Consultation on Energy Performance Certificate (EPC) reform in Scotland

United Kingdom

As part of the race to net zero, the Scottish Government is consulting on proposals for the reform of the current Energy Performance Certificate (“EPC”) regime (the “Consultation”). The Consultation aims to ensure that EPCs provide a useful source of information by reforming both the domestic and non-domestic metrics in useThe Consultation closes on 16th October. This CMS Law-Now sets out the Scottish Government’s final proposals detailed in the Consultation ahead of the anticipated EPC reform.

Background to the Consultation

It is a legal requirement to produce an EPC when a building is to be sold or let, unless an exemption applies. The Scottish Government’s independent statutory advisor, the UK Climate Change Committee (“CCC”), has long been critical about the current information provided by EPCs and has recommended reform to ensure that EPCs provide information directed towards achieving net zero. Since 2017, the Scottish Government has commissioned research to ensure that any changes to EPCs are tailored to this purpose. Although earlier consultations focused on the domestic EPC metrics, the Consultation reveals that a wider reform will also address non-domestic EPCs.

The Consultation Proposals

The Scottish Government proposals in the Consultation can be divided into three categories: (i) Domestic EPC metrics, (ii) non-domestic EPC metrics and (iii) additional EPC system changes. All of the proposed changes are intended to ensure that stakeholders have access to advice and information that assist with making improvements to a building’s energy performance, which in turn supports the transition to net zero.

(i) Domestic EPC metrics

The current domestic EPC contains two metrics: (a) the Energy Efficiency Rating and (b) the Environmental Impact Rating. The former is based on the modelled energy cost of a dwelling, whereas the latter is based on direct and indirect carbon dioxide emissions associated with a dwelling. The better the rating, the lower the annual cost and emissions a dwelling is modelled to have. The CCC has criticised these metrics for their failure to incentivise homeowners to make energy efficient improvements to their homes, taking the view that the ratings can be difficult to compare against actual performance. In response, the Consultation proposes five new metrics to provide a more comprehensive view of a dwelling’s energy performance. These new metrics are separated into headline metrics and additional metrics aimed at supporting different policies.

The headline metrics would include a Fabric Rating, a Cost Rating and a Heating System Type, and they would aim to provide information related to a dwelling’s energy costs and heating system emissions. An additional set of metrics is also proposed being an Emissions Rating and Energy Use Indicator. Details of these metrics are as follows:

  • Fabric Rating – This rating would demonstrate how well the swelling retains heat, taking into account how effective its insulation is. The Consultation proposes two different options for calculating the energy that is required for the heating system, and it is seeking views as to whether the rating should also include domestic hot water demand. It also proposes to present the rating on an A-G scale based on the total amount of energy used per year (as kWh/m2/year). On this scale, band C would be good level of energy efficiency, which is in line with the current rating bands.
  • Cost Rating – This rating would replace the current Energy Efficiency Rating. Instead of providing an estimated figure of annual costs, the Consultation plans to continue with the A-G scale and a 0-100 rating index as a method of comparison. 
  • Heating System Type – This metric would provide information on the efficiency of a dwelling’s heating system and its emissions. This would place heating systems on a classification scale based on energy use, with the aim of encouraging homeowners to compare their heating system with better available options. 
  • Emissions Rating – This rating would reflect the current Environmental Impact Rating. Although the Scottish Government’s Heat in Buildings Strategy sets the focus on direct emissions, this rating will continue to recognise total emissions on an A-G scale with a 1-100 rating.
  • Energy Use Indicator – This metric would introduce the total amount of energy used per year, displayed as kWh/m2/year.

(ii) Non-domestic EPC metrics

The Consultation also proposes introducing a new set of metrics for non-domestic EPCs that would focus on direct emissions. These metrics would be known as the Energy Rating, the Direct Emissions and the Energy Use. Due to the variety of building types and activities, the Consultation recognises the difficulty in identifying decarbonisation measures that can be applied across all buildings. The proposed metrics aim to provide a picture of a building’s performance against a benchmark as follows:

  • Energy Rating – This rating would be based on modelled emissions relative to a reference building, in order for building owners to be able to compare their building’s rating to other buildings across the UK. This would be represented on an A-G scale with a 1-100 index rating.
  • Direct Emissions – This metric would display a building’s modelled direct emissions, in line with policies supporting decarbonisation. The modelled carbon figure would be presented as kg/CO2e/m2/year.
  • Energy Use – This metric would represent a building’s modelled energy use under standardised conditions, presented as a figure in kWh/m2/year.

(iii) Additional changes to the EPC system

In addition to metrics, the Consultation proposes further changes to the system as a whole to ensure that the information provided is clear and useful for the underlining policy purposes. These further changes are as follows:

  • Proposal to reduce the validity period of EPCs from 10 to 5 years, in order to ensure that the information is kept up to date.
  • Proposal to move from PDFs towards a digital and accessible EPC in webpage format. This would reduce the difficulty in viewing EPCs on mobile devices and address accessibility issues with screen-reading technology. Additionally, a webpage format would allow for easier signposting towards next steps, by providing direct links to resources for homeowners to take steps to make dwellings more energy efficient.  
  • Proposal to introduce Application Program Interface access to the Scottish EPC Register, to allow stakeholders to access the register in real time instead of the current practice which publishes EPC data quarterly. In addition, the Consultation proposes allowing access to historic EPC data, to allow stakeholders to understand trends in energy performance over a longer period of time.
  • Proposal to update the existing Operating Framework to ensure a robust quality assurance system. A further proposal is to update the auditing requirements with a risk-based, smart auditing approach that is similar to that used in England and Wales.

The Consultation does not propose changes to the current use of modelled data for the purposes of EPC metrics. Although it addresses the potential risks of modelled data, such as the risk of misidentifying the demand of buildings and their occupants, the Consultation relies on the introduction of quality assurance to mitigate such risks. The Consultation also addresses briefly the CCC’s recommendation of introducing digital Green Building Passports but chooses to focus on the development of EPCs for now.

What’s next?

The reform will be documented through amendment of the Energy Performance of Buildings (Scotland) Regulations 2008 during the Winter of 2023-24. The proposed EPC reform will come before the proposed Heat in Buildings regulations, allowing for a period of time for stakeholders to get accustomed to the new EPCs. In addition, the Scottish Government has mentioned that it is following the major update that is underway on the Standard Assessment Procedure (“SAP”) in the UK Government, and it will consider aligning its reform on EPCs with this SAP update. 

The Consultation is currently seeking views on the proposed metrics, and as to whether additional metrics that have not been proposed should be included with the reforms. It will welcome views until 16 October 2023.

Article co-authored by Sofie Santry, Trainee Solicitor at CMS.