Our response to consultation on introducing a performance-based policy framework in large commercial and industrial buildings

These proposals would introduce a national performance-based policy framework for rating the energy and carbon performance of large commercial and industrial buildings above 1,000m² in England and Wales, with annual ratings and mandatory disclosure as the first step.

The proposals are designed to work alongside the Non-domestic Private Rented Sector Minimum Energy Efficiency Standards for England and Wales. These will require for landlords to improve privately rented non-domestic buildings from the current minimum standard of Energy Performance Certificate (EPC) E to EPC B by 2030 (where cost-effective).

Why are both needed?

As the EPC does not measure metered energy consumption, a high EPC score is no guarantee that a building will use less energy and emit less carbon. In large and complex buildings, evidence cited in the consultation suggests almost no correlation between a building’s EPC score and its actual energy and carbon performance in practice.

We welcome the consultation and agree with the government’s assessment of the problem – that asset-based instruments will not be sufficient to deliver the change needed. We like the NABERs-influenced proposals to develop a new market for high-performing commercial space, the annual rating based on metered consumption and the intent to establish robust benchmarks for performance. We also support the approach – the private rented regulations will drive investment into fabric and building systems whilst these will support occupants to use their equipment and sites more effectively by making usage more visible (via the benchmarking exercise) and rewarding improvement/ good performance (by the annual and public star rating).

However, the proposals are not sufficient to drive the scale of change necessary. There are two issues here – the scope is too narrow and good performance is voluntary.

1. Scope (who will the current proposals affect?) Of the UK’s 1.66 million non-domestic buildings, the proposals focus on buildings over 1,000m² in England and Wales (around 110,000). As the scheme is mandatory only for owner occupiers and sole tenants, which excludes 38% of energy from large offices, this suggests Phase 1 may target just 4% of non-domestic energy consumption.
2. Mandatory reporting but voluntary performance As in the Australian NABERs scheme, reporting is mandatory but improvement/ good performance is voluntary. Whilst the NABERs scheme has delivered an average reduction of 34% reduction in energy intensity, around half the participants did not improve (or declined) their performance.

Our recommendations

1. Expand the scope: We recommend increasing the scope to include all sites and part of sites for which the potential savings are likely to exceed the costs of compliance (with a lighter touch approach for smaller sites).
2. Mandate good performance: It is essential that action is taken quickly to address emissions in this sector, so we urge government to mandate performance and drive this at pace. This could be delivered with a minimum standard (as suggested in the consultation) with a penalty where the standard is not met.