Energy Performance Certificate (EPC) reform: consultation

3. Stakeholder Recommendations and Previous Research, Working Groups and Consultation

3.1 CCC Recommendations for Reform

The Climate Change Committee (CCC), our independent statutory advisors, have recommended that the Scottish Government reform EPCs to ensure they better reflect our net zero objective. In their Sixth Carbon Budget report^[20] and subsequent reports to the Scottish Government and Parliament^[21],[22] the CCC identified that high quality advice and information is critical for guiding householders’ decisions to improve the energy performance of their home.

In February 2023, the CCC published research and recommendations^[23] on the reform of domestic EPCs in Scotland and the rest of the UK. This made recommendations for revised EPC metrics^[24]. The key messages from this advice are:

• The ratings currently on EPCs are an important policy tool used to define standards and targets for reducing emissions from homes but they are poorly suited to this role;
• The ratings do not appropriately incentivise the energy efficiency and heating solutions required to deliver net zero homes;
• The presentation of metrics and ratings should be improved, so they are easier to understand, can be compared with actual performance, and enable policies to be better targeted;
• Reforms to EPC metrics should be applied alongside wider improvements to the EPC system to improve the quality of assessments and use of data.

The CCC recommended domestic EPCs should include four primary metrics, using real-world units, and clear simple names:

• Fabric Rating: Space heating demand intensity (kWh/m²/year);
• Cost Rating: Energy cost intensity (£/m²/year);
• Heating Type: Heating system type (category of heating system);
• Energy Indicator: Total modelled energy use (kWh/year).

The CCC recommends that work to reform EPCs is designed to drive deployment of the necessary energy efficiency measures on a holistic basis and does not hinder the use of low-carbon heating solutions^[25].

3.2 EU Energy Performance of Buildings Directive

The Scottish Government has ambitions to align with the EU, where appropriate, and in a manner that contributes towards maintaining and advancing standards. We continue to engage with EU proposals on EPCs, and will take them into consideration when reforming EPCs in Scotland.

EPCs across Europe are mandated by The Energy Performance of Buildings Directive (EPBD). In December 2021, the EU proposed a revision of the EPBD^[26]. This recast directive sets out how Europe can achieve a zero-emission and fully decarbonised building stock by 2050 and includes updates to EPCs across Europe and is now entering the last phase of the EU legislative process. Once final agreement on the EPBD has been reached, we will be able to fully consider any opportunities for alignment.

3.3 Previous Research and Working Groups

In 2017 the Scottish Government commissioned Alembic Research, Energy Action Scotland, and Dr Patrick Waterfield to undertake a review^[27] of earlier consultation and recommend actions to be taken forward. EPCs across Europe, officials recently reviewed and classified the substantial number of recommendations it made. The research recommended making changes to the methodology as well as the information presented on, and design, of EPCs.

The Scottish Government has raised, and will continue to raise, many of the methodological recommendations with the UK Government, including in consultation regarding the development of SAP 11. Several of the recommendations have informed this EPC reform work. These include user-centred redesign of the EPC format, better signposting to further support schemes, and clearer description of the purpose of the EPC and its recommendations.

In 2019 the Scottish Government ran a Short Life Working Group on Assessment^[28]. While the group did not run to completion due to Covid-19 disruption, their work reviewing the assessment needs for the Energy Efficiency Scotland programme has also informed the development of these proposals.

In 2019 the Scottish Government also ran a Working Group to review the assessment and improvement to the energy performance of non-domestic buildings in Scotland. This group also did not run till completion due to Covid-19.

3.4 Previous Consultation

Changing the EPC format and considering how we use it to regulate and encourage progress towards net zero is a complex process. Initial work was set out in the Domestic Energy Performance Certificates (EPC) Reform consultation document in 2021, which ran from July to October 2021.

While this work was undertaken several years ago, we published a summary report of the EPC reform consultation analysis and outlined our key findings. Respondents also broadly agreed with our proposals to rename the existing metrics and ensure EPCs provide clear, simple, and useful information to users. There was strong support for our proposal to introduce a new metric to report energy efficiency based on energy use. However, several respondents suggested a metric based on heat demand, rather than on energy use, would be more appropriate. An energy use metric would report the modelled energy delivered to the dwelling for the purposes included in SAP. A heat demand metric only takes account of the heat required to be provided by the heating system to maintain standard conditions.

In both the previous consultation and wider engagement, stakeholders expressed concerns that EPCs, and so policies that rely on them, are inherently flawed because they are based on modelled data. Stakeholders are particularly concerned with assessments of existing buildings where three key issues are identified:

• Firstly, there is a risk that EPC assessments misidentify the type or characteristics of building elements, either by mistake, by use of default values, or by methodological constraints;
• Secondly, the model may overestimate or underestimate values such as heat demand or running costs, potentially misleading consumers who interpret the values shown on an EPC as a prediction of actual energy use or costs;
• Finally, the recommendations shown on EPCs may be misleading. For example, they may not be physically possible due to data input errors, may have inaccurate cost analysis, or may be technically inappropriate for the building without further investigation.

We have taken this feedback from previous work into account when developing the proposals presented in this consultation.