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 doing so, it offers a comprehensive framework that can be universally adopted, ensuring consistency and clarity across the industry.

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 not just marketing mechanisms but are backed by verifiable data.

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. Therefore, a development aligned with the standard at the design stage could have its certification jeopardised by excessive energy usage after one year of occupation.

Of course, there will be instances where energy use higher than predicted levels is unavoidable due to specific occupational habits - for example, all household occupants working from home using energy-intensive equipment five days a week. However, in the majority of cases where occupant behaviour and associated energy use are typical of the building typology, education will be crucial to ensure occupants maximise efficiencies embedded into the building design and its equipment.

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 that 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 phenomenon, 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, it is currently uncertain who will experience the greatest benefit from such a premium due to the reporting periods of the UKNZCBS.

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 is brilliant news from a performance gap mitigation perspective.

However, from a build-to-sell developer perspective, this is not an attractive proposition. Indeed, once a developer has a development certified by the UKNZCBS, this project can be used to enhance the marketing and sales success of future developments. However, the development industry is highly competitive, making it uncertain whether 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 downfalls. Consequently, while the requirements are well-intentioned, they risk alienating a significant portion of the market and limiting investment into the sector. Other standards, such as BREEAM and Passivhaus, could 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 excessive use of carbon offsetting. However, net-zero operational carbon has 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). Therefore, it is surprising that the UKNZCBS does not explicitly require buildings to be net zero in operation for buildings where it is a proven and feasible concept.

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 lack of an explicit operational net-zero requirement can be justified. Yet, 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 position of the standard feels like an elephant in the room.

Also, the option to use carbon offsetting to gain UKNZCBS certification for such low-rise buildings could be viewed as generous, since on-site net zero is already a proven concept for such buildings. The offsetting position of the standard for operational carbon could also be questioned, given that there is no limit on where or how the associated offsetting is undertaken, which conflicts with the scientific consensus that carbon offsetting should remain within the sector and the region, or country as a minimum, where the emissions have occurred. 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, of which the efficacy remains unproven at scale, enables some developments to utilise carbon offsetting as a cheaper route to compliance where its use in the first instance is not necessary.

It should be noted that the collection of requirements for operational carbon, on 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 another reason why the explicit requirement for buildings to be net-zero carbon in operation was not included.

The potential issue here is that for buildings that achieve net-zero carbon in operation, that have been verified after a year of reporting, the development will only receive certification that states ‘net-zero aligned building’.

Terminology has always been a sticking point throughout the climate and sustainability space, so it is not surprising that the same occurs for the UKNZCBS. The key point moving forward from the pilot version is that the certificates provided clearly match the performance achieved on-site, which arguably is not currently the case if a true operational net-zero carbon building was compared to another that was only net-zero aligned.

Alignment with local new build policy

Use of the UKNZCBS for local newbuild policy is yet to be tested and will not be until the final version is released following an assessment of the pilot version implementation. However, with the current reporting periods for operational carbon (i.e. accreditation not granted until reporting for one year), it is unlikely that local policy can utilise the standard as a policy approach due to the timebound constraint of planning. 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. From an energy and carbon perspective, the power of planning is held at the design stage.

One attraction of the UKNZCBS as local policy could be that the administrative burden of assessing policy compliance at local authorities could be passed onto 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 confidently assess the performance of new buildings at the point of planning decision-making. Therefore, the offering of the UKNZCBS is reduced to what is already on offer, whereby local authorities imitate industry-leading standards by setting specific requirements for energy consumption, space heating demand and on-site renewable energy generation.

While this approach is gaining traction and significantly improving the quality of local net-zero newbuild policy, the opportunity to use the UKNZCBS as a policy requirement is lost due to its reporting periods. Subsequently, this squanders the opportunity for a universal standard to be applied throughout the UK’s local authorities, which would enhance the consistency of requirements and increase the confidence of developers to apply them.

Clearly, the UKNZCBS is not currently aimed at local newbuild policy, although workshops have been undertaken with local authorities to understand how the standard could be used. In future, it would be a welcome addition to the standard for guidance to be given on how to apply the standard within a local policy context.

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. As we move forward, the success of this standard will depend on the collective efforts of all stakeholders in the industry.

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. As more buildings adopt this standard, we can expect to see a ripple effect, driving broader changes in construction practices and contributing to the UK's overall climate goals.

While this blog has addressed some potential missing links and 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 not 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 for an undoubtedly improved full version.