Housing and net zero

Residential buildings are a significant source of carbon emissions in the UK. Reducing carbon emissions from new and existing homes is therefore part of strategies to meet the UK’s net zero target.

Carbon emissions from homes

The government has set a legally binding target to reduce the UK’s net emissions by 100% by 2050 compared with 1990 levels. This is known as the ‘net zero target’.

In 2022, emissions from residential buildings accounted for a fifth (20%) of greenhouse gas emissions in the UK. The Climate Change Committee (CCC), the government’s advisory body, said the UK will not meet its emissions targets “without near complete decarbonisation of the housing stock”.

Emissions from residential buildings come mainly from fuel combustion (the burning of oil and gas for heating and hot water) and electricity use. Homes can be decarbonised by installing low-carbon heating systems (such as heat pumps), fitting insulation to improve their energy efficiency and installing renewable energy systems (such as solar panels).

Assessing the energy performance of homes

Energy performance certificates (EPCs) are commonly used to assess and compare the energy performance of homes. EPCs for homes include two ratings: an energy efficiency rating and an environmental impact rating. Both are rated on a scale of 1 to 100 and split into bands (A to G).

When EPCs are discussed, the focus is usually on the energy efficiency rating. It is based on the cost of energy requirements per square metre per year of a building to supply its fixed building services (such as heating and lighting).

To determine the energy efficiency rating of a home, EPC assessors use the standard assessment procedure (SAP). For existing homes, where information may not be available, EPC assessors will make assumptions. This is called the reduced SAP (RdSAP).

Concerns about EPCs and proposed reforms

The CCC has argued that EPCs are not “fit for purpose” to assess the energy efficiency of homes and to set retrofitting targets. For example, the CCC has noted that, because the energy efficiency rating is based on cost and gas is relatively cheaper than electricity, homes with a gas boiler may be rated as more energy efficient than homes with a heat pump.

The UK Government (for England and Wales) and the Scottish Government have proposed reforms to EPCs. The UK Government has proposed replacing the SAP with a new methodology: the home energy model (HEM). The Scottish Government has proposed renaming the energy efficiency rating ‘cost rating’ and adding information to EPCs (for example, on the heating system).

Targets and policies to decarbonise homes

Targets and strategies to decarbonise existing and new homes differ across the UK. The UK Government set out its policies for decarbonising homes in the Heat and Buildings Strategy (October 2021). It has set a target for “as many homes [in England and Wales] as possible to achieve EPC band C by 2035”.

The Scottish Government set out its plans for decarbonising homes in its Heat in Buildings Strategy (October 2021). It said all homes in Scotland should meet at least EPC band C by 2033 “where feasible and cost-effective”. The Scottish Government has proposed a new Heat in Buildings Bill to require homeowners in Scotland to meet a minimum energy efficiency standard by 2033.

Although the Welsh Government and the Northern Ireland Executive have not published specific strategies on their plans for decarbonising homes, they have included commitments in other strategies: the Welsh Government in its emissions reduction plan for its second (2021 to 2025) carbon budget, and the Northern Ireland Executive in its Energy Strategy (December 2021).

Decarbonising existing homes

There is currently no legal requirement for existing homes to be retrofitted or for low-carbon heating technologies (such as heat pumps) to be installed in existing homes. Exceptions apply to privately rented homes and homes owned by local authorities and housing associations in some parts of the UK:

• Privately rented homes in England and Wales must have at least an EPC rating of E (since 2020). The Scottish Government has also proposed a minimum energy efficiency standard for privately rented homes.
• The Welsh Government and Scottish Government set minimum energy efficiency standards for socially rented homes. The UK Government said it would consult on setting “a long-term regulatory standard” for socially rented homes in England.

To incentivise homeowners to retrofit their properties and install low-carbon heating technologies, the UK Government and the devolved administrations have various schemes that provide homeowners with financial support. These schemes and their eligibility criteria differ across the UK.

Concerns about progress

The CCC has expressed concern that the “current pace” of energy efficiency upgrades was “too slow” and that, although the rate of installations of heat pumps has increased, it remained “very low”.

House of Commons Select Committee have highlighted the installation and running costs of heat pumps usually exceeded those of gas boilers and that funding for retrofitting homes was “piecemeal”. They have also highlighted a lack of awareness of heat pumps.

Decarbonising new homes

The UK Government and the devolved administrations updated requirements for new homes in 2021/22. They also plan to further update requirements for new homes in the coming years: England and Wales in 2025, Scotland in 2024 and Northern Ireland in 2026 or 2027.

For example, in England, under the 2021 uplift, an average semi-detached home must have 30% lower emissions than a comparable home built under 2013 standards. The UK Government has proposed further changes to these requirements under the Future Homes Standard from 2025. It said that, under the Future Homes Standard, an average semi-detached home will have 75% lower emissions than under 2013 standards and heat pumps will become “the primary heating technology”.

In Scotland, as of April 2024, new homes cannot have oil or gas boilers. They must instead have a low-carbon heating system, such as a heat pump. By the end of 2024, the Scottish Government also intends to introduce a ‘Passivhaus’ standard. A Passivhaus building is designed to retain heat from the sun and their occupants, so it requires very little additional heating or cooling.

Response to the Future Homes Standard

Although the Future Homes Standard was welcomed by environmental groups and built environment professionals, they expressed concern that it did not go far enough. For example, the Royal Institution of British Architects said it was “insufficient to significantly improve the performance of new homes”, and the Good Homes Alliance said that there would need to be “a further iteration […] to ensure new buildings are of a higher specification by 2028”.

The Commons Environmental Audit Committee also expressed concern about the lack of targets for embodied emissions (which are the emissions involved in manufacturing and transporting the materials used to build or refurbish a building and in the construction process). The CCC has recommended that the whole-life carbon impact of new homes should be reduced.