Net Zero report by Mills & Reeve

Building towards net zero What is it and how do we get there?

Professor Sean Smith Chair of Future Construction, School of Engineering Director of the Centre for Future Infrastructure, Edinburgh Futures Institute University of Edinburgh Carla Parsons Associate, Mills & Reeve June 2021

Introduction This report is written as we begin to emerge from the restrictions caused by the Covid pandemic. But what will the world look like as we emerge blinking into the welcome summer sunshine and begin to take advantage of longer days and meeting friends and family?

How and where we work, shop and play, and how and when we travel (and, perhaps, no longer travel) to do all of those things, has seen a once-in-a-generation change which arguably increases the challenges faced by our built environment. The growth of online shopping was already posing a challenge to our high streets before Covid, but the past year has seen those challenges turn into shop closures which will transform our town and city centres. And the growth in remote working may mean that the business districts of our cities will not see the return of office workers, and of all of the businesses which supported them, in the same numbers as existed before the pandemic.

All of this is happening against the background of the ongoing climate change challenge which we face.

With COP 26 still scheduled to take place in Glasgow this November and the UK government recently committing to reduce carbon emissions by 78% by 2035 (as well as local, regional and national commitments to achieve net zero by various dates between now and 2050), the issues discussed in this report are hugely important.

Finally, Carla and I, as well as the wider Mills & Reeve team, would like to thank Professor Sean Smith for all of his assistance with the report. Sean is an internationally-recognised leader in this field, and we are delighted that he was able to find the time amid his myriad of teaching, research and advisory commitments to help.

Thinkers as diverse as Machiavelli and Churchill have reminded us not to waste a good crisis. We hope this report helps to provide some practical and legal input in support of that challenge.

Stuart Pemble Partner T. +44(0)7717538275 E. stuart.pemble@mills-reeve.com

Net zero: what is it?

1. Defining net zero ‘Net zero’ refers to achieving an overall balance between emissions produced and emissions taken out of the atmosphere. This includes the seven primary greenhouse gas emissions and are often then calculated into carbon dioxide equivalents (CO2e).

2. Net zero targets 2.1.

The UK government has targeted 2050 for net zero emissions as have the Welsh Government and Northern Ireland Assembly. The Scottish Government has targeted 2045 for net zero emissions. Many local authorities and public organisations have also set their own net zero emission targets with some being as early as 2030. Many companies have also been active in setting policies, strategies and targets to reduce carbon and greenhouse gas emissions including multi-nationals, large, medium and small enterprises.

2.2.

By summer 2020 internationally over 800 cities, 1,500 major businesses and 90 regions had declared or set policies and strategies for net zero targets. This trend has increasingly continued from 2020 to 2021 and can be found in every continent. Some sectors which are traditionally considered hard to abate are setting ambitious targets.

2.3.

Some companies are aiming for net zero in the next few years, and others are going beyond their direct emissions to include wider scopes of emissions. Emission scopes are broadly categorised under 3 main areas:

Scope 1: direct greenhouse gas emissions 2.4.

Direct greenhouse gas emissions occur from sources that are owned or controlled by the organisation, for example, emissions from their combustion boilers, furnaces, company vehicles, etc.

Scope 2: electricity indirect greenhouse gas emissions 2.5.

Accounts for greenhouse gas emissions from the generation of purchased electricity consumed by an organisation. Purchased electricity is defined as electricity that is purchased or otherwise brought into the organizational boundary of the organisation. Scope 2 emissions physically occur at the facility where electricity is generated.

Scope 3: other indirect greenhouse gas emissions 2.6.

Scope 3 is an optional reporting category that allows for the treatment of all other indirect emissions. Scope 3 emissions are a consequence of the activities of the organisation, but occur from sources not owned or controlled by them (examples include supply chain emissions or business travel such as air travel or where staff use their own vehicles)

Greenhouse gas emissions

3. Terminologies and client targets 3.1.

It is also very relevant to check what target is being stated by an organisation or client for tender invitations and also what is incorporated within the target emission framework they are adopting.

Some organisations will use a target of carbon neutral. This is because it is one of the few targets which has a supporting structural framework to guide and report against.

Carbon neutral 3.2.

Carbon neutral has a Publicly Available Specification (PAS) document for the specification and the demonstration of carbon neutrality (PAS 2060). Currently net zero does not have a PAS document.

3.3.

Carbon neutral refers to achieving ‘the state or level’ of net zero carbon emissions by balancing a measured amount of carbon released with an equivalent amount sequestered or offset, or buying enough carbon credits to make up the difference. Carbon neutral is commonly associated with carbon dioxide reductions. Achieving carbon neutral status generally covers scopes 1 and 2.

3.4.

For an organisation to achieve carbon neutral, they need to offset the carbon they directly emit into the atmosphere and look at the energy they are using, and the emissions associated with this power generation. For example a business can eliminate scope 2 emissions by only purchasing 100% green energy.

Net zero 3.5.

3.6.

Net zero takes this one step further, typically involving scopes 1, 2 and 3 and is commonly associated with all greenhouse gas emissions, therefore more challenging to achieve. It involves much more upfront work to collect and process data. Achieving net zero requires more investment and considerable input and actions from all areas of an organisation and importantly their supply chains.

Importantly net zero and inclusion of scope 3 requires strong working partnerships with supply chains and any joint venture partners to ensure the ‘collective’ reduction of associated emissions, data handling, tracking and co-solutions are developed in a timely and impactful way.

3.7.

