Thought of the Week
More ambition, more money, more questions: What will the Labour Government do to decarbonise the built environment?
July 11, 2024 5 Minute Read
Labour’s manifesto revealed ambitious plans for decarbonising the UK economy. Targets for decarbonising the grid and mandating electric vehicle sales will be brought forward to 2030, new oil and gas exploration will be banned, and a carbon price for imported materials will be introduced. All of this will be backed by increased funding and investment, showing ambition that is welcomed by the real estate industry.
However, it remains unclear exactly how these plans will be implemented, and what they truly involve. The commitment to strengthen minimum energy efficiency standards is a good example, symbolic of the wider lack of detail that accompanies some of Labour’s plans.
The Labour manifesto states: ‘we will ensure homes in the private rented sector meet minimum energy efficiency standards by 2030.’ On the surface, this appears to be a reinstatement of the regulations proposed (and later scrapped) by the Conservatives, whereby private rented accommodation with an EPC lower than C would be illegal to let from 2030.
However, Labour’s policy does not state what the minimum required EPC will be, nor what exemptions would apply. These are critical considerations for landlords with energy inefficient stock who will need to rapidly adapt CapEx and cashflow plans.
The manifesto presents several more plans with positive implications for decarbonising the built environment which raise questions about implementation. Three are examined below.
Manifesto pledge |
Impact on built environment |
Questions about the policy |
| £12.6bn of funding to improve energy efficiency of five million homes Around £2,500 per household. |
This could improve the efficiency of around 17% of UK housing stock, significantly reducing emissions from the built environment. |
|
| Achieve net zero energy grid by 2030 This will predominantly be achieved through large increases in renewable energy generation. Great British Energy, capitalised with £8.3bn, will aim to lead this process. |
Real estate emissions would fall significantly. For example, decarbonising the energy grid could save a UK office 35kg of CO₂/m² per year*, taking it far closer to net zero operational emissions. |
|
| Carbon boarder adjustment mechanism to introduce carbon costs on imported construction materials with low environmental standards. | Efforts to reduce embodied carbon by encouraging the use of lower carbon materials would not be undermined by cheap, high carbon imports. |
|
*Notes: 162 grams of CO₂ per kWh, annual final energy consumption of 216 kWh per m².
As well as a lack of clarity on some Labour plans, the manifesto was also silent on some key industry issues. There was no mention of minimum efficiency standards or operational energy ratings for commercial real estate, nor of disclosure or regulation around embodied carbon.
While the industry welcomes the ambition of Labour’s plans, which could have a significant impact on the decarbonisation of UK real estate, it is essential that the unknowns of the policy proposals are clarified – and quickly. As we have seen to date, delay, uncertainty and inconsistency on government regulation have led to inertia in the market when it comes to building efficiency and decarbonisation.
A consistent and transparent plan will be pivotal to the real estate industry’s decarbonisation efforts, and to getting on track to reach net zero by 2050.
