There are approximately 230,000 non-domestic buildings in Scotland, including offices, factories, warehouses, hotels and shops. These vary widely in size, construction, and usage, so there are considerable differences in their energy efficiency.
While all non-domestic buildings must produce an Energy Performance Certificate (EPC) when sold to a new owner or rented to a new tenant. Since 2016 all such buildings larger than 1000 square meters must also produce an Energy Action Plan. The plan should provide a program to implement measures to improve the building’s energy performance and reduce greenhouse gas emissions associated with the building.
The Scottish Government are now developing a new regulatory framework for non-domestic buildings that will require them to achieve net-zero by 2045. The plan is to complete consultations during 2022, with the new regulations being implemented in 2025. In a nutshell, the rules will call on building owners and tenants to reduce the amount of energy they use to heat and cool the premises by increasing the building’s energy efficiency while also expecting them to install a zero-emissions heating system such as a heat pump.
What is a Section 63 Action Plan?
The action plan mentioned in the above paragraphs is widely known as a Section 63 Action Plan.
However, what it essentially sets out is summarised below. First, we look at the significant takeaways from Section 13, how this essentially differs from regulations in England and Wales, along with a brief look at how the situation in Scotland might change in the future.
Section 63 highlights
- The legislation applies only when non-domestic buildings in Scotland are resold or let to a new tenant.
- The rules only apply to buildings with floor areas larger than 1,000 square meters. However, there are some exemptions to this rule.
- For buildings that are not exempt, an EPC must be provided. However, if the building’s construction complies with building regulations dating from 2002 onwards, it is exempt, though evidence that this is the case must be provided, usually by the representative’s legal advisor.
- Another reason a building in Scotland might be exempt is if it met the equivalent of the 2002 standard. EPCs dating from 2016 will usually state if this is the case, though EPCs provided before this date are unlikely to do so. In this latter case, a new EPC will be required.
An action plan is required for buildings that are not exempt following a section 63 assessment. Such a plan will specify the improvements that should be made to achieve the specified energy and carbon standards.
These measures must be implemented within 3½ years unless the measures are deferred. Typically measures include low energy lighting and improved lighting controls, increased insulation, more efficient heating and cooling systems, and photovoltaics.
- The measures set out in the action plan may be deferred only by implementing annual energy reporting. Such reporting requires a Display Energy Certificate (DEC) to be produced annually, showing the actual fuel and electricity usage.
- If the responsible person or body fails to comply with these rules, penalties can be issued.
How Scotland differs from England and Wales regarding minimum standards
In England and Wales, Minimum Energy Efficiency Standards (MEES) apply to non-domestic buildings. The regulations make letting properties with an EPC rating below an ‘E’ unlawful. The required rating will be increased to ‘B’ by 2030. These regulations are very different from the salutation in Scotland, which does not set out a MEES – there is no minimum EPC rating to which non-domestic buildings must comply.
The England and Wales EPC system uses the ratio of the BER (Building Emissions Rate) and SER (Standard Emission Rate). The scale is non-linear in terms of carbon dioxide emissions. The Scottish system calculates the BER in terms of kgCO2/m2 and uses a linear carbon scale from 0 to 100 corresponding to bands A to G. As a result, similar buildings in Scotland and England can receive different ratings, with those in Scotland appearing less efficient when in practice they are more efficient.
Will the situation change in the future?
On the face of it, Scotland lags behind England and Wales in extending non-domestic EPC ratings; however, the Scottish Government is no less committed to reducing emissions than those of England and Wales. Consequently, it would be wise to anticipate that changes to the current Scottish position will happen in the not too distant future.
A possible change might be removing the right to defer action plan measures with a DEC. Such a move would mean the Action Plan must be implemented within 3½ to avoid penalties. Also, the current exemption for building smaller than 1,000 square meters could be modified to include smaller buildings.