An example of a net zero contribution approach with supply chains could involve packaging and avoidance of waste. The lead company could request their supply chain to shift to a common packaging approach, either by material or process (where possible). The shift could include only using 100% recyclable packaging and reportable tracking to demonstrate zero waste, or adopting a take back policy on packaging for 100% re-use leading to zero waste.

3.8.

Achieving carbon neutral status can be seen as a pathway towards net zero outcomes and is more likely to be utilised in the short term by organisations as they develop new solutions and emission outcomes in the areas in which they can directly control under scopes 1 and 2.

3.9.

It is not surprising that in the last six months a range of multinational large and SME companies have declared strategies and policies towards carbon neutral. In some cases companies have already declared that as a result of their offsetting, new technologies and approaches adopted they are already carbon neutral. These are often self-declarations and there have been growing calls for some form of third party certification for such declarations.

‘1.5°C pathways’ and science-based target initiative 3.10. This is a term often aligned to net zero outcomes. The International Panel for Climate Change in its Special Report on Warming of 1.5°C, suggested that warming of less than 1.5°C is defined by humans achieving net zero CO2 emissions (between 2050-2065) and achieving net zero emissions of all greenhouse gas (by 2070-2085). As a result, many organisations with net zero goals around this time frame state that their targets are aligned with warming of 1.5°C or less.

This description is used as a reference point by the Science-Based Targets initiative (SBTi).

Over a thousand companies worldwide are setting emissions reduction targets through the SBTi and hundreds of companies have raised their ambition by committing to ‘Business Ambition for 1.5°C’.

3.11.

The Paris agreement in 2015 resulted in 200 of the world’s governments committing to address climate change by limiting global warming to well-below 2°C. This signaled an acceleration in the transition to a low carbon economy. Many organisations are already demonstrating carbon reductions and have invested in new skills, training and technologies to make this a reality.

However, to ensure transformational action and outcomes to achieve they undertake is aligned with current climate science many organisations now utilise science based targets..

3.12.

Targets adopted by companies to reduce greenhouse gas emissions are considered ‘sciencebased’ if they are in line with what the latest climate science says is necessary to meet the goals of the Paris Agreement—to limit global warming to well-below 2°C and pursue efforts to limit warming to 1.5°C.

Zero carbon 3.13. Zero carbon is often used to describe zero emissions related to an energy generation mechanism (renewable energy) or material (timber). Often wood and timber products are classified as carbon negative as these materials sequest and store carbon. For many other products, processes and systems zero carbon is difficult to achieve and organisations should be wary of making any such claims.

3.14.

In 2011 the Advertising Standards Authority requested a company to remove advertising claiming a solar power system was a ‘zero carbon product’. Although the ‘energy produced’ was zero carbon the product itself utilised materials and required transport to site and therefore emitted carbon as part of its product material development, delivery and installation.

Terminologies within client contracts 3.15. Given the range and diversity of carbon and greenhouse gas claims, targets or statements that can be made it is not surprising that the emissions reduction landscape can appear confusing and overwhelming to many who are unaware of the differences and measures involved.

3.16.

Future public sector contracts and/or planning requirements for the built environment are likely to include net zero outcomes or carbon neutral compliance. It is therefore very important to understand the deliverables, measures and outcomes expected within such contracts. It is also imperative that where clients insert such requirements that ‘they too’ also understand what they are asking for.

3.17.

The private sector is also likely to include contractual arrangements to support and enhance sustainability outcomes aligned to net zero transitions. Some major companies and lead developers are also now engaging with their supply chains to work as a partnership towards reducing future emissions.

3.18.

Clients may enquire for evidence within tenders of ‘demonstrable’ carbon and greenhouse gas reductions which have already been undertaken by an organisation to determine if they are aligned with the aspirations and environmental outcomes the client is seeking to achieve.

3.19.

Large investment organisations, pension funds and shareholders are requiring companies and organisations to demonstrate their commitment and report actions towards net zero and carbon reduction plans.

3.20.

Given the above it is likely that in the near term for many sectors the data, evidence, modelling and objective outcomes of net zero will become ‘standard practice’ and will be part of the contractual journey from pre-tender, tender, award of contract, ongoing analysis and evaluation and resultant reductions achieved by end of contract delivery.

3.21.

In the case of new buildings or major retrofits (particularly those involving ‘deep retrofit’) the contracts may include, as standard practice, a post occupancy evaluation assessment (or Verification) of ‘in operation’ carbon reductions outcome within 1 to 2 years after the completion of the project. As such the evaluation and performance reporting would extend beyond the normal contract delivery period.

3.22.

One of the first public bodies in the UK to publish net zero standards for public buildings is the Scottish Futures Trust in April 2021 (see Annex C). This provides a specific categorisation and breakdown of key measures and guidance on reporting. It is likely many more government bodies and funders of infrastructure and buildings will do similar in the coming years.

Net zero: how do we get there?

4. Key role of the construction industry and task ahead to get to net zero 4.1.

To tackle both existing buildings and infrastructure and the future pipeline of new construction requires a triple strand approach:  



Retrofitting and addressing the emissions from existing buildings, Adaptation and installation of alternative energy generation systems and supply such as for electric vehicle (EV) mass roll out, localised energy generation hubs, the future switch from gas to electric and potential hydrogen adoption in industrial and existing large scale developments, and Designing and building the future buildings and infrastructure, to slow-down (or preferably drastically reduce) the emissions from new buildings and infrastructure at a sufficient rate.

4.2.

With 40% of emissions related to the built environment sector it will require a cohesive and collective approach from the public and private sectors across both onsite and non-site based staff, working with an inter-disciplinary team, sourcing expertise and know how where needed and following through on the project deliverables, reporting and benchmarking emissions.

