge in the UK. It’s something that will need more commitment from the government if they intend to meet 2050 targets.

For now, a phased approach to retrofitting could be an option. Working with retrofitting experts like Smart Spaces to create a roadmap, prioritising upgrades that have the greatest impact on bottom lines. The vision is to help building owners onto the road to sustainability faster.

Addressing what constitutes a ‘net zero building’

Our next barrier to retrofit adoption is confusion around legislation, standards and targets. The terminology alone can leave building owners in doubt of their responsibilities.

Take carbon neutral vs net zero. Who knows the difference? Does anyone understand the term ‘climate positive’? What about ‘carbon negative’ or ‘carbon positive’?

On top of this, monitoring and reporting this is no longer going to be optional in the UK, as is the case in New York.

This is precisely what prompted organisations such as the Carbon Trust, RIBA, RICS and UKGBC and others to join forces to develop the UK Net Zero Carbon Buildings Standard.

The UK Net Zero Carbon Buildings Standard will represent the UK’s first cross-industry standard. It’s set to combine a clear set of sustainability requirements for all major building types, existing and new build, centred on a science-based 1.5°C trajectory.

The Standard will remain voluntary, and will not constitute regulation itself.

But it will set out transparent evaluation metrics for carbon performance, and list core targets and limits. This will make it more straightforward for investors, designers, developers and owners of built assets to prove their net zero carbon status.

The Standard will be fully compatible with PAS2080. And it is likely that following its publication, other voluntary schemes, such as the RIBA 2030 Climate Challenge, will be updated to align with the UK Net Zero Carbon Buildings Standard target trajectories.

The Beta Test version of the UK Net Zero Carbon Buildings Standard is set to be issued in spring 2024. This will represent a significant step for industry engagement, and all eyes and ears will be focused on the feedback.

So, could the UK Net Zero Carbon Buildings Standard ease the path to sustainability in the built environment?

With some of the most important bodies in the industry behind it, and its objectives clearly set on relieving confusion and ambiguity around what constitutes a net zero building, we believe the standard could make a significant impact on retrofit take-up in the UK.

The growing importance of net zero now and sustainability reporting

We touched on the fact that sustainability and net zero reporting had become increasingly important. In some cases, they’ve also become mandatory.

Free Energy Source vector and picture

The ESG reporting responsibilities brought in by the Sustainability Disclosure Requirements in 2023, for example, mandate certain organisations to make disclosures on climate change-related risks and opportunities and how these are managed.

The Companies Act 2006 has always included annual reporting obligations. But in 2022, those obligations were expanded to include sustainability information.

Large UK companies must now include information about their energy use and carbon emissions within their annual reports to Companies House through the Streamlined Energy and Carbon Reporting (SECR) requirement.

In line with recommendations made by the Task Force on Climate-Related Financial Disclosure (TCFD), they must also include sustainability information, covering their impact on the environment, how they approach social matters, their respect for human rights, and their anti-bribery and anti-corruption policies.

The rules apply to larger companies that are either listed, have a £500 million+ turnover, or employ a workforce of 500+.

Obligations aside, there are other reasons why some organisations are keen to get on board with ESG (Environmental, Social and Governance) reporting and standards compliance.

Why else should net zero and sustainability reporting matter to businesses and building owners?

Competitive edge and reputation – companies with good ESG ratings and which can prove their net zero commitment will stand out amongst their peers. They’ll be more likely to attract and retain top talent, and will be the preferred choice amongst their target audiences.

Healthier investment prospect – well-scoring businesses in the ESG stakes are considered better prepared to manage future risks and embrace emerging opportunities. They are thought of as healthier investment prospects as a result, and more likely to be included within portfolios.

Benchmarking – ESG ratings can be deemed a valuable internal benchmarking tool. They can help support decision making, as well as improve sustainability performance generally.

Added valueresearch shows that buildings with sustainability certifications attract a higher rental premium.

So, we can see that, even when ESG reporting isn’t mandatory, it remains valuable. But just how straightforward is the reporting process? And how easy it is to achieve those all-important positive ratings?

The answer to both of these questions is ‘not very’. But smart building technology could change all of that.

How does smart building technology support net zero reporting?

Smart tech plays a crucial role in supporting net zero and ESG reporting. Because in the smart building, rich data insights come as standard.

Connected meters, sensors and building automation systems continuously monitor a range of building parameters. Data related to energy consumption, occupancy patterns, equipment performance and indoor air quality is collected in real time.

These insights provide the necessary metrics for accurate net zero reporting. This can include greenhouse gas emissions, energy consumption, renewable energy generation, and overall building performance metrics.

How can the smart building contribute towards achieving net zero status?

By continuously monitoring and optimising building operations, smart technology helps to meet net zero targets and compliance requirements.

Let’s get more specific:

Energy efficiency

  • Smart building energy management systems use advanced analytics and artificial intelligence machine learning algorithms to recognise energy saving opportunities, reduce carbon emissions and cut energy waste.
  • The systems adjust lighting, heating, ventilation and air conditioning based on occupancy patterns, weather forecasts and energy pricing. This reduces energy waste and optimises usage.
  • Usage levels can be set to manage consumption, whilst real time monitoring flags anomalies before they turn into major waste situations.

