Window of opportunity
Chris Newman, Zero Carbon Design Manager at Mitsubishi Electric, explains why decarbonising commercial buildings is the missing piece in the UK’s Net Zero puzzle.
Momentum has been building around how we decarbonise the UK’s homes, but the commercial sector risks being left behind. Decarbonising offices, retail and other non-domestic buildings is just as critical if we are to meet climate targets and future-proof our built environment.
The Seventh Carbon Budget proposes a legally binding target to cap the total emissions the country can produce in the years to come. While its adoption has not yet been confirmed, it aims to set a clear pathway for reaching Net Zero by 2050.
Many of the plans set in place, such as the Warm Homes Plan, focus on how to make sure the UK’s housing stock aligns with these targets. But the commercial sector has been underaddressed.
This becomes a problem when we consider that there are around 2.1 million non-domestic buildings in the UK – and over half (54%) are over 50 years old. They too must be retrofitted in order to reduce emissions, but also to future-proof buildings and ensure they don’t become stranded assets – buildings that create a negative impact on economic growth, as well as the environment.
The scale of the commercial decarbonisation challenge
The opportunity to decarbonise the commercial sector is vast, but progress to date has been too slow. Heating accounts for 20% of the UK’s emissions, but heat pumps currently make up only 5% of commercial heating products sold annually.
And recent analysis from the UK Green Building Council also shows that the built environment is currently off track when it comes to meeting emissions reduction pathways. This underlines the urgency of ensuring that both existing and new commercial buildings do not continue to add to the problem.
One factor that is hampering uptake is the gap in clear policies to incentivise and drive adoption. For example, the Warm Homes Plan announced earlier this year provides funding and incentives for homeowners to invest in heat pumps, battery storage and solar panels – but largely excluded commercial buildings.
Clearly, commercial sector decarbonisation is being held back, and this lack of commercial focus is a real missed opportunity. The sector is primed for transformation, but needs much firmer direction to create the drivers for businesses to act now to reduce carbon.
Acting now to future-proof buildings
While we are missing the same incentives as we see in the residential industry, there are some regulatory standards in place which are driving the commercial sector to change – and it’s important for businesses to act now to stay compliant.
For example, the Future Buildings Standard has now been released and is expected to raise the bar on operational emissions, while the Minimum Energy Efficiency Standards (MEES) are set to tighten for existing buildings. However, without the accompanying updates to the National Calculation Methodology (NCM), it is still difficult to fully understand how much the bar has been raised compared to current Part L requirements.
One clear signal from the new Future Buildings Standard is the direction of travel for heating systems. New non-domestic buildings are now expected to use energy sources with significantly lower carbon intensity, effectively pushing the market towards electrification. In practice, this means technologies such as heat pumps will become the primary solution for meeting future compliance requirements.
The risk of not acting now to retrofit buildings to meet these standards is that buildings become non-compliant down the line. If this happens, building owners will find their buildings become ‘stranded assets’ – which cannot be let, or are unappealing investments to tenants who value high environmental standards.
There are a number of ways to future-proof against this happening. Moving to systems that use refrigerants with lower Global Warming Potential (GWP) – as outlined in the F Gas regulations – is one way to lower carbon emissions within a building.
Another method is to think about embodied carbon – the carbon involved in everything associated with construction of a building, from raw materials to transport, maintenance and end of life demolition – and track how it can be lowered. For example, retrofitting existing buildings with new, lower carbon equipment for heating and cooling is one way to keep the total carbon use of a building down over its entire lifecycle.
Just being compliant with current standards is no longer enough. Everyone involved in the commercial building sector must think about the steps needed to anticipate regulations that are to come and future-proof buildings now, not act once regulation is in place.
Accelerating decarbonisation in practice
The technology also already exists to make this level of commercial decarbonisation possible. Electrification through heat pumps is one clear way to reduce carbon use across all kinds of commercial buildings, from offices to retail spaces.
For example, Exchange Quay, an office hub in Manchester built in the 1980s, needed to upgrade one of its buildings to reduce energy use and its carbon footprint. By using 12 Mitsubishi Electric air source heat pumps to replace gas boilers, the team was able to cut energy use and improve the buildings EPC rating from a D to a B. For those working in the commercial sector and looking to retrofit buildings to future-proof as regulations change, this should serve as a great example.
Another important factor to consider is the current imbalance in the price of electricity and gas. At present, electricity prices remain linked to the cost of gas, despite a growing share of generation coming from renewables. This artificially inflates electricity costs, and means that the commercial sector will find electric technologies, including heat pumps, have higher running costs than they would if the price was decoupled.
In fact, our research in 2025 found that in the commercial sector, higher gas prices were linked to more heat pump installations (480 more annually), while higher electricity prices were linked to fewer heat pump installations (574 less annually). This suggests that making electricity cheaper relative to gas, as well as expanding subsidies for commercial buildings, will be crucial to see uptake of renewables increase and help the UK to meet its targets.
Finally, another barrier to commercial heat pump adoption is the perceived complexity of installation. For offices, retail spaces and more, ensuring that building occupants are not disturbed for prolonged periods during installation work is critical – especially when closing a business can have a direct impact on its bottom line. But renewables like heat pumps can actually be designed in a modular approach, making the install process quick and manageable. The transition over to lower carbon heating can even be staged over time, where a heat pump is installed alongside the existing system and changed over gradually to renewables.
Closing thoughts
The UK cannot meet its climate targets without more effectively tackling commercial buildings. With over two million commercial buildings in the UK, and many which need retrofitting, the window to act is now. We need to see greater support and clarity in the form of policies and incentives that support the commercial sector to make these changes, in the same way the support has been outlined for homes.
Decarbonising commercial buildings is not just an environmental necessity, it is also a strategic opportunity to future-proof the UK’s building stock, reduce costs for businesses and build a resilient low carbon economy.