4.3.

The scale of approach is significant when consideration is given to the emissions the sector is responsible for going forward and the retrospective work required on 25 million homes in the UK involving energy efficiency and new green energy technologies to be installed.

4.4.

Some of the major works will involve upgrading of the existing non-domestic buildings, many of which are bespoke (unlike housing), and the complexities of the retrofit works for many buildings and the difficulty of the building function and operation which can be 24/7 (such as hospitals).

Industrial and commercial buildings also involve a range of complex uses both in energy and business operations. Sports and leisure buildings, such as swimming pools, have high energy demands and may require several integrated solutions to deliver the emissions reduction required.

4.5.

Universities have some of the most complex retrofit works ahead for their estates. Some higher education institutions have individually over 500 buildings within their estate portfolio involving offices, teaching rooms, lecture halls, residential, catering and complex research laboratories varying in scale which are not too dissimilar to industrial units. Importantly for this sector the age of buildings can span over 300 years and may be listed or have historic significance further complicating the solutions portfolio required.

4.6.

Looking at just one sector such as school education buildings the property portfolio is significant and wide ranging involving 32,770 schools in the UK. Of these, 3,714 are nurseries or earlylearning centres, 20,832 are primary schools and 4,188 are secondary schools. There are 2,408 independent schools, 1,257 special schools and 352 pupil referral units. The number of buildings in each school estate may vary from one to multiple separate buildings and types covering a diverse range of period builds and construction types.

4.7.

In December 2020 the UK government published the Construction Playbook. One of the three cross cutting themes is ‘Building back greener’ and states that ‘all contracting authorities should set out strategies and plans for achieving net zero…[greenhouse gas]… emissions by or ahead of 2050 for their entire estate/infrastructure portfolio’. It is expected that these should be aligned under an overarching sustainability framework, and systems and processes should be in place to ensure their projects and programmes deliver on the targets set. Recognising the design life of public works, contracting authorities should adopt the use of whole life carbon assessments (e.g. PAS2080) to understand and minimise the greenhouse gas emissions footprint of projects and programmes throughout their lifecycle. Furthermore, achieving sustainable outcomes should be considered alongside the net zero commitment.

5. Key steps towards emission reductions – operational and leadership 5.1.

There are primarily three key operational steps towards mapping out the emissions pathway and delivery, these are:

A.

Measure: measuring all of the emissions from making and delivering products and services to customers which are within the organisation’s direct control.

B.

Reduce: developing plans and implementing actions to reduce emissions and benchmark these changes through ‘annual measure’ reviews.

C.

Offset: purchasing carbon credits to offset the carbon footprint by funding a mix of projects, such as reforestation and renewable energy or investment in energy efficient measures in third party organisation (e.g. local authority housing or housing association). Over time the quantity of offsetting should reduce as (B+C) take effect and the emissions level decrease.

5.2.

Offsetting should (where possible) be a last resort. Firstly this only delays the inevitable actions and reductions needed and secondly over time as more industry sectors invest to reduce emissions price are likely to rise as demand outstrips supply.

5.3.

In 2020 the British Standards Institute (BSI) undertook a survey (termed BSI Barometer) of over 1,000 organisations to assess the readiness, understanding and proposed plans and strategies they were planning for net zero. In the BSI Barometer review it was recommended to ‘Look beyond offsets - as offsets are often one of the first milestones for companies seeking to address sustainability issues, but it is important that these organizations move beyond offsetting and develop plans around reduction and capture on the journey to net zero. By taking a more holistic approach and pioneering sector and business specific innovations, progressive organizations have the opportunity to create real and lasting impact’.

5.4.

The BSI Barometer report also provided useful guidance to help industry sectors prepare for net zero, these included:     

strategic and specific approach aligned to the organisation’s portfolio, selecting the right tools guidance and approach, widening vision to look outside the organisation, investing in skills both for existing staff and new expertise into the organisation, encouraging knowledge sharing and open conversations, and

 5.5.

committing to science-based targets following best practice for reporting.

Within the BSI Barometer of 1,000 organisations for preparing and implementing net zero, cost was cited as the primary barrier with clarity on net zero being second and senior management buy-in being third.

In a recent study by the University of Edinburgh (Centre for Future Infrastructure) involving 50 UK universities investigating readiness and needs for net zero, 90% wanted greater clarity on net zero and 88% wanted leadership from the top. Cost, preparedness and budgeting for future spend on green ‘estates’ investment was third.

5.6.

5.7.

Leadership will be required across all organisations involving large, medium and small to drive forward the aspirations, ambitious targets and measures. Upskilling of senior leadership teams will be required to ensure the significant investments and decisions being taken are understood to help optimise the approach and delivery.

5.8.

Many organisations are likely to appoint an ‘emissions responsible person’ to drive forward the tasks and actions, monitor and report to company boards or executive committees. This role may align with Sustainability Managers and would collectively report on not only estates operations and energy efficiency, but business travel, supply chains, waste and have knowledge on new technologies and engineering systems with data and analysis skills.

5.9.

Annual internal reporting is likely to then become more often open ‘public’ reporting through the science-based targets initiative . Such data may be required for annual reports for shareholders and investors (if not already adopted), content for tender documents, reporting to local councils and industry sector organisations.

6. Tackling emissions and strategy within the built environment sector 6.1.

Within the built environment sector there are four key areas where carbon and greenhouse gas emissions will occur or have impacts towards current and future emissions and reduction strategies. These are:    

estate operational emissions construction operational emissions embodies carbon and manufacture emission End-of-life (end of full-life cycle) of asset and deconstruction emission legacy

Figure 3: Life cycle stages from BS EN 15978:2011 Sustainability of construction works — assessment of environmental performance of buildings

Estate operational emissions 6.2.