Smart automations

  • smart HVAC system uses artificial intelligence and machine learning algorithms to create automations. These include switching off heating and air conditioning in unoccupied rooms; reducing heating levels in response to a rise in ambient temperature, and adjusting air conditioning when the air cools to a certain level. Energy waste and carbon emissions are reduced as a result.
  • Smart lighting saves energy by automatically making adjustments in line with changing natural conditions. Again, resulting in energy savings.
  • Sensors placed on equipment detect unusual sounds or vibrations that could signal functionality issues. Predictive maintenance replaces reactive maintenance, boosting machinery energy efficiency and extending lifespan.

Renewable energy integration

  • Smart building technology facilitates the integration of renewable energy sources. Solar panels, wind turbines and geothermal systems are increasingly forming part of smart new builds and retrofits, replacing higher carbon grid sources such as coal, gas and oil.
  • Smart energy management systems monitor renewable energy generation and consumption. They also optimise energy storage. By temporarily reducing energy usage at times of peak demand, or shifting loads to off-peak hours, smart buildings help balance grid supply and demand. This can result in reduced electricity usage and costs.

Occupant engagement and behaviour change

  • Smart building systems engage occupants by offering user-facing applications. These can include workspace preference controls, and personalised feedback channels.
  • By raising awareness around energy consumption patterns, and encouraging behaviour changes, smart buildings empower occupants to actively participate in energy conservation. This contributes to overall energy efficiency and sustainability goals.

Government Initiatives and Policies Supporting Smart Buildings

As the pressure mounts on building owners to ‘do their bit’ towards achieving net zero targets, we feel a higher level of government commitment is needed.

The government agrees that decarbonising buildings will help grow the economy, create new green jobs and deliver greener, smarter, healthier homes and workplaces with lower bills.

They’ve also said that the transition to low carbon buildings could add £6 billion gross valued added (GVA) and support 175,000 skilled green jobs by 2030.

There are government funds and grants in place specifically targeting the domestic building sector. And the Energy Efficiency (Private Rented Property) Regulations 2015 are driving the need for retrofit upgrades in this sector.

In the built environment generally, policies such as the Heat and Building Strategy are being put in place to guide action in the 2020s and longer term net zero growth plan.

The Future Homes and Buildings Standards consultation was launched in December 2023 to explore various changes to the Building Regulations for dwellings and non-domestic buildings. The consultation closed in March 2024 and various industry bodies have submitted responses.

Some have commented that, despite the consultation and its accompanying proposals making significant strides towards cutting carbon emissions within the built environment, the measures may still fall short of the 2050 net zero targets. A more radical approach will be needed to address the urgent issue of climate change.

The Department for Energy Security & Net Zero was established in 2023 to ‘focus on giving the UK cheaper, cleaner, more secure sources of energy – cutting bills, cutting emissions, and cutting dependence on international energy supplies.’

Department responsibilities include ensuring the UK is on track to meet its legally binding net zero commitments, and improving the energy efficiency of UK homes, businesses and public sector buildings.

The department joint sponsors the Energy Act 2023. The Act aims to deliver “a cleaner, more affordable and more secure energy system for the long term”, having been described by the UK government as “the most significant piece of energy legislation in a generation”.

But is there actually any real commitment to funding and incentives outside of the domestic building sector?

Green Alliance is an independent environment-led think tank and charity. They are focused on ensuring the UK government rises to the significant environmental leadership challenges of our age.

The organisation recommends that a new building retrofit programme is established, backed by £300 million in support, to develop and scale-up digitally enabled whole building energy efficiency solutions.

They also recommend that VAT for building renovation and repair should be brought in line with that for new build, in order to stop discouraging existing building upgrades. This new policy is needed to encourage the use of digital technology to improve energy use in buildings.

In February 2024, The Royal Institute of British Architects (RIBA), published its Smart Building Overlay to the RIBA Plan of Work.

The Overlay introduces smart building terminology and outlines the benefits of embedding smart building technology from the outset. Its principles can be applied to projects of all scales and scopes.

All of this tells us that industry is clearly behind the smart building as a means to paving the way to UK net zero.

Future Outlook: scaling up smart buildings to deliver on net zero targets

The future of smart building technology is panning out to be an exciting one.

Internet of Things advancements are improving building management system interoperability and functionality. Sensor technology is evolving to deliver real time data collection at ever greater levels of accuracy across a wider scope of building operations.

Analytical capabilities are advancing, providing the ability to scrutinise huge volumes of data at deeper and faster rates than ever before.

Artificial intelligence is automating processes, enhancing user experiences and supporting decision making, reducing risk and maximising budgets in the process.

As the smart building scales up, it has even more to contribute to our net zero efforts.

The UK Net Zero Carbon Buildings Standard is a step in the right direction in terms of streamlining standards, policies and targets, and cutting through net zero ambiguity.

Government initiatives promoting and funding smart buildings are vital if we are to experience an energy-efficient and sustainable future. The groundwork is currently being laid out, with early adopters set to see the biggest gains.

Smart Spaces is a smart building technology platform. Built on Internet of Things and artificial intelligence and supported by an expert development and implementation team and Master Systems Integrator, it has the ability to transform new and existing buildings into energy-efficient, sustainable assets.

To learn more about how our tailored smart technology could support your net zero growth plan, and compliance with the UK Net Zero Carbon Buildings Standard, please get in touch.

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