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Steps towards building a sustainable future: The UK Net Zero Carbon Buildings Standard

October 2024

Late September 2024 saw the launch of the Pilot Version of the UK Net Zero Carbon Buildings Standard (the “Standard”)[1]. This initiative marks a significant milestone in a collective cross-industry effort to agree a UK built environment industry wide net zero standard, and to facilitate parties in taking positive and demonstrable steps in reducing the overall impact of construction of buildings on the environment. Additionally, it paves the way for the creation and implementation of future standards or monitoring systems, further contributing to the UK’s broader decarbonisation goals.

A collaborative industry achievement

The Standard results from extensive collaboration between industry organisations with expertise across the UK built environment industry, including the Better Buildings Partnership, the Building Research Establishment, the Carbon Trust, CIBSE, the Institute of Structural Engineers, LETI, RIBA, RICS, and the UK Green Building Council. Experts and representatives from contractors, consultants, and developers played a key role in creating the Standard. Their contributions were complemented by inputs gathered through stakeholder engagement and consultation.

The release of the Standard also follows a previous ‘call for evidence’ from UK construction industry professionals, as mentioned in our November 2022 update. Participants were invited to submit data on their buildings’ operational energy and embodied carbon performance. The collected insights were crucial in establishing standardised performance targets for carbon emissions during both the construction and operation phases of such projects.

Importance of the Standard

The Standard responds to an urgent need for clarity and consistency in how net zero carbon is defined and applied within the construction industry. Historically, efforts to standardise approaches to net zero contributions were hampered by a lack of a unified definition, creating confusion and inconsistency in contracts and projects. As previously noted by David Partridge, Chair of the UK Net Zero Carbon Buildings Standard Governance Board, “if the real estate industry and built environment is to seriously address its impact on climate change, a universally adopted Net Zero Carbon Buildings Standard is absolutely essential”[2].

The Standard establishes a framework to help define what constitutes a net zero carbon building and set out clear, commonly understood, performance targets. It consolidates important net zero carbon requirements for most major building types.

Given that the construction sector is responsible for approximately 40% of all carbon emissions, creating a comprehensive framework for measuring and achieving net zero is viewed as crucial.[3] Having a single agreed methodology for assessing both operational energy use and carbon emissions enables industry practitioners to minimise the risk of ambiguities and show compliance in this area. This uniform approach has also been praised by the construction industry for creating a level playing field for all stakeholders and in considering or supporting net zero claims.

Who is the Standard aimed at?

The Standard is created for use by a wide range of stakeholders involved in projects. This includes those procuring projects, developers, contractors, asset owners and managers, occupiers, investors and funders, consultants/designers, building industry professionals, building managers, and product or material manufacturers, suppliers, and distributors.

What does the Standard cover?

The Standard includes metrics for evaluating net zero carbon performance, together with specific limits and targets for aspects like upfront carbon, operational energy use, embodied carbon, on-site renewable electricity, and refrigerants. It emphasizes avoiding fossil fuels on site. The overarching requirements, specific measures for elements like embodied carbon and operational energy, and tables of numerical limits by building type, purpose, and year, are likely to be of interest for users and operators of the Standard.

The Standard also covers carbon accounting, reporting, and submitting mandatory evidence to demonstrate that a building is net zero carbon aligned. The methodology for deciding to offset residual carbon emissions is outlined (where appropriate), along with the roles and responsibilities of those involved in implementing the Standard. Any claims associated with the above may come in the form of “Net Zero Carbon Aligned Building” or “Net Zero Carbon Aligned Building (with offsets).” The Standard does not discourage the use of carbon offsetting, but this cannot replace conformity with the mandatory targets.

Based on the Pilot Version of the Standard, an independent third party must verify claims by using in-use measured data. Although the verification process is not yet fully detailed, it is expected to be released in the future. The Standard is an in-use standard, meaning buildings can only claim to be net zero carbon aligned after being in use and occupied for at least 12 months, with supporting measured in-use building performance data. If a building fails to meet the required targets in subsequent years, it cannot then claim to be net zero unless it references prior years when it was compliant.

Is the Standard science-led?

