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Industry takes the lead into 2024 - but government must step in on housing

The last few months of 2023 have been slightly disheartening for those of us interested in the UK’s Net Zero goals, and the future of a low-carbon built environment.

As the first country to set a national Net Zero emissions target (in 2019), we benefitted from a reputation for leading the way in tackling global environmental challenges.  But the past few months have looked more like coasting on the coat-tails of a former administration, as the current government has stepped back from several scheduled updates to carbon-cutting regulations.

This includes postponement of changes to MEES regulations to require higher EPC ratings for privately rented homes. The same looks likely to happen for commercial MEES.  Rishi Sunak’s flying (literally) visit to COP28 and the lack of press conferences for the UK delegation were also disappointing.

If we look to the future for the UK built environment, then these issues are critical in how things will play out. One crucial pathway that provides a good indication of trends to watch out for in the next few years is the Carbon Budgets established by the Climate Change Committee (CCC).

The CCC notes that the UK achieved its first two Carbon Budgets and looks likely to have met the objectives of the Third (figures will be announced in 2024). We are currently on the Fourth Budget (2023 to 2027) which requires a 68% reduction in emissions against 1990 levels.

And we know what’s coming further down the line because the CCC has already set out its requirements for Budgets Five, Six and Seven. There’s no avoiding the fact that meeting these targets will be tougher, requiring deeper emissions cuts, further decarbonisation and more work in the built environment sector.

As the CCC notes: “During the Seventh Carbon Budget period (2038 to 2042), the UK’s emissions are likely to be dominated by the buildings, aviation and agriculture sectors.”

So, with the government taking its foot off the emissions reduction accelerator, do we stand a chance of getting to Net Zero? If we’re looking for some rays of light for the coming year, we can look to pressures coming from commercial tenants. They are driving the demand for sustainable, low-carbon and energy-efficient buildings – and the construction industry is responding.

One great example of this is the development of the Net Zero Carbon Building Standard. The project shows the construction industry working harmoniously to set its own building embodied and operational carbon targets and measurement methodologies. Organisations involved include CIBSE, RIBA, RICS, BRE and BBP, supported by major developers and hundreds of volunteer engineers, architects and other building specialists.

The Standard will be free to use (so not a British Standard or ISO) and is not linked to any (current) legislation. This is a crucial point. The industry is not waiting for the government to step in. Instead, it’s getting on with achieving Net Zero in the built environment by defining what that means for buildings and sharing lessons on what it takes to get there.

This trend of industry surging ahead to set targets and meet them will set the pace in 2024. Already, 2023 has seen a rise in demand from office tenants for sustainable, high-quality office space, and it is driving new developments and refurbishments of existing buildings.

And with most financial experts predicting that high interest rates will make for a challenging lending market, there is an increasing focus on winning green financing deals. Both banks and insurers now regard climate change impacts on the built environment as high risk, and they want reassurance that developers are taking this into account. Lloyds of London recently announced that it will spotlight the issues of low-carbon transition and climate-related liability risk in 2024.

The commercial property sector is showing what can be done by an industry which is working to meet the high standards and sustainability goals of clients with money to invest in a Net Zero future.

But we must be realistic about the housing sector.  Homeowners (and buyers) don’t have the same powerful influence as commercial property developers. It’s here that we need the government to stop prevaricating and start taking action in areas such as improving the thermal efficiency of older homes and requiring faster transition to low-carbon heating systems.

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