Scale of UK real estate emissions reduction challenge highlighted in CCC report

Siobhan Cross of Pinsent Masons was commenting after a new report by the Climate Change Committee (CCC) highlighted the need for more and faster action to decarbonise UK real estate to help the UK meet its broader climate ambitions.

The report, delivered to parliament, pointed to the steady fall in total greenhouse gas (GHG) emissions in the UK since 1990. However, it argued that the UK government urgently needs to accelerate measures to reduce GHG emissions, and roll out electric vehicles (EVs), heat pumps and industrial electrification to reach its future carbon budgets and its net zero target by 2050 and enhance the UK’s energy security.

Provisional figures indicate that the main reduction in emissions in 2025 was in industry – which fell by 12%. Emissions from buildings fell by 1.5%. Emissions from surface transport increased by 2.7%.

Cross, a property and sustainability expert with Pinsent Masons, said the emissions reduction in buildings was welcome after the increase in buildings emissions reported in 2024.

In October 2025, the government published its Carbon Budget and Growth Delivery Plan (CBGDP), which outlined its policies and plans for meeting carbon budgets. The CCC has previously urged the government to act faster to meet its commitment under the Paris Agreement to reduce GHG emissions by at least 68% compared to 1990 levels by 2030.

According to the CCC, the building sector is expected to become the highest-emitting sector in the CBGDP pathway during the Sixth Carbon Budget period, which spans 2033 to 2037 and requires a 78% reduction in UK territorial emissions from the 1990 baseline. The road ahead for the building sector if it is to deliver the emissions reductions required between 2025 and 2037 is made clear by the difference in scale between the 1.2MtCOe reduction achieved in 2025 and the annual average 2.9MtCO2e annual reduction required from the sector up to 2037.

This underscores why the government needs to be more ambitious to stay on track for its Sixth Carbon Budget, said Cross: “The reductions required to 2037 are on a scale the real estate sector has come nowhere near to so far and will require joined-up effective energy policy to reduce electricity costs and enhance grid capacity, real estate policy and regulation to drive decarbonisation and affordable finance availability.”

The report indicates there has been mixed progress towards decarbonising the buildings sector. A new warm homes plan backed by a £15 billion public funding commitment up to 2030 is expected to contribute to decarbonising the sector. From March 2027 Building Regulations will implement the Future Homes and Building Standards to ensure new homes and non-domestic buildings are future-proofed with low-carbon heating, high levels of energy efficiency and some on-site generation.

Yet the report argues that these plans are still “insufficient” for the expansion of low-carbon heating installations in existing homes required over the next decade. In 2025, there was just a 7% increase in the number of heat pumps installed in the UK – a significantly lower rate of growth than the 56% witnessed in 2024. The UK currently has the lowest adoption rate of heat pumps in Europe.

The report also points to “significant gaps in the market”, including insufficient plans to reduce emissions in public and commercial buildings following the closure of the Public Sector Decarbonisation Scheme (PSDS) and delays in introducing ‘minimum energy efficiency standards’ (MEES) in the private rented sector.

On 18 June, a week before the CCC report was published, the government confirmed that from 2031 all private rented buildings over 1,000 square metres in England and Wales will need to reach a higher standard of energy efficiency of EPC rating B, where cost-effective.

Cross added: “The report rightly welcomes the progress we have seen recently including domestic EPC reform and increased domestic MEES requirements – including for social housing, the changes to Building Regulations from 2027 under the Future Homes and Building Standards, which at last means new homes will not be built with fossil fuel heating, and the Warm Homes Plan, which provides support for fuel-poor households and aims to stimulate private finance options for home retrofit and rooftop solar.”

Cross said the CCC’s report underlined that success in decarbonising the real estate sector is intimately connected both with action to reduce electricity prices and improve grid capacity.

The report also calls for further action from the government, including establishing more priority recommendations for the building sector – some of which have been made repeatedly, “namely ruling out any role for hydrogen in heating and regulating to prevent installation of new fossil fuel heating systems after 2035”, she said. “The former has been fairly strongly confirmed by the current government, and the latter was ruled out by the current government who preferred to provide incentives to achieve this rather than regulation.”