Blog: Net zero alignment in property development cannot be delayed – Pinsent Masons

Existing UK regulation has so far been focused on improving the energy efficiency of buildings, although policy and regulatory gaps remain on owner occupied property. There is currently no legal imperative for UK developers to switch to low-carbon materials or methods of construction. An attempt to introduce a new Bill to require the whole-life carbon emissions of buildings to be reported and to set limits on embodied carbon emissions in the construction of buildings was withdrawn earlier this year.

The calls for regulation of embodied carbon are increasing and the lack of regulation of embodied carbon emissions in the UK means there is currently a deficit in adequate regulation to meet standards which align fully with the net zero agenda.

The reasons to act now

Despite the other urgent issues which the UK government and businesses are grappling with there are reasons for developers to act now to reduce embodied carbon.

Many have set their own net zero targets and to achieve these will require action on embodied carbon. Many are already reporting – and most in due course will be required to report – their carbon emissions including their ‘Scope 3’ emissions which will include emissions from the embodied carbon in their developments. Their customers will increasingly be subject to similar requirements. If, as seems likely, whole life carbon assessments become mandatory these are likely to drive a much greater focus on the need for net zero compliant developments. A key question remains on how soon such carbon assessments are likely to become mandatory, as this is likely to be a real prompt to a change in behaviours.

There are also financial risks in not making developments sustainable. With pressure growing on lenders and investors to align their financial support with businesses committed to reducing emissions, developers that fail to do so will likely limit their access to capital on the best terms. There is also the likely risk of a carbon tax in time. A net zero aligned tax system with loss of taxes from fossil fuels makes such a tax more likely.

In a recent report, the Environmental Audit Committee of MPs warned that the legal targets for reductions in emissions which the UK has set both up to 2030 and to 2050 cannot be met without regulation of embodied carbon. It highlighted that the UK built environment is responsible for 25% of the UK’s greenhouse gas emissions and that the UK is falling behind in dealing with embodied carbon emissions. Other European countries, such as the Netherlands, France and Scandinavian countries, as well as the US, have introduced, or are introducing, regulation of embodied carbon.

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