The government has been urged to revisit last year’s decision to scrap the zero carