The UK Net Zero Carbon Buildings Standard (UKNZCBS) represents a significant milestone in the journey towards a sustainable built environment. Launched as a pilot version in September 2024, the standard is the first of its kind to bring together net-zero carbon (aligned) requirements for all major building types across the UK. The UKNZCBS approach uses the term ‘Net Zero Carbon Building Aligned’ to avoid greenwashing claims of buildings that may be net-zero carbon in operation but not for the building lifecycle.

So, what makes this standard so crucial, and why should we pay attention?

A unified approach

One of the stand-out features of the UKNZCBS is its unified approach, driven by an extensive collaboration of industry leaders, such as BBP, BRE, the Carbon Trust, CIBSE, IStructE, LETI, RIBA, RICS, and UKGBC. For years, the construction and real estate industries have grappled with varying definitions and methodologies for achieving net-zero carbon buildings.

The UKNZCBS addresses this by providing a single, agreed-upon methodology that aligns with the nation's climate targets. The standard sets out clear metrics and limits for operational energy use, embodied carbon, on-site renewable electricity, and more – see Max Fordham’s blog series to explore the details across the various requirements. By providing this clarity, it offers a comprehensive and consistent framework for the industry to adopt.

Driving accountability and transparency

The UKNZCBS emphasises accountability and transparency. Buildings that aim to meet this standard must submit mandatory evidence to demonstrate their net-zero carbon alignment. This includes detailed carbon reporting, which not only helps in tracking progress but also in identifying areas for improvement.

Unlike many existing industry standards, reporting of operational carbon under the UKNZCBS is led by actual building performance in practice, rather than being guided by design stage performance. This is a crucial step forward to avoid misleading claims from developments that achieve net zero at the design stage but fail to maintain predicted performance in practice. Such rigorous documentation ensures that claims of net-zero carbon performance are verifiable and reliable, building trust in the process.

For schemes that are aiming for UKNZCBS certification, occupant education on energy usage will be crucial given that energy consumption in practice will be dictated significantly by building occupants. A real risk for a development aligned with the standard at the design stage is that its certification could be jeopardised by excessive occupant energy usage at the point of verification, after one year of occupation.

Luring in investors

A key outcome of the UKNZCBS could be to attract more investors to the net-zero real estate market. As sustainability becomes a critical factor in investment decisions, the clear and unified criteria set by the UKNZCBS provide a reliable benchmark for evaluating the environmental performance of buildings.

While existing carbon-based standards, such as NABERS, are recognised as beneficial to the sustainability credentials of a development, none cover the detailed requirements for operational and embodied carbon for such a large range of building typologies. Wider sustainability initiatives, such as BREEAM and One Planet Living, continue to be essential to consider alongside net-zero aspirations. However, from an energy and carbon perspective, the UKNZCBS acts as a mechanism for virtually any development to pursue net-zero carbon status.

As the standard can be used across all major development typologies, one unified standard can be utilised consistently, rather than switching between existing standards that may only apply to one building typology. Increased use will enhance familiarity and confidence in applying the standard, among both developers and investors, promoting its uptake across the whole industry.

Investors are increasingly looking for assets that align with their Environmental, Social, and Governance goals, and buildings certified under the UKNZCBS offer a tangible demonstration of commitment to sustainability. As a result, we can expect a growing interest from both domestic and international investors who are keen to capitalise on the benefits of sustainable real estate.

Promoting sales premiums

For developers and investors to be drawn to the standard, sales premiums must be demonstrated to create incentives beyond climate benefits. Evidence is already available that high energy and carbon standards deliver a sale value uplift, demonstrated in a 2021 study by Lloyds/Halifax, which assessed the sale value of homes across England and Wales. Additionally, for non-residential buildings, research by Knight Frank from 2021 found a sale value uplift of 8%-18% for buildings with a green certification. This uplift was 10.1%-10.5% for BREEAM or 8.3%-17.9% for NABERS ratings.

We can therefore have a high level of confidence that properties that meet the requirements of the standard are expected to command higher prices due to their superior energy efficiency, lower operational costs, and reduced environmental impact. This trend, often referred to as the green premium, reflects the market's willingness to pay more for sustainable and high-performing buildings.

As tenants and buyers become more discerning about the environmental impact of their buildings, the demand for UKNZCBS-certified properties is likely to increase, driving up their market value and creating a competitive advantage for owners and developers who invest in sustainable practices.

Sticking points

Despite the above, there are considerations about how the standard’s timelines might impact developers' incentives.

The reporting periods set out by the standard aim to eliminate any performance gap between designed and completed buildings. For operational carbon, this means that verification of compliance with the standard is not granted until the operational carbon of the building has been metered and reported on for the first year. This represents a forward-thinking approach to ensuring actual performance aligns with design-stage intentions.

However, from the perspective of developers working on build-to-sell models, these requirements may present challenges in attracting immediate financial returns. Indeed, once a developer has a development certified by the UKNZCBS, the project can be used to enhance the marketing and sales success of future developments delivered by the same organisation. However, uncertainty remains if the credentials of past projects would significantly influence stakeholders.

Due to the substantial investment needed to achieve the performance levels set out by the UKNZCBS, a compelling financial return is essential to attract investors. However, this is challenging to secure with projects that will not be accredited until at least a year post-completion, or worse, may not be accredited due to operational performance. Consequently, while the requirements are well-intentioned, there is a risk of alienating a portion of the market and limiting investment in the sector. Other standards, such as BREEAM and Passivhaus, may likely be viewed as more favourable as operational monitoring is not required for accreditation.

