Energy performance ratings may be significantly over-reporting emissions from the least efficient homes, making it harder for the UK to achieve its net zero target, a new study suggests.

The trial led by Atom Bank in conjunction with Experian and Durham University calculates that UK banks are likely to be over-estimating the emissions linked to residential mortgage lending by as much as 50%.

These findings came from comparing estimates of carbon emissions from 1,038 homes based on their energy performance certificate (EPC) rating with measurements derived from their actual meter readings.

Atom worked with the Department of Mathematical Sciences at Durham University to create and analyse a representative sample of homes from its mortgage book so that the trial would give a fair view of the broad range of properties that its customers are living in.

Experian’s analysis of the actual meter readings compared to the EPC assumptions revealed that Atom is over-estimating the CO2 emissions from its residential mortgages by up to 50%. 

Experian and Atom believe that this huge difference is likely to be the same for many other banks and businesses who rely on EPCs to measure CO2.

The study also shows that actual carbon emissions from properties in EPC bands A-C, which are deemed to be the most efficient, are not significantly lower than for properties in bands D-G.

Experts at University College London’s Energy Institute observed a similar pattern across a larger national dataset, finding little variation in primary energy use above EPC band C, even after accounting for factors such as family size and thermostat temperature. 

The UCL team has since been investigating these discrepancies further as part of a government study into EPC accuracy, but this has not yet been published. 

Industry group B4NZ is working with Atom and other members from across the banking sector, to share data from different lenders and work with policymakers to improve the UK’s approach to net zero.

If this data is correct then the Government and banks should step up funding available for the generation and use of low-carbon electricity whilst also making electricity prices more competitive compared to gas for heating.

Atom director of environmental, social and governance Edward Twiddy says: “The UK has made real progress in addressing the challenge of decarbonising its economy but continuing that momentum will require better data and more targeted action. 

“This study reveals that EPC ratings do not reliably reflect actual household emissions, with inaccurate data being a clear hindrance to reaching net zero. 

“If most households are using similar amounts of energy, the focus should be on where that energy comes from and then how to make that clean energy as affordable as possible.

“The findings of this trial have important implications for green lending, banks’ carbon reporting, and the future use of EPCs in measuring and reducing residential emissions, which has implications for social issues like fuel poverty. 

“Atom is collaborating with organisations such as B4NZ to engage with other banks and policymakers on the reforms needed to drive meaningful change. 

“As the lenders of billions of pounds to households and businesses, banks like Atom have an enormous role to play in meeting the UK’s net zero commitments.”

Experian director of strategy and innovation Scott Harrison says: “Collaborating with Atom on this study has reinforced what we at Experian have long understood — EPCs are not a sufficiently accurate way of measuring household carbon emissions.”

“This trial highlights the urgent need to shift from theoretical estimates to real-world data.”

He says that by using real energy consumption data from meter readings, lenders can move beyond “unreliable proxies” and “take meaningful steps toward emissions transparency, credible reporting, and real climate impact”.

B4NZ chief operating officer Hannah Cool says: “Atom bank’s decision to publish these findings sets a powerful precedent for the financial sector. 

“Transparency is essential if we are to accelerate the transition to net zero in a cost-effective and fair way. 

“By acknowledging the limitations of EPC-based reporting and embracing more accurate, verifiable data, Atom is demonstrating real leadership. 

“We encourage other banks to join this initiative. 

“Only through collaboration and open data can we reform outdated methodologies and ensure that sustainable finance is built on evidence, not assumptions.”