To tackle the total emissions to be offset, one of the single most important factors in the short term is to reduce emissions involving ‘operational emissions’.

6.3.

For the built environment sector this is often for the estates portfolio, the largest contributor to emissions and would be categorised (if under direct control by the organisation) within scope 1.

6.4.

An array of emission reduction methodologies and actions can be included involving energy efficiency improvements of the fabric of the building, integration of smart energy systems (automated or artificial intelligence technologies), renewable technologies (solar photovoltaics ‘PV’, solar thermal system for heating water), or low carbon energy heating systems such as ground source heat pumps or air source heat pumps.

6.5.

More advanced technology or engineering solutions may include battery systems and energy storage or hydrogen for larger estates with adjacent buildings.

6.6.

Utilising renewable energy generation systems reduces emissions and specifically when reporting for scope 2.

6.7.

Vehicles owned or leased for organisational operations (under their direct control) also fall within the direct emissions (scope 1). Switching to electric vehicles or utilising public transport (such as buses or trains where possible) can reduce the direct operational emissions. Although the use of alternative (non-owned or leased) transport does then transfer the emissions to ‘indirect emissions’ which are included within scope 3.

Construction operational emissions 6.8.

The construction operations for new build and retrofit also involve greenhouse gas emissions including the design and development stages, transport, erection, assembly, tools, site operations (including temporary site buildings) and waste to landfill.

6.9.

These are often the most complex to measure given the array of diverse operations during the design and construction stages.

6.10.

The covid-19 pandemic and rapid switch by many organisations to online has reduced travel emissions and it is likely that for the foreseeable future design and planning meetings for developments may be a hybrid of ‘online + face to face’.

6.11.

The use of federated design systems such as Building Information Modelling (BIM) and digital twinning can also reduce operational design emissions but this still often requires IT resources, multiple servers and ‘cloud’ operations. BIM is now mandatory in most government public sector contracts in the UK (e.g. where the project value is in excess of £3 million), although this limit may vary dependent on the public sector client.

6.12.

IT and computing resources however still involve emissions. It was reported some years ago that each time staff undertook an online web internet search, this was equivalent to boiling half a cup of water, due to the vast array of inter-connected computer servers globally such searches involve. This has led many IT internet providers to address this by using renewable energy technologies, improved algorithms to reduce server computing requirements and battery storage mechanisms to sustain the power requirements balance when renewables are less operational.

One of the largest energy use requirements involving large scale servers is for the cooling requirements and avoidance of overheating. To reduce operational costs and emissions some internet providers have transferred their main hub servers into cooler climate countries, underground locations, within mountains or under water (of course shielded from water ingress).

6.13.

Offsite construction is one of the largest sources of modern methods of construction. It has been shown to be just one of the ways to reduce site operations and it reduces waste by 60-80% depending on the offsite system used. Offsite construction can involve:



Closed panel systems - such as whole walls with pre-assembled windows, insulation, moisture membrane linings and finishes. Other examples include floor and roof cassettes, spandrel panels and preformed foundation systems.



Pods – such as for bathrooms, kitchens and service units (historically driven by the hotel sector for city centre or rapid build site locations)



Modular / Volumetric – involves complete building units, fully finished and in many cases with pre-fitted services.

The offsite sector is growing across the UK and many current new build constructions incorporate some form of offsite construction, for walls, roofs or floors. Some of the reasons for the increasing drive to adopt offsite approaches included:     

reduction in available skilled labour, shift by some clients to pipeline projects through framework arrangements, increases in the landfill tax and need to reduce waste streams, higher quality of production, control and build performance outcomes, and Business to Business operations for materials supply and co-design

6.14.

Improved product and system design, standardisation of some products portfolios (e.g. similar specifications of gypsum boards across the construction) has reduced incorrect use of boards, reductions in waste and standardised delivery and storage on site.

Embodied carbon and manufacture emissions 6.15. The specification of materials can also significantly alter the embodied carbon of products and systems adopted in the building, whether for new build or retrofit.

6.16.

Embodied carbon is the carbon footprint of a material. It considers how many greenhouse gases are released throughout the supply chain and is often measured from cradle to (factory) gate, or cradle to site (of use). The most common measure is cradle to factory gate (direct emission under control of the product manufacturer), as the transportation stage to site may be subcontracted by the product manufacturer (an indirect emission, not directly under their control).

6.17.

Cement, steel and aluminium are some of the highest embodied carbon materials in construction. As mentioned previously the manufacture of cement makes up 40% of the UK ‘industrial emissions’. In recent years advances in the manufacture of cement and changes in some component constituents has reduced the embodied carbon footprint and further R&D is ongoing to reduce this further.

6.18.

Timber based products and systems are ‘carbon negative’ as they lock in carbon (sequested) unless this goes to landfill or is burnt. Carbon negative is often defined as the reduction of an entity’s carbon footprint to less than neutral, so that the entity has a net effect of removing carbon dioxide from the atmosphere rather than adding to it. For this reason cross laminated timber (CLT) has become increasingly specified in medium rise buildings due to the large span capabilities, structural loadings being lighter (requiring less foundations) and carbon negative credentials.

6.19.