The drivers behind balancing between prioritising performance gap mitigation against investor incentives, and subsequent enhancing funding for the industry, should become clearer as the results from the UKNZCBS pilot come to fruition.

The elephant in the room

The UKNZCBS, as it suggests, addresses net-zero carbon emissions in buildings. However, the standard doesn’t require this explicitly. For embodied carbon, this is understandable as materials and supply chains are nowhere near enabling net-zero carbon buildings at scale without significant reliance on carbon offsetting. When it comes to operational carbon, however, net-zero buildings have been proven to be feasible and viable across numerous studies (e.g. South Oxfordshire and Vale of White Horse evidence base) and in practice (e.g. Greencore Homes). This raises an interesting opportunity for further refinement of the UKNZCBS, as operational net-zero carbon is a proven and achievable concept in many instances.

For many non-residential buildings and residential buildings above three storeys that may not be able to achieve net-zero operational carbon on-site, the current approach to operational net-zero is likely to be appropriate and justified. However, for low-rise residential buildings that can achieve on-site net-zero carbon in operation (on an annual basis) with somewhat straightforward design interventions, the absence of an explicit requirement for operational net-zero carbon could be seen as an area for further consideration.

Additionally, the option to use carbon offsetting to gain UKNZCBS certification for such low-rise buildings could be viewed as a practical approach in the absence of on-site net zero carbon capabilities, where site constraints are evident. Nonetheless, this raises a valid question regarding the balance between offsetting and on-site performance, especially when there are concerns about the limitations of carbon offsetting in certain contexts. The offsetting position of the standard for operational carbon could also be further examined, especially considering there is no specific limit on where or how the associated offsetting is undertaken. This might invite a more regionally focused or sectoral approach to offsetting, aligning with the broader scientific consensus. Given that the UKNZCBS is a voluntary standard, endorsement of ICROA standards and ICVCM credits is welcomed. However, the use of such voluntary carbon market mechanisms, remains unproven at scale. There is a risk that some developments could utilise carbon offsetting as a cheaper route to compliance.

It is noted that the requirements for operational carbon (energy consumption, space heating demand, and on-site renewable energy generation) should produce net-zero operational carbon buildings in the majority of cases for low-rise residential buildings. This is likely to be why the explicit requirement for buildings to be net-zero carbon in operation was not included.

A potential consideration moving forward is that buildings that achieve net-zero carbon in operation, verified after a year of reporting, will only receive certification that states ‘net-zero aligned building.’ This is a reminder that terminology plays an important role in the communication of sustainability goals. It is likely that, with future refinements, clearer distinctions can be made between those that are operational net-zero and net-zero aligned to better reflect actual performance.

Alignment with local new build policy

Use of the UKNZCBS for local new build policy has yet to be tested and will not be until the final version is released following an assessment of the pilot version implementation. However, given the current reporting periods for operational carbon (i.e. accreditation not granted until reporting for one year), it may present challenges for local policy adoption due to the time-sensitive nature of planning processes. Once the development is complete, the power of planning is essentially nullified, with the exception of planning conditions that may hinder the saleability of the development legally. This highlights a potential area for further exploration in terms of integrating the standard into the planning process more effectively.

An advantage of the UKNZCBS as a local policy tool could be that the administrative burden of assessing policy compliance at local authorities may be streamlined through the verification process of the standard. However, without a verification process in place for the standard at the design stage, local policy will not be able to fully assess the performance of new buildings at the point of planning decision-making. This means that, at present, local authorities may be left to develop their own standards or rely on other frameworks to set energy consumption, space heating demand, and on-site renewable energy generation targets.

While this approach is gaining traction and significantly improving the quality of local net-zero new-build policy, the opportunity for a universal standard across the UK’s local authorities might be limited due to the reporting periods outlined in the UKNZCBS. This could result in variations in the application of standards, which may affect developer confidence in compliance.

Clearly, the UKNZCBS is not currently aimed at local new build policy, although workshops have been undertaken with local authorities to understand how the standard could be used. In future iterations, it would be beneficial for the standard to include specific guidance on how it can be applied within the context of local policy, which would enhance the consistency and effectiveness of policy application across the country.

The path ahead

The UKNZCBS is a significant step forward, but its release alone is not the silver bullet the industry needs to align actual emissions reductions with national and international climate targets. The pilot version will provide important detail on feasibility and, importantly, reveal industry readiness and willingness to engage with a standard aligned to the required rate of action to meet the UK’s carbon budget. The collaboration and expertise that have shaped this standard are a clear signal of the industry’s commitment to change.

In conclusion, the UK Net Zero Carbon Buildings Standard is more than just a set of guidelines; it is a catalyst for change. By providing a clear, unified framework for achieving net-zero carbon buildings, it paves the way for a more sustainable and resilient built environment. The pilot version represents a critical first step, and its iterative development process will undoubtedly strengthen its impact over time.

While this blog has addressed some potential areas for refinement of the UKNZCBS, it does not intend to understate its immense contribution to the industry. The extensive work of countless volunteers from throughout the industry must be appreciated in pushing forward the net-zero agenda within the built environment. In an industry that includes such a large array of stakeholders, getting it right for everyone is far from an easy task. The pilot of the UKNZCBS is a brilliant addition to the built environment, which will form the basis of an undoubtedly improved full version.