The Standard has been developed with input from leading businesses and specialists, using data from thousands of projects. The technical working groups employed different approaches: the ‘top-down’ workstream considered national carbon and energy budgets to define industry actions for future decarbonisation and net zero efforts, while the ‘bottom-up’ workstream used case studies, benchmarking, and modelling to establish performance levels based on technical evidence.

The limits and targets of the Standard are designed to align built environment carbon emissions with the industry’s carbon and energy budgets. The goal is to achieve net zero carbon in the industry by 2050, which is necessary to mitigate the worst effects of global warming to 1.5°C. The Standard also aligns with projected energy demand reductions needed for a net zero carbon energy supply sector.

Is the Standard mandatory?

The use of the Standard is voluntary – whether it applies will therefore depend upon whether it is adopted by parties on their projects and the applicable contract terms and conditions agreed. However, where projects comply with the Standard, the project owner or project teams may be able to use it as part of future marketing claims.

Is this Standard that new?

The Standard is relatively new but has been discussed and consulted on since 2022.

The BSI’s PAS 2080, Carbon Management in Infrastructure and Built Environment, specifies requirements for whole-life carbon management in buildings and infrastructure. Many parties might already be familiar with other environmental or net zero standards or requirements, such as the ‘Net Zero Public Sector Buildings Standard’ (published in November 2021) or the specific ‘NHS Net Zero Building Standard’ (published in February 2023). There have also been wider attempts to include carbon reduction requirements into public sector contracts: see our article on Procurement Policy Note (PPN 01/24) – a new Carbon Reduction Schedule.

The Standard aims to align with existing industry standards and targets (such as RICS’s whole life carbon standard, second edition), but it has a broader scope and application in respect of buildings.

What types of buildings does the Standard apply to?

The Standard is applicable to both existing and new buildings across various sectors, including commercial residential, homes, data centres, offices, retail, healthcare, higher education and schools, hotels, science and technology, sport, leisure and culture, and storage and distribution buildings. As mentioned above, the Standard uses available information and robust performance data from these sectors to set relevant limits.

Currently, the Standard does not apply to infrastructure projects, and specific data for certain building types are also missing from the Pilot Version. Future versions of the Standard may include other types of projects and guidance for multi-use buildings. Further, with increased emphasis on retrofitting and refurbishment forming part of wider decarbonisation efforts, we may need to watch this space to see how the Standard can be practically applied to existing or listed building types. It is also uncertain whether the Standard will eventually develop to cover infrastructure projects or other types of assets.

Next steps for industry stakeholders

The Standard provides information and technical details on how a building can meet the Standard, including the necessary limits, targets, and technical evidence required for compliance. This information must be maintained and reported accordingly. The pilot’s launch webinar is scheduled for 31 October 2024.

The Standard has been promoted to encourage organisations to adopt the Pilot Version for their buildings and assets as soon as possible. A development programme has been set up to collect feedback on the Pilot Version, which can be submitted online. Case studies and information on buildings can also be used to test the Pilot Version and to understand its implementation and future evolution.

It is anticipated that Version 1 of the Standard will include more comprehensive information, such as energy and carbon assessment; evidence submission; and limits and targets (all currently referenced in the Pilot Version of the Standard); plus, the verification process, and communication and disclosure requirements (not included in the Pilot Version). Based on the indicative timetable, Version 1 will be released no earlier than late 2025.

We have already seen impacts from global warming and other climate related impacts in the UK and globally. The creation of this Standard, with inputs from leading organisations and experts, highlights the need for a concerted effort to address such risks. As we move forward, it is increasingly clear that it is crucial for industry stakeholders to engage with the Standard, review its provisions, and consider how to incorporate the Standard into their projects and operational strategies. In the future, it is anticipated that projects will be able to use the Standard to verify and demonstrate compliance with net zero carbon requirements.

Implications for contracts and compliance

There has been a growing acknowledgment of the need for environmental and sustainability requirements in standard construction industry contracts. This includes clauses advocated by The Chancery Lane Project and, more recently, in the JCT suite of contracts, 2024 Edition. For example, as highlighted in our article regarding the NEC4 Secondary Option Clause X29, whilst some steps had been taken to include such provisions, it was generally left to the parties to define net zero in their construction contracts. This could be done using the Climate Change Requirements under NEC4 Clause X29 or through various bespoke definitions and standards. Consequently, parties were responsible for determining, monitoring, and managing the performance targets or metrics from a net zero perspective.