Product innovation is also important in assisting to reduce the embodied carbon. Examples include new 300mm hollow core concrete blocks, which can span a standard external wall width, reduce mortar wastage, reducing the number of steel wall ties by 90%, increase speed of build and accuracy and reduce by over 25% the water, cement and overall carbon footprint. In addition, as these blocks are lighter, more can be transported to site in one truck delivery reducing transport emissions. The thermal insulation energy performance of these blocks can also be similar or better than other types of higher embodied carbon materials used in external walls.

6.20.

Another example are the changes in even small components and connectors. In one case a structural tie for timber frame housing was redesigned with 30% less steel and achieved 50% more strength, and had other installation benefits which supported ease of erection and setting out the walls when installed.

Asset end-of-life (full-life cycle) and deconstruction emission legacy 6.21. A key factor to consider is the end-of-life of a building asset. Whilst demolition of buildings and infrastructure can provide a pathway for recycled materials back into future products and systems, the most significant emissions benefit is to (where appropriate) maintain the existing core structure and refurbish and retrofit (preferably deep retrofit). This maximises the existing embodied carbon benefits of the building’s structure and materials.

6.22.

Deep retrofit takes a whole-building approach to energy in the building by looking at the overall effect of a combination of the most appropriate energy measures. The aim is to achieve an improvement in energy efficiency towards the standard of near zero energy, while ensuring that these measures work together successfully, long-term. This may often involve enhancing the energy efficiency of a building that was previously an Energy Performance Certificate from EPC band ‘G, F, E’ to EPC band ‘A or B’. In some cases deep retrofit is also taken as a mechanism to convert an existing building’s energy performance into a ‘passive’ level standard. This is where the air tightness is less than one air change per hour and must include mechanical ventilated systems often involving heat recovery.

6.23.

In some cases deep retrofit may involve the development of a positive energy building. This is a building (or a group of buildings) that produces more on-site energy from renewable sources than it consumes to achieve appropriate thermal comfort levels.

Maintaining the existing core and structure of a building instead of demolition (at end-of-life of current use) prevents the embodied carbon (used in the original construction and materials of the building) being wasted or lost.

6.24.

6.25.

An example might include in the post-covid economy, as companies downsize their office space, the future change of use of existing office buildings into residential or other commercial usage or facilities, such as hotels or incubation suites for start-up companies. There is a UK wide shortage of 1 and 2 bedroom apartments and many office buildings when converted could provide a solution for new housing supply. Also, additional sustainable development benefits arise due to residential accommodation being replanted into cities and town centres, substantially reducing the travel to work distances (where relevant for occupants and their places of work). This also aligns with circular economy approaches and the development of 20 minute neighbourhoods. These are neighbourhoods where residents can access the majority of their primary services and needs within a short distance from their home.

6.26.

New build construction and designing for end-of-life is also a key factor for the future.

Consideration and foresight into the future availability of materials and scarcity of resources for future generations interacts with how new buildings could be designed and constructed now.

6.27.

Involving design and construction approaches which enable design for future disassembly provide a material resource, carbon savings and solutions to reduce future waste.

6.28.

One area which aligns strongly towards such an approach is the adoption of offsite construction systems, which are designed for assembly and can also be designed and configured for future disassembly.

7. Reducing emissions, technologies and systems 7.1.

For the built environment’s existing buildings the first action is in relation to improving energy efficiency. Installation of retrofit insulation measures for walls, roofs and floors as a first phase of works is known as the ‘Fabric First’ approach.

7.2.

Renewable technologies such as solar photovoltaics and solar thermal (for water) may be considered and installed prior to fabric first as these are not interconnected in performance outcomes.

7.3.

However, for ground source heat pumps or air source heat pumps prior to their installation the fabric first ‘high insulation level’ approach must be undertaken. Too often air source heat pumps have been installed when the fabric thermal insulation is too weak or insufficient or not been addressed first.

7.4.

In some cases building occupants have had to remove and replace air source heat pumps technologies because of incorrect specifications. Building owners should request professional sign-off for such energy calculations, involving for example registered architects, building services engineer, chartered architectural technologist or energy consultant related to a professional body.

7.5.

Building owners should ensure that any energy retrofit measures do not weaken the fire protection of the building or the fire safety of building occupants.

7.6.

Recent studies in the UK to identify the types of approaches companies and organisations may be taking for individual buildings or homes (after Fabric First) include increased solar PV or solar thermal and air source heat pumps.

7.7.

Hydrogen has been utilised in larger scale new build or larger scale retrofit such as for commercial premises (such as the new Aberdeen Conference Centre, Europe’s largest hydrogen powered commercial building in 2020, or for industrial such as distilleries projects).

7.8.

Several housing sites are trialling or about to demonstrate hydrogen involving up to 300 homes, for example the H100 project in Fife.

7.9.

The main focus by some in the sector for hydrogen is in relation to green hydrogen, this is where the hydrogen is recovered from water via electrolysis, where the electricity is sourced from renewable (green) technologies.

7.10.

Blue hydrogen involves the splitting of natural gas into carbon dioxide (CO2) and hydrogen and the CO2 is stored or re-used.

7.11.

Grey hydrogen has been the primary mechanism for previous sourcing of hydrogen by splitting natural gas and the CO2 is emitted into the atmosphere. This understandably is the mechanism many organisations wish to avoid.

7.12.

A range of industry sectors are currently trialling both green and blue hydrogen. Further evidence is required to assess the potential for emissions reduction with hydrogen and at present the future focus for potential deployment is on large sites, industrial or commercial estates with multi adjacent users. Universities andcColleges are also considering for their campuses the potential of hydrogen given the number of specific campus sites with multiple adjacent buildings.

7.13.

