Written evidence from UK100 (BUS0029)

Energy Performance Certificates (EPCs)

UK100 outlined some of the issues with Energy Performance Certificates (EPCs) in our report Power Shift, which outlines the powers that local authorities have and those that they need to deliver Net Zero.

The EPC methodology is a significant barrier to decarbonisation and should be revised as a key priority in order to determine the most suitable interventions for the varied building stock. EPCs do not provide a good representation of the carbon performance of a building in operation. The production of an EPC is a tick-box exercise based on the presence or absence of building and energy supply elements, rather than how well they perform. Some elements (e.g. underfloor insulation, some roof insulation) cannot be inspected and are typically ignored in the assessment. For traditional and rural properties, the recommendations frequently include external wall insulation which is technically unsuitable for these building types. The calculation methodology based on energy cost means that most off-gas properties will never reach a EER of C. There is sufficient margin in the assessments for an inspector to award an E or higher if required by the landlord, for a property that could equally be rated F. A 2012 survey of non-domestic building performance and related EPCs found that that average energy consumption of a building was very similar whether its EPC rating was C, D, or E. There is no mechanism to assess progress as there is no requirement to register a property as tenanted with the local authority, and no central register of tenanted properties’ EPCs, so local authorities have no baseline to measure progress against. 

The BEIS Strategy Committee reported a “systematic lack of capacity” was severely hampering local authorities’ ability to enforce the EPC regulations, and there was not a single entry on the non-compliance register by May 2019. A Freedom of Information request by the “i” newspaper in July 2020 found that only 17 of the 268 councils that responded had taken any enforcement action on EPCs and only 17 fines had been issued. For non-domestic buildings a 2016 report noted that only 48% of sales and 39% of rentals even had an EPC despite it being a legal requirement. Enforcement is reported as being a low priority by local authorities, except in cases of tenants with other issues in which the authority is involved, such as health or poverty.

A 2019 report commissioned by BEIS on behalf of the Committee on Fuel Poverty found significant barriers to both understanding of the scale of the issue and the ability to enforce the standard:

• A complete lack of confidence in the quality (and hence validity) of EPC ratings and exemption certifications

• Difficulties in identifying private rented properties with an EPC of F or G or without an EPC

• Difficulties in identifying and contacting the landlords of properties or working with letting agents

• Lack of resources to carry out any of the enforcement actions needed.

A local authority officer interviewed for this study commented that: “MEES is hardly worth the paper it’s written on.”

Local authority staff have no information on which to base a challenge to an EPC classification unless there is sufficient evidence from a tenant or occupant. Between the introduction of EPCs in 2008 and 2016, EPCs were only lodged for approximately 47% of all privately rented properties in 2016.

Overall, the EPC calculation methodology is unsuitable for many properties, particularly traditional buildings, provides recommended solutions that are inappropriate for many building types and does not factor in low carbon electric heating. The Energy Performance Certificate for Buildings Action Plan published in September 2020 aims to address some of these issues, but the Environmental Audit Committee has noted that the measures proposed are “not enough to achieve what is needed to support the decarbonisation of homes.” 

The UK’s Zero Carbon Hub concluded that there is clear evidence of an energy performance gap in new dwellings, which is a risk to homeowners, developers, and government. Field testing has shown that fabric heat losses can be between 50% and 60% more than design predictions and space heating demand typically 100%–150% greater in new build homes. 

We recommend that the UK Government:

• Requires all properties that have carried out major renovation, refurbishment or change of use to have a new Energy Performance Certificate (EPC). This would greatly improve the data on the entire housing stock, as opposed to solely the properties on the housing market being bought/sold. 
• Revises the EPC system to be more accurate and to better reflect in-use energy performance, including a reflection of the technical limitations of energy measures in traditional and historic buildings.
• Establishes a national database of EPCs for tenanted properties: with a requirement to supply information back to local authorities.
• Set up a long term flexible funding scheme for landlords and private householders to enable them to meet EPC requirements.

As the Housing, Communities and Local Government Committee outlines in its 2021 report, reforms to improve EPCs include requiring calculations of CO2 emissions produced by construction to include the embedded carbon of a property and closing the performance gap between the theoretical and actual energy output of new homes through post-occupancy evaluations of real performance. 

