There are changes coming, according to the Climate Change Committee’s (CCC) latest Carbon Budget.
What does that actually mean for property owners?
The Key changes that are coming
Stricter energy efficiency standards are expected. The CCC is pushing for tighter EPC requirements and mandatory improvements to building performance
The UK is targeted towards an 87% emissions reduction by 2040. In 2023, commercial buildings made up 5% of UK emissions with emissions of 20.8 MtCO2e. By 2040, those emissions must shrink to just 2.7 MtCO2e. That in itself for many businesses will be a challenge and possibly a step to far.
We know that Heating is being pushed to shift away from fossil fuels. The UK needs to install 450,000 heat pumps annually by 2030 to phase out gas boilers and move to electrified heating and district heat and or cool networks. With a skills shortage and a massive difference between gas and electric kw/h prices that is unlikely to be met.
Renewables will play a much bigger role. Electricity demand is expected to double by 2040, and renewable sources will be supplying most of it. At the building level this puts more emphasis on solar PV, battery storage, and electrification.
Interestingly some research below and carried out by Wattstor showed how consumers feel about Net Zero.
New research of more than 2,000 UK consumers has revealed that over half (56%) believe that businesses need to step up their sustainability efforts to help achieve the country’s Net Zero targets.
The research showed that a significant majority – 70% – believe that businesses should face serious repercussions if they don’t take sustainability seriously.
In fact, 30% of respondents said that they strongly felt that the government should hold companies accountable if they don’t meet Net Zero targets.
It also revealed some scepticism about whether Net Zero was achievable, with half (50%) saying they don’t believe the target will be met, and nearly one in five (19%) unsure. I
n addition, one in four (43%) consumers believe that businesses should have all or most of the responsibility for meeting Net Zero targets.
That said, the research also demonstrated the potential commercial advantage for those businesses who do invest in sustainable solutions. More than two-thirds (69%) of respondents said that a business’ approach to sustainability and use of renewable energy was a key factor when choosing to buy from them.
Waiting too long could be risky
Delaying energy upgrades could become a serious liability. With MEES upgrades in full swing, the CCC warns that buildings failing to meet new standards could lose value, struggle to attract tenants, and face higher insurance costs. Ultimately in some instances they could become stranded assets.
Retrofitting will also get more expensive over time. Labour shortages, supply chain issues, and stricter future regulations mean businesses that wait will pay more for upgrades later.
Securing capital could also become harder. Lenders and investors are prioritising low-carbon buildings. Those with poor efficiency ratings may face higher borrowing costs or be denied financing altogether.
Opportunities in the Net Zero Transition
For property owners who act early, there are clear advantages. Green finance and ESG-linked loans are making capital more accessible for buildings that meet sustainability goals, but financing can often be hard to come by.
Government-backed incentives for heat pumps, insulation, and renewable energy are expanding, making investments in energy efficiency more financially viable.
At the same time, operational savings will be significant. Lower energy bills, reduced exposure to fossil fuel price fluctuations, and long-term cost stability will make net-zero buildings more attractive to tenants and investors alike.
Net Zero Carbon
The term net zero is widely used in the context of sustainability goals, but its meaning and implications are often misunderstood. Ultimately, net zero refers to balancing the amount of carbon emissions produced by a business with an equivalent amount removed from the atmosphere. While net zero is a term that has helped to propel the environmental agenda into public awareness, it is not necessarily the most helpful as it does not reflect the elimination of carbon entirely.
For instance, a building could technically achieve net zero by burning fossil fuels while offsetting its emissions through initiatives like planting trees, restoring natural ecosystems, or investing in renewable energy.
However, that focuses on mitigation rather than elimination and reduction. Collective sustainability goals should reach beyond merely offsetting emissions – they should put the emphasis on large-scale decarbonisation and actively removing carbon already present in the atmosphere.
Moving toward negative carbon – i.e. removing more carbon than is emitted – will ultimately be necessary to reverse environmental damage and stabilise global temperatures.
We continue to rely heavily on the energy required to maintain our current standard of living. This prioritisation of stability and convenience often takes precedence over decarbonisation efforts.
While governments focus on high-profile initiatives such as COP conferences, they lack the depth and actionable strategies required for meaningful change. Companies sit at both ends of the spectrum: some are genuinely committed to addressing climate challenges and are actively seeking the tools and resources to decarbonise.
Many others can be deterred by the perceived costs and shareholder pressures. For instance, when it comes to retrofitting buildings or investing in sustainable technologies, the upfront investment can be a barrier - especially if some stakeholders are not aligned in prioritising sustainability.
This hesitancy also identifies short-termism and design for compliance, where the immediate costs or sacrifices overshadow the long-term benefits. However, amidst all the doom and gloom challenges, innovations in renewable energy and sustainable practices are advancing rapidly.
We spoke to the built environment specialists about what they see as possible over the next 30 years.
Delving into the Data
The 2023 Advancing Net Zero Status Report indicates that, despite signatories contributing to a collective reduction of approximately 7.2 million tonnes of CO2 annually, significant barriers remain for the industry’s journey to net zero.
The gap between the current performance of the sector and the necessary decarbonisation trajectory is widening, despite improvements in energy efficiency and investment. The survey, indicates some discrepancy between industry perceptions and the reality of the climate challenge.
In Autumn 2024, the views of 158 built environment senior manager leaders or above within medium to large enterprises were sought.
Improving what we already have
By 2050 80% of the buildings that will still exist, therefore existing buildings must be the priority of sustainability efforts. Optimising these properties which already exists is a great starting point for decarbonisation and should be a continual process which is reviewed throughout the entire lifecycle of buildings.
According to the UKGBC, optimisation has the potential to reduce operational energy use by over 26%. Additionally, deep retrofits such as upgrading the building fabric, installing new heating, ventilation, and air conditioning (HVAC) systems, or introducing renewable sources of energy, such as PV panels. offer further significant energy reductions, typically 60-65% for commercial buildings, when applied in conjunction with optimisation measures.
A detailed dynamic simulation is conducted prior to investing in retrofit upgrades, to ensure they are suited to the building in question and to foresee, and mitigate, any potential negative consequences, such as overheating. Reviewing and optimising buildings post-retrofit to ensure that good intentions come to fruition is also important to the success of such projects.
In Conclusion
It’s clear that the sustainability agenda and built environment has evolved significantly over the last 30 years – and will continue to do so. Society has made significant strides when it comes to defining the decarbonisation agenda and acting upon it.
The pace of climate change continues to pick up and we must face the reality that our actions to date have not yet stopped it in its tracks. More must be done if net zero 2050 is to become a reality – but the message is that of opportunity. The good news is that there are plenty of ways to embrace change and increasingly sophisticated technologies to help make it happen.
Smart Future HVAC as an Auditel franchise have a great set of resources including our Net Zero Toolkit and is a great start to help you decarbonise your buildings and through our No Win No Fee service can make it self-funding
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