20% hydrogen has been discussed and presented as one mechanism to kick start emissions reduction of the existing gas network. The expectation is that the gas network could accommodate up to 20% hydrogen before the network or homes would require major changes in technologies, boilers, pipework and pipework seals.

7.14.

In the case of older and more historic buildings which may be protected, listed or unable to adopt major retrofits, there has been a considerable growth in the specification of secondary magnetic window systems. These systems are easy to install and also significantly reduce external noise entering the building. In addition to the energy insulation improvements over winter or colder months, they can be removed and stored during the warmer months allowing existing windows to stay in place and be openable, thus improving the embodied carbon measure.

7.15.

Triple glazing as a replacement for existing windows in non-historic buildings has also increased and is effective provided the surrounding wall area to the window is also insulated. Too often new windows are retrofit installed and the external walls are left untreated and as such the thermal improvements expected do not always arise.

Community and district heating systems are likely to increase in use or via planning consent requirements for new build sites. However, retrofit of such systems into existing communities has shown that sometimes this can lead to higher costs than expected due to unchartered services. These systems also allow individual building owners to control the comfort temperature they require.

7.16.

7.17.

Building occupant systems have been shown to have some effect including 8% reduction in electricity and 20% reduction in gas usage. The use of some in-home displays (IHDs) have been effective, however not all IHDs are real time, or do not clearly show the usage and benefits the consumer is gaining, by seeing the changes they make by switching off devices, stand-by lights and consumption time periods.

7.18.

Occupant behaviour is a key strand to the built environment estate and whilst IHD’s have provided some insights and benefits, it is generally accepted that moving to passive level standard for building insulation and air tightness, does require education of the building occupant in how to use their building. Many housing associations and local authorities have given such training to home occupants where passive level homes have been built. If the private sector in housing or the commercial sector moves more towards passive level standards then there will be a need to upskill the building occupants in how to work or live in such buildings.

7.19.

The Internet of Things is likely to help transform how we live in future buildings, through integrated and critically important easy to understand graphics or information. Most occupants want to have a ‘fit and forget’ energy system. Some are interested to see real time and to ensure maximum benefits from online automated switching of energy providers. Our current society is more adaptable to such technologies given the pace of change over the last ten years.

7.20.

The future algorithms and artificial intelligence currently in development could not only positively influence energy usage by building occupants, but entire estates, villages and towns optimising substation usage and integration with electric vehicles energy as ‘pump prime’ supply for high usage times when the grid requires support and also as energy storage mechanisms.

8. Some perspective - now and the future 8.1.

By 2020 the UK had reduced emissions by 44% from the 1990 baseline levels. This has involved key changes in industry, power generation (reduction in coal) and installation of energy efficiency measures in existing buildings, improved optimisation in energy systems and increased regulatory energy insulation regulations and adoption of renewables for new build both domestic and non-domestic buildings.

8.2.

It could be argued that within the portfolio of measures undertaken to date for reducing emissions some of these were ‘in part’ the low hanging fruit. As a country tackles the range of emissions and source types over time the journey to reach higher percentage emission reductions (post the low hanging fruit phase) becomes more difficult, more complex and in many cases more expensive.

8.3.

Globally as more countries, regional authorities, cities and municipalities adopt and action such net zero approaches this can make headway to reduce existing emission levels. However, this is the current global state of the built environment portfolio, but in the coming 80 years, to year 2100, the world’s population is forecast to increase by almost 3.5 billion. With people living longer, divorce rates and reductions in household sizes across countries causes increased demand pressures for future supply of housing. As a result over the coming 80 years the world requires to build over 2.1 billion new homes.

8.4.

The aligned infrastructure with such population growth is equivalent to rebuilding the whole of the EU27 nations at least seven times over the coming 80 years. This is unprecedented in scale and complexity when combined with the regulatory drivers, world’s shortening material resources and ongoing climate emergency environmental needs.

8.5.

Thus the imperative to action reductions of existing emissions as soon as possible is even more important when considering the oncoming global population growth, required infrastructure to be built and resultant increase in future emissions.

Annex A - emissions reduction guidance action list A: Leadership 1. Appoint within your organisation the ‘responsible person’ for tracking, monitoring and reporting on all relevant emissions and reduction effects.

2. Include the organisation’s staff in discussions, as many will know more details than senior management, and may have potential solutions which could be heard and actioned.

3. Knowledge share with other industry leaders, both related to existing industry sector but also other industry sectors.

4. Budget for change and solutions and consider the short, medium and long term role of such works, planning and net zero deliverables.

5. Upskill staff at all levels, identify gaps and provide the opportunity for continuous learning.

6. Undertake a SWOT analysis of all existing processes, portfolios or operations within the organisation (estates, buildings, vehicles, products and services).

B: Data, analysis and reporting 1. Calculate existing emissions levels of the current organisation.

2. Firstly direct operational emissions (in the organisation’s control).

3. Ensure data is relevant, timely and aligns with a constant and similar reporting period.

4. Seek expert advice if not available in-house.

5. Worth considering a dual form of approach, assessing for carbon neutral (CO2) and net zero (all greenhouse gas).

6. Having data for both Carbon Neutral and net zero in B.5 will assist in mapping trajectory and reporting on emissions primarily within the organisation and energy usage (scopes 1 and 2). May also help with future tenders and reporting.

7. Prepare reports which benchmark year on year reductions (some organisations) may do this every three to six months to track progress during the year.

C: Supply chains (involving scope 3) and towards zero waste 1. Liase and work with your supply chains. View this as a partnership approach.

2. Consider all products and services your organisation utilises which are not within the organisation’s direct control 1) supply emissions and 2) waste emissions.

