Net-zero buildings: The challenge for decarbonising estates

Ciara Burke, a Director in EY’s Sustainability practice, explains why decarbonising property portfolios is one of the hardest tasks facing estates directors and climate ambitious local authorities.

Net-zero buildings: The challenge for decarbonising estates

The launch of the UK’s revised Net-Zero Strategy in early April 2023 threw a renewed spotlight on the challenge of meeting its commitment in law under the sixth carbon budget to reduce emissions by approximately 78% by 2035, compared with 1990 levels. Even though the UK now has a government department dedicated to decarbonisation – the Department for Energy Security and Net Zero, established in February 2023 – there is still a general consensus among the sustainability community that there is a lot of talk and not enough action.

In the race to net zero, a key action must be decarbonising property.

Property contributes heavily to organisational carbon footprint

Up to 75% of an organisation’s carbon footprint (in terms of Scope 1 and 2 emissions) can be driven by property use, so tackling this is essential when seeking to meet net-zero targets. Buildings also impact scope 3 carbon footprint, for example through leased assets and embodied carbon via construction or major retrofit.

This challenge is acutely felt at local government level, where councils are expected to decarbonise their building stock as part of the national net zero goal. Data shows that in 2021, 6% of the UK’s carbon emissions were driven by the local government supply chain. Nearly a third of this (10mn MtCO2e) was attributed to social care – primarily through nursing homes, day centres, and health and domiciliary care – with a further 30% (9.8mn MtCO2e) emitted by buildings including construction, retrofit and facilities management.

More efficient buildings save carbon and money

Rises in energy prices mean that inefficient buildings now cost more than ever to run, making the need for retrofit even more urgent. For example, for some buildings upgrading heating, ventilation and air conditioning (HVAC) systems alone can save up to 60% on future energy bills. And in others, fabric interventions will deliver the most cost-effective path to energy savings.

Therefore, retrofitting existing buildings will play a vital role in the net-zero transition

Did you know, 80% of the buildings that will exist in 2050 have already been built? This means that national net zero targets cannot be achieved without decarbonising existing building stock – therefore retrofitting buildings must play a vital role. But decarbonising estates is complex and expensive. Taking a site-by-site surveying approach will take years at great expense.

So, organisations can be forgiven for finding it hard to know where to start: how can they quickly gain an understanding of the scale of work that needs to be done, and what it will cost?

How to decarbonise property portfolios

To address this issue, leveraging our transformation and sustainability expertise, EY has developed the Net Zero Estates (NZE) tool in collaboration with global engineering specialist Mott MacDonald. The tool is designed in line with the UK Government’s Net Zero Estates Playbook – a methodology EY wrote with the UK Office of Government Property to define how UK public sector property professionals should plan the decarbonisation of their estates.

The NZE tool analyses an organisation’s property estate to establish its carbon footprint (in terms of Scope 1 and 2 emissions). It provides costed scenarios for different decarbonisation plans and conducts organisational capability analysis to understand organisational readiness to deliver a programme of this scale.

Case Study: Barnet Council

In September 2022, EY worked with Barnet Council in north London to use the NZE tool to analyse its property estate, which was dominated by a vast portfolio of residential properties. This project has recently received a nomination in the Unlock Net Zero Live Awards for ‘Innovation of the year’ in the product/service category. In under eight weeks, EY worked with the Barnet Estates team to:

  • Define the carbon footprint of their property portfolio
  • Identify hotspots of carbon intensity for focused action
  • Scenario model a range of costed decarbonisation pathways to their net zero target date; and
  • Determine organisational readiness to decarbonise – helping form a view of additional programme costs and preparations required.

This allowed the council to rapidly understand the options available to them, the scale of the funding required to achieve their goal to become a net zero council by 2030 and a net zero borough by 2042 and enabled them to start building the business case to take action.

The challenge for local government, and indeed all organisations, to decarbonise entire property portfolios is a complex one, particularly where data gaps may exist. Taking a tool-based scenario modelling approach to developing a portfolio decarbonisation plan accelerates progress, by helping government and organisations to rapidly understand what it takes to fulfil their net zero goals.

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