In its action plan for improving EPCs, the Government recognises the need to provide an “EPC system that delivers accurate, reliable, and trusted EPCs.” Their proposals for improvements to the system include better use of data, policy to revise penalty rates, policy to enforce compliance, and options for greater accountability. However, as we outline in our Local Net Zero Delivery Progress Report on Heat and Buildings, the required overhaul to the system which could better take account for a broader range of decarbonisation options for homes is missing. Reforming the methodology of producing EPCs would enable place-based solutions to the decarbonisation of houses which are suitable for the property to which they apply e.g. gas/off-gas grid, rural/urban, terraced/detached houses.

Local authority examples of ambitious action to decarbonise homes and heat

• Leeds City Council received £25.3m as part of the PSDS, which has enabled them to install a range of low carbon heating, thermal efficiency, solar PV and other energy efficiency measures in 38 civic buildings - including leisure centres, primary schools, children’s centres, homes for older people and offices. These measures have saved 3,951 tonnes of carbon and 20,538MWh of energy, and produce 2168MWh of renewable energy. The Leeds PIPES district heating network continued to grow at pace in 2021, supported by HNIP and PSDS funding. The project takes heat from the nearby Recycling & Energy Recovery Facility (RERF) and converts it into usable heating and hot water, which is distributed to almost 2,000 flats, civic buildings, and Leeds Playhouse, with more buildings continuing to connect to the network. 
• Cambridgeshire County Council is supporting the village of Swaffham Prior to move homes off oil fired heating to a district heating scheme powered by solar, air and ground source heat pumps. This has now received Heat Network Investment Project funding, despite having to compete with more attractive urban schemes. Swaffham Prior Heat Network is powered by heat generated through boreholes drilled in nearby land.
• The Training Academy at Stoke-on-Trent College operates in conjunction with the development of the City’s District Heat Network, to help to develop the workforce needed to roll out the District Heat Network. Stoke on Trent College’s Urban Heat Training Academy works with contractors and employers involved in the design, installation, management and maintenance of the District Heat Network to provide apprenticeships and work-related training for students. 

Skills for Local Net Zero Delivery

For UK100's Skills for Local Net Zero Delivery Insight Briefing we spoke to local authorities across the country to better understand the impact of recent policies to deliver skills for Net Zero, identifying key gaps and opportunities. Our research finds that the government is impeding its delivery of green jobs and skills by failing to define and support local authorities’ role in facilitating local green skills development and by failing to align skills policy with Net Zero delivery.

It includes recommendations for national government to:

• Develop a Skills for Net Zero Framework incorporating local and national action
• Embed a long-term funding mechanism for Skills for Net Zero
• Introduce a national energy efficiency strategy led by local authorities

Report by PwC/UK Research and Innovation

Accelerating net zero delivery: unlocking the benefits of climate action in UK city-regions. 

The key relevant points in the report are:

• They conducted analysis across 6 of the UK’s city regions and found that there are often multiple interacting blockages preventing the adoption of low-carbon options. They found that often homeowners lack the capability to retrofit a home because they are unaware of the value it brings, and/or cannot afford the upfront costs, the supply chain needed for large-scale retrofits does not yet exist, and the payback period is unattractive.
• Where interventions are introduced to help adoption of low carbon measures, they need to address all of the blockers to be fully effective, e.g. help to build the supply chain, increase the number of workers skilled in retrofit, increase public understanding of retrofit’s benefits, reduce the costs to households of retrofit.
• Their economic analysis of the place-agnostic scenario found it requires ~£195bn of investment across the UK to meet targets set out in the Sixth Carbon Budget by 2035 and this investment is partly offset by £57bn of energy savings. Whereas their place-specific scenario requires just £58bn investment between now and 2035 which is significantly offset by £108bn of energy savings for consumers. This is because when places adopt the most socially cost-effective combination of low carbon measures based on the specific characteristics, needs and opportunities of their area it requires significantly less investment, whilst creating nearly double the energy savings - reflected in lower bills for consumers.
• They found that the place-specific investment of £58bn generated wider social benefits of £825bn - e.g. the economic value brought by cleaner air, warmer homes, healthier people. This is compared to £195bn investment realising £444bn of wider social benefits in the place-agnostic approach. This targeted action benefits the levelling-up agenda.
• District heat networks powered by renewables or waste heat are a very cost-effective means of decarbonising heat generation. Local characteristics determine the availability of these sources. District heat networks must also be located near adequately sized housing developments. Both determining factors are highly place-specific, but the benefits are large. A district heat network’s economies of scale reduce the levelised cost of heat to 40% less than an air source heat pump, per household.
• Net Zero projects delivered through local and regional governments return £14 of benefits for every £1 spent.