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To date there has been a lack of agreed methodology to determine what is a net zero carbon building in the UK. That is set to change with the recent – and much-anticipated – publication of the pilot version of the UK Net Zero Carbon ºÚ¶´ÉçÇøs Standard (the standard) on 24 September.

What is the purpose of the standard?

The industry-backed standard clearly defines the requirements for buildings across all major UK sectors to be net zero carbon. The standard will allow for uniformity in the verification of net zero claims and aims to drive the decarbonisation of the built environment.

The standard also aims to create alignment with existing industry standards and schemes working towards the same net zero goal, such as NABERS. Where there is equivalence, achieving one scheme or standard could help buildings to achieve another.

What are its key features?

The standard sets out specific, measurable requirements for buildings to be considered net zero carbon. Key features of the standard include:

• The standard’s carbon limits combine: (i) top-down budgets based on carbon budgets for the UK to reach net zero carbon by 2050; and (ii) bottom-up analysis regarding what can be practically achieved based on in-use information from the industry.
• The standard adopts a whole-life carbon approach and includes both embodied carbon and operational carbon.
• The standard is applicable to both existing and new buildings in the specific sectors, including offices, hotels, retail, data centres and healthcare, which each have their own carbon limits and targets.
• ºÚ¶´ÉçÇøs can only claim to be verified against the standard once they have been occupied and in use for at least a year, with actual data. Verification will be managed by third-party verifiers.
• Carbon offsets may be used to complement, but not replace, the mandatory elements of the standard. Any carbon offsets used are not restricted in type or location, but the year of the carbon credits must be no more than five years before or after the reporting period.

The pilot testing scheme is expected to be launched in early 2025, and then version 1 of the standard published in late 2025.

What does it not cover?

As a building can only be verified against the standard after the accumulation of one year of data and occupation, one cannot verify a building against the standard at the design stage or at practical completion. This could prove challenging for developers. However, those behind the standard have said they are investigating options to demonstrate that building projects are on track at practical completion.

The standard does not cover buildings that cannot be classified into the sectors listed within the standard, nor infrastructure projects. The standard also does not cover buildings located outside the UK, although in due course it is hoped the methodology can be used to develop limits and targets in other countries.

How will it impact construction and development?

The work undertaken by the standard has shown that a significant uptake of energy retrofit to existing buildings is required.

As you would expect, the standard prioritises the reuse of existing buildings and assets – and it will be interesting to see whether it accelerates the increase in retrofit developments within the sector, given that the earlier you retrofit an existing building, the more operational carbon is saved – whereas if you leave it later, you need to retrofit at a deeper, and more expensive, level. We are already seeing an increased focus on not only the retrofitting of existing buildings but also on factoring retrofitting into plans for the asset lifecycle of new developments.

One cannot verify a building against the standard at the design stage or at practical completion

Turning to the legal aspects of developments, if the standard is widely accepted by the industry once launched, we expect to start seeing references to compliance with the standard, either as a goal or as a strict legal requirement, within agreements for lease, leases and development funding agreements.

Similarly, we anticipate seeing references to the standard within construction contracts for development projects.

Although the standard will not be mandatory, if the uptake is as wide as is hoped, it should help drive the delivery of low carbon solutions across the project team on developments.

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The real challenge will be ensuring that any obligations to comply with the standard are passed down, and can be evidenced, through the supply chain.

Overall, it will be exciting to see how the industry implements the standard on buildings that are being designed and constructed – as well as on those already operating.

Gabrielle Coppack is a professional support lawyer in real estate, Nick Turner a real estate partner and Matthew Bool a construction partner at Herbert Smith Freehills