Domestic Energy Performance Certificates (EPC) reform: consultation

2. Introduction

2.1 Background

Energy efficiency measures alone will not reduce greenhouse gas emissions enough to meet our emissions reduction targets. Improving the energy efficiency of our buildings is an essential parallel action to heat decarbonisation and the rollout of zero emissions heating systems. Improving the energy efficiency of our homes will also reduce energy demand and therefore support households to reduce their energy costs and mitigate one of the four drivers of fuel poverty.

The UK Climate Change Committee (CCC) in its sixth Carbon Budget report (Dec 2020^[1]) identified that high quality advice and information is critical for guiding householders' decisions to improve the energy performance of their home. Energy Performance Certificates (EPCs) are a useful source of basic comparable information. However, the CCC have acknowledged that there are extensive issues with using them as a basis upon which to set standards. These are mainly poor quality or low robustness; modelled data rather than actual energy performance; they do not incentivise or show benefits of decarbonising heat or include the savings possible from smart tariffs. In previous Energy Efficient Scotland consultations, stakeholders have echoed the need for a more effective EPC process.

We are committed to bringing forward a framework of regulatory standards to improve energy efficiency and achieve zero emissions in our buildings. The first stage in this process is to have information that is robust, reliable and informative.

2.2 What this consultation covers

Changing the EPC format and considering how we use it to regulate and encourage change towards net zero is a complex process. This consultation forms only the first part of that process.

Stage 1 – This consultation - Consultation on the metrics in an EPC based on our commitments laid out in the draft Heat in Buildings Strategy.

Stage 2 – A tailored approach to achieving EPC C (equivalent) and zero emissions heating

The CCC, and our own Short Life Working Group recommended that reforms to EPCs should drive necessary change, and the draft Heat in Buildings Strategy (HBS) states "to be a useful tool for property owners, EPCs need to set out clear property level recommendations on the measures needed to reduce demand for energy and reduce emissions to zero." "It will be important that EPC recommendations are tailored and appropriate to the property, and are in line with the heat zoning set out in the area's Local Heat & Energy Efficiency Strategy".

Figure 1 Diagram showing the three stages in the process of reforming the domestic Energy Performance Certificates.

Stage 1 - Domestic EPC Metrics consultation (July - Oct 2021)

+

Stage 2 - Tailored approach to recommendations for home owners (April - Nov 2021)

This work will form the second stage – creating a process whereby property owners are provided with an accurate list of steps to allow them to meet standards set, achieving improved energy efficiency and seek to achieve zero emissions in their heating system. The steps must be actionable and correct from the outset and must set out a pathway to help property owners reach the standard set in regulations, and must be robust and appropriate to the property in question, going beyond the limitations of basic data collection on an assessment.

We will work with EPC assessor organisations to ensure any assessment can deliver a tailored and reliable set of steps which building owners would take to reach the regulatory standard.

Stage 3 - Consultation on tenure-based regulations

In the draft HBS we laid out a timeline for consulting on tenure-based regulations in 2022. To allow this to happen we must have concluded stages 1 and 2 above. Consultation on regulations using the new metric as the basis of the standard. This will include consideration of how such regulations will impact on those who are or are at risk of becoming fuel poor.

What are Domestic Energy Performance Certificates?

The original policy driver for the current system on EPCs was the European Union's (EU) Energy Performance in Buildings Directive 2002 (EPBD)^[2] with its objective to promote the improvement of the energy performance of buildings across EU member states. This was transposed into Scottish statute via the Energy Performance of Buildings (Scotland) Regulations 2008^[3].

Energy Performance Certificates (EPCs) provide information on how energy efficient your building is, and how it could be improved. Buildings are rated on a scale from A-G, with A being the most efficient. Information is also provided on measures which could be made to improve energy efficiency and an indication of the cost for each improvement. An EPC must be produced when a new building has been constructed; and when a building is to be sold or rented to a new tenant.

EPCs are valid for 10 years. They are based on information collected onsite by Domestic Energy Assessors, such as the size and layout of a building, how it has been constructed and the way it is insulated, heated, ventilated, and lighted. Since people use buildings in different ways, the calculation is based on standardised assumptions of occupancy and use.

What do Domestic EPCs show?

Domestic EPCs display an Energy Efficiency Rating (EER) and an Environmental Impact Rating (EIR). The EER is rated in terms of energy costs, while the EIR is rated in terms of carbon emissions. Domestic EPCs also have numerical ratings, with a higher number suggesting greater energy efficiency.

The numbered arrows show the current rating based on the existing energy performance of the property and the potential rating if the suggested improvements are implemented. An EPC also shows the Primary Energy Indicator which indicates the amount of energy used to produce one kilowatt of power for a household.

This consultation proposes a change to the way information, already gathered as part of an EPC assessment, is displayed on the EPC - creating a new metric - which will help homeowners understand how much energy their property uses.

This consultation is the first in a series of stages to improve the energy efficiency of domestic properties, to ensure properties are readied for the introduction of zero emissions heating systems and to ensure properties are warm and efficient to help mitigate the risk of fuel poverty. At this stage we are not asking for views on:

• the list of recommended measures and the way these are generated;
• the quality and accuracy of EPCs generated;
• how the EPC will be used to set standards in the future (by tenure);
• changes to the underlying EPC methodology (SAP, RdSAP) and how they are produced (e.g. assessor skills); non-domestic EPCs;
• the assessment of energy performance in non-domestic properties; and
• wider energy standards in building regulations.

We are also developing an appropriate scale for the new metric (see 4.5 – Energy Use Rating). As outlined in the draft HBS, the proposal for regulatory standards is to be set at EPC C equivalent, ensuring for energy efficiency, buildings will be as ambitious as the current EPC C.