3. If setting emission reduction targets for the organisation ensure the supply chain is aware in advance so they can work with you. Early warning is more likely to engage partner and supply organisations and reduce emissions by working together.

D: Indirect emissions 1. Estimate emissions for staff travelling to work (if not using organisation transport) 2. Calculate business travel emissions by staff and mode of transport 3. Identify how or where emissions could be reduced (e.g. hybrid working from home – where relevant or possible) or (adaption to business travel policy that staff follow) E: Horizon emissions and circular economy 1. Designing for future deconstruction, re-use and recycling

Annex B - glossary of terms Carbon negative Where a product, technology or material sequests more carbon than it emits (e.g. wood).

Carbon neutral Where all carbon dioxide emissions are balanced with technologies or processes to absorb, reduce and store carbon resulting in ‘net zero CO2 emissions’.

Construction emissions Greenhouse gas emissions associated with the design, construction and assembly from a construction project.

Deep retrofit Takes a whole building approach to achieve an improvement in energy efficiency towards the standard of near zero energy. Also used as a phrase when retrofitting a building from a low Energy Performance Certificate bands (G, F, E) to bands (B or A) or delivering a ‘passive level’ performance involving mechanical ventilation and often heat recovery systems.

Direct emissions Greenhouse gas emissions that are in the direct control of the organisation.

Embodied carbon Is the carbon footprint of a material and considers the quantity of greenhouse gases (in equivalent carbon CO2e) which are released throughout the manufacturing process and is often measured from cradle to (factory) gate.

Fabric first The application of energy efficiency insulation measures to the external walls, roof and ground floors of a building to limit heat loss and is undertaken before the deployment of renewable energy technologies.

Future disassembly Designing at the very outset of a new building or infrastructure to enable easy future deconstruction (disassembly) at the end of the asset life cycle.

Greenhouse gases The seven primary gases (Kyoto protocol basket) associated with global warming: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFC), perfluorocarbons (PFC), sulphur hexafluoride (SF6) and nitrogen trifluoride (NF3).

Indirect emissions Emissions not under the direct control of an organisation (e.g. supply chains emissions)

Nearly-zero energy buildings A NZEBs is defined as a building with a very high energy performance, as determined in accordance with Annex I of the recast Energy Performance Buildings Directive (EPBD). The nearly zero or very low amount of energy required should be covered to a very significant extent by energy from renewable sources produced on-site or nearby Net zero carbon A state in which the greenhouse gases going into the atmosphere are balanced by removal out of the atmosphere.

Offsetting Offsetting is a mechanism of compensating for an organisation’s emissions by making an equivalent carbon dioxide saving elsewhere, is often undertaking by investing in a third party (e.g. paying for new forests, funding retrofit on a third party housing stock and claiming the carbon emission reductions achieved).

Offsite construction Utilising pre-fabrication approaches to the assembly of parts of buildings or whole buildings within a factory setting (examples include: modular, volumetric, closed panel, cassette systems and pods) Operational emissions Emissions associated with the existing operations of an organisation (e.g. estate or building energy usage and associated emissions) Positive energy buildings A building which through the incorporation of renewable energy technologies generates more energy than it uses.

Science based targets An initiative to focus on the accurate reporting of emissions reductions using science based approaches and where the common aim is to embrace the goal of limiting global temperature rise to no more than 1.5 degrees.

Scope 1 emissions Direct organisation owned or controlled emissions occurring at source.

Scope 2 emissions Emissions associated with the production of energy purchased by an organisation.

Sscope 3 emissions Indirect emissions associated with an organisation’s activities from sources not owned or controlled by them.

Zero carbon A mechanism, state or material in which no carbon is released.

Annex C – background to net zero 1.1.

In June 2019, the UK Parliament passed legislation that committed the country to reducing net emissions by 100 per cent by 2050. The UK was the first major economy in the world to pass laws to underpin the global sustainability effort. Previously there had been policies to reduce emissions by 80% from 1990 baseline levels. Following recommendations by the Committee on Climate Change, the UK’s independent advisory body, the UK government increased the target net emissions reduction to 100%.

1.2.

By reducing net emissions by 100% in effect aims for a net zero emission approach. Net zero means any emissions would be balanced by schemes to offset an equivalent amount of greenhouse gases from the atmosphere, such as planting trees or using technology such as carbon capture and storage.

1.3.

This requirement for the UK as a whole impacts across all business, industry and public sectors and importantly UK citizens in our future decisions, changes, contributions and behaviours.

1.4.

Net zero aligns with many of the United Nations ‘Sustainable Development Goals’ (SDGs).

1.5.

It is forecast by UK government that by 2030 there will be an increase of 2 million ‘green collar jobs’ aligned to net zero adaptation measures and the low carbon economy exports value could be £170 Billion.

1.6.

Importantly, these three sectors have the greatest role to play in the delivery of such targets and resultant environment benefits providing a legacy for our future generations. Whilst the full route map is as yet unchartered there are some early key decisions and planning which could accelerate the UK forward in addressing the challenges and opportunities of net zero.

1.7.

Ultimately if all three sectors work together then there is a higher chance of far more being accomplished within the climate emergency time window.

Annex D- international agreements and reporting of emissions 1.1.

The general underpinning of many legislative processes or international guidance on emissions relates to the Kyoto Protocol which was adopted by the United Nations on 11 December 1997.

Owing to a complex ratification process, it entered into force on 16 February 2005. Currently in 2021, there are 192 countries signed up to the Kyoto Protocol.

1.2.