Incorporating the Standard into construction contracts will help reduce ambiguity in measuring carbon emissions and ensuring regulatory compliance. This alignment will allow parties to set clearer targets and responsibilities, fostering a proactive approach to sustainability in construction projects. The Pilot Version also aligns with existing net zero initiatives and standards, which should be familiar to many parties. In addition, as industry practitioners engage more with the ongoing refinement of the Standard, we anticipate a greater use or commitment to its adoption and implementation. Early engagement with this process will therefore be crucial for those seeking to stay competitive and ahead in the evolving regulatory landscape.

Concluding thoughts

The Pilot Version of the Standard remains a welcome initiative aimed at clarifying the construction industry’s approach to achieving net zero carbon emissions. It fosters a common understanding among key stakeholders such as employers, contractors, and consultants. The Standard is drafted in a clear and user-friendly manner, considering underlying data points, as well as the rollout, implementation, and feedback processes. The approach and input from key industry bodies and organisations further demonstrates engagement from the UK’s built environment sector to better integrate and embed decarbonisation efforts into daily activities and projects. The Standard is designed to be neutral, focusing on meeting carbon and energy targets without political agendas.

While the piloting and testing may lead to further development based on feedback, there are potential opportunities to expand or supplement the Standard. Aligning the Standard with existing live requirements and future equivalents, and minimising the impact of future political changes, will help to increase its attractiveness and overall adoption. The more parties that use the Standard, the more chance for improved outcomes. It remains to be seen whether there will be substantial changes between the Pilot Version and Version 1, although it is worth keeping an eye out for the additional items mentioned above.

References to decarbonisation efforts in the Government’s Construction Playbook and recent Procurement Policy Notes (“PPNs”)[5] point towards the importance of sustainability requirements on UK projects. This could increase the visibility and use of the Standard by the construction and engineering sector, local authorities, developers, contractors, and consultants moving forward. Nonetheless, this is a voluntary Standard and, whilst it may encourage earlier discussions and efforts linked to net zero, it will only make an impact to the extent that parties decide to adopt and actively implement it on their projects. Further, the Standard’s mandatory requirements for building performance and construction quality are currently ambitious but pushed as achievable: it will therefore be interesting to see how such requirements are ultimately incorporated into contracts and implemented in practice.

Those seeking to use and comply with the Standard will benefit from clear references to it in contract documents or technical specifications, early adoption, and robust information management and data practices. Using a unified methodology and metrics from the outset of building projects and maintaining quality records will become crucial for later independent verification and testing of net zero marketing or claims. This information will also be important for evidencing compliance with contractual requirements and associated performance reporting, monitoring, or incentivisation provisions. Care must therefore be taken when drafting or negotiating such provisions and references to the Standard, including whether it is an aspirational goal or strict requirement of the agreement between the parties.

We look forward to supporting our clients through the ongoing transition to net zero and will continue to keep you informed as the Standard evolves post-pilot. Our specialist lawyers are available to provide advice on environmental-related matters and can guide you on how to effectively incorporate key environmental and sustainability terms into construction contracts and documents. Should you have any questions on the content of the Standard and how this might impact or inform your construction contracts, professional appointments, or practices in the meantime, please contact the authors or your Beale & Co lawyer.

[1] Home | UK Net Zero Carbon Buildings Standard (nzcbuildings.co.uk)

[2] Quote taken from the RICS article, “UK Net Zero Carbon Buildings Standard coalition launches call for evidence”, 9 November 2022 – https://www.rics.org/news-insights/uk-net-zero-carbon-buildings-standard-coalition-launches-call-fo#:~:text=%E2%80%9CIf%20the%20real%20estate%20industry%20and

[3] Statistic taken from the World Economic Forum article, “We can’t tackle the climate change crisis without changing construction”, 4 January 2021 – How much carbon does the construction industry emit? | World Economic Forum (weforum.org)

[4] The Construction Playbook sets out key policies and guidance for how public works projects and programmes are assessed, procured and delivered: The Construction Playbook – GOV.UK (www.gov.uk)

[5] For example, the Procurement Policy Note 01/24: Carbon Reduction Contract Schedule

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