The European Climate Neutrality Observatory has released a new report, showing that the UK’s construction industry is still its main CO2 emitter, and much more needs to be done to hit targets
UK net-zero targets require a cut of 33m tonnes, but average emission cuts between 2018 and 2023 sit at just 16.5m tonnes.
This is partly due to a stalling of building renovations/retrofit, which are stuck at 1% per year.
Deep retrofits are vastly underperforming
The report finds that, per year, just 0.2-0.3% of existing stock undergoes a deep retrofit, nowhere near enough to offset the output of construction. For example, embodied emissions are rising due to an 18% increase in demand for cement and brick in the last five years.
Donatas Karčiauskas, CEO of Exergio, said: “Deep renovations cover less than 1% of the building stock each year, which I can hardly call progress. Even light measures like replacing windows or swapping boilers have slowed. Despite that, Europe still overlooks digital retrofits. With AI optimisation, buildings could already cut emissions by up to 30% without waiting for construction work.”
Progress has also been slow in electrification, for example, heat pump sales require around €55bn per year, but currently is at €19bn, falling short of the targeted 30 million units by 2030.
Donatas continued: “Smart meters and optimisation tools are the backbone that makes electrification work. They track electricity and heat use in short intervals, often every 15 minutes, and show how demand changes across floors or tenants. Occupancy sensors add another layer by showing when rooms are actually used. With that data, AI can, for example, warm offices before staff arrive in the morning, cool meeting rooms before they fill up in the afternoon, or shift energy use to cheaper night-time tariffs. Without this system, installing more heat pumps will not deliver the expected results.”
User-error can also diminish retrofit value
Earlier this month, BSRIA also released a report finding that, after carrying out retrofit works, 76% of construction professionals do not follow up with a post-occupancy evaluation.
This means that there are often large discrepancies between the expected outcome of energy efficiency and the actual output, sometimes reaching up to 300%.
Tom Garrigan, executive director at BSRIA, warned that achieving UK net-zero targets will require a multifaceted strategy: “For housebuilders and developers, the handover of a retrofitted home can’t be the end of the story: implementing measures alone is not enough. Performance issues emerge when occupants don’t fully understand low-carbon systems and indoor environmental controls, leading to higher running costs and missed targets.
“While there has been progress in some areas of the market, it’s critical that the wider industry prioritises occupant education to ensure that homes work for people in practice, not just on paper.
“This doesn’t just apply to retrofit projects, either. With the Future Homes Standard approaching, residents in both new builds and refurbished buildings will require greater support to confidently manage longer heating cycles, responsive controls, and new approaches to comfort and efficiency.”
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