Primarily the Kyoto Protocol operationalises the United Nations Framework Convention on Climate Change. This commits industrialised countries and economies in transition to limit and reduce greenhouse gases emissions in accordance with agreed individual targets. The Convention itself only asks those countries to adopt policies and measures on mitigation and to report periodically. It binds developed countries, and places a heavier burden on them under the principle of “common but differentiated responsibility and respective capabilities”, because it recognizes that they are largely responsible for the high levels of greenhouse gas emissions in the atmosphere.

1.3.

Importantly the Kyoto Protocol laid a framework for reporting by countries of what is commonly referred to as the Kyoto ‘basket’ of seven greenhouse gases: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFC), perfluorocarbons (PFC), sulphur hexafluoride (SF6) and nitrogen trifluoride (NF3).

1.4.

The last four gases listed above are collectively referred to as fluorinated gases or F gases.

Emissions from each of the gases is weighted by its global warming potential (GWP), so that total greenhouse gas emissions can be reported on a consistent basis. The GWP for each gas is defined as its warming influence relation to that of carbon dioxide over a 100-year period.

Greenhouse gas emissions are typically presented in carbon dioxide equivalent units (CO2e or CO2e). Emissions are estimated following the guidance set out by the Intergovernmental Panel on Climate Change, as required for the UK’s submissions to the United Nations Framework Convention on Climate Change each year.

1.5.

The Paris Agreement is a legally binding international treaty on climate change. It was adopted by 196 Parties at COP 21 in Paris, on 12 December 2015 and entered into force on 4 November 2016. Its goal is to limit global warming to well below 2, preferably to 1.5 degrees celsius, compared to pre-industrial levels.

UK emissions 2019 Fluorinated Nitrous Gases, 3% Methane, Oxide, 5% 12%

Carbon Dioxide, 80%

C Figure 1 - UK Primary greenhouse gas Emissions (2019, source: UK Government)

1.6.

The UK government publishes the annual emissions of the primary greenhouse gases of the preceding year in units of millions of tonnes (Mt) of carbon dioxide equivalents (CO2e). In 2020, the UK 2019 total emissions were 454.8 MtCO2e and the breakdown of the greenhouse gases is shown in Figure 1.

1.7.

Figure 2 shows the UK emissions by source (20019-2019) and the relative 1990 baseline emissions used for reporting. From 1990 to 2019 the UK has reduced greenhouse gas emissions by 44%.

UK Greenhouse Gas Emissions (MtCO2e) by Source (2009-2019, & baseline 1990)

300.0 Energy supply Business Transport

250.0

200.0

Public

150.0 Residential Agriculture

100.0

Industrial processes

50.0 Land use, land use change and forestry Waste management

0.0 1990

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Figure 2 - UK Primary Greenhouse Gas Emissions by Source (2009-2019, & 1990 baselines)

1.8.

Whilst the reduction in fossil fuel emissions (such as coal) and increases in renewable energy generation have positively impacted the reduction in energy emissions, and overall emissions, many other emission sectors have still to make significant reductions.

1.9.

Over the past decade the UK government and devolved administrations have implemented a range of energy efficiency improvements to existing housing, specifically local authority and housing association premises (approx. 25% of housing stock).

1.10.

Figure 2 illustrates that there has been only limited reductions in residential emissions. This is partly due to the annual winter cycle and variations in temperature, which influence the amount of heat used within homes. Typically heating can contribute 70-80% of the energy use of a home.

The increasing move towards electric vehicles, electrification of railways, improvements in energy savings for new HGVs and construction site excavators (such as using digital displacement technologies – which optimise fuel to power usage) will in future reduce the transport sector emissions. The increasing development of renewable energy generation (both onshore and offshore) could support near zero-emission energy generation.

According to the UK Green Building Council the ‘built environment’ sector (housing, offices, commercial and industrial buildings and infrastructure) account for 40% of the total UK emissions.

1.11.

1.12.

1.13.

42% of ‘industrial process’ emissions are related to the manufacture of cement (4.4MtCO2e) and 8% for iron and steel collectively.

1.14.

Using the current approach for net zero would require the UK to reduce, offset and find new green near-zero technologies to balance to net zero the total current emissions of 454.8 MtCO2e by 2050.

1.15.

To deliver such significant reductions even over a 30 year period will require a rapid increase in energy efficiency measures for buildings, an acceleration in the deployment of green energy technologies and a collective engagement with consumers, building occupants and supply chains.

Annex E- Examples of scope 1, 2 and 3 emissions Scope

Target area of Emissions

Example

Scope 1

direct organisation owned or controlled emissions occurring at source

organisation's estate portfolio heating appliances and own transport vehicles

Scope 2

emissions associated with the production of energy purchased by an organisation

electricity generation purchased (source type)

Scope 3

indirect emissions associated with organisation activities from sources not owned or controlled by them

supply chain materials and transport thereof, business travel, employee commuting

Meet our ESG team Stuart Pemble Partner T: +44 (0)121 456 8335 E: stuart.pemble@mills-reeve.com

Joanna Davies Partner T: +44 (0)1223 222429 E: joanna.davies@mills-reeve.com

Jayne Hussey Partner T: +44 (0)121 456 8400 E: jayne.hussey@mills-reeve.com

Neil Pearson Partner, Head of ESG and Social Value T: +44 (0)121 456 8460 E: neil.pearson@mills-reeve.com

Laura Ludlow Principal Associate T: +44 (0)1223 222366 E: laura.ludlow@mills-reeve.com

Carla Parsons Associate T: +44 (0)1223 222312 E: carla.parsons@mills-reeve.com