Commercial buildings: the UK’s forgotten energy efficiency challenge

Andrew Warren writes on the Business Green website that the issue is not simply weaker MEES regulations, but government has no discernible strategy for reducing energy demand across the vast majority of non-residential buildings in England and Wales. Andrew Warren chairs the British Energy Efficiency Federation, and is a former special advisor to the House of Commons environment committee.

Building energy efficiency standard delays are an enormous blow for businesses

Seven years after targets were first mooted by the previous government to ensure that all non-residential buildings in England and Wales achieve a minimum energy performance certificate (EPC) rating of C by 2027 and of B by 2030, the Labour administration has now decided that such requirements need only apply in the very largest leased commercial buildings. For good measure, it has also decided that commercial landlords do not need to meet these more stringent minimum energy efficiency standards (MEES) until December 2031.

All in all, it means that only commercial buildings with a usable occupancy area above 1,000 square metres will be required to make any energy improvements at all, beyond the minimum EPC level of E that was already legislated for a decade ago. Even then, upgrades only need to be carried out when occupants of these larger buildings alter them, and then only “practical and affordable improvements” with a maximum seven-year payback can be anticipated.

As a result, those owning the vast majority of leased buildings – so many of which are under 1,000 square metres in size – will continue to face no further requirements whatsoever to improve these buildings.

These latest announcements from the government are an enormous blow to thousands of smaller and medium sized companies (SMEs) which are most likely to be the prospective tenants of these draughty and inefficient commercial buildings, for which they will end up paying far larger energy bills as a result.

As initially proposed seven years ago, delivering the new MEES targets could have delivered a £12bn boost to the UK economy at 2025 prices. according to the previous government’s forecasts.

Yet curiously, no new figure has been published by the Labour government assessing the potential economic impact assessment of its recent decision to dilute and delay the MEES targets, and the potential reduced benefit to the economy that might now be expected as a result of its pusillanimity .

Removing standard sized buildings from the requirements was never an option considered as part of the  original public consultation. Nor is it clear how many buildings will fall into either size category, or how that critical differential will be policed.

Instead, the government has weakly argued that its failure to upgrade energy standards for the majority of commercial buildings is designed to give landlords of smaller properties “greater flexibility to upgrade buildings, without a deadline for meeting a higher standard”.

In reality, these latest MEES announcements simply provide an opportunity for landlords to continue to let out many thousands of energy inefficient buildings in England and Wales for the foreseeable future.

Non-residential constructions are responsible for an ever-growing proportion of energy usage, now well over one-third of the buildings sector. Part of this is due to the large increase in power-hungry data centres to meet growing demand for digitalisation and AI technologies. According to the National Energy System Operator (NESO), as recently as 2023 data centres consumed 5TWh of electricity, or around two per cent of total UK electricity demand.

Subsequently there are now more than 50 data centres that could be built in the UK this decade decade. NESO now reckons that total power demand from data centres could reach 26.2TWh by then, which would see energy demand from these sites approaching nine per cent of total electricity demand.

During the six years since the original proposals for tenanted buildings were published by government, there have been no less than eight different ministers from a variety of departments who have responded to relevant Parliamentary questions regarding when this dereliction of duty would end. The responses have always been variations of “in due course”.

Meanwhile, just last month the Department for Energy Security and Net Zero (DESNZ) took the absurd decision to abolish its specialist unit dealing with commercial buildings.

It is now absolutely clear that there is no discernible government strategy regarding encouraging even halfway competent energy management in the vast majority of our entire non residential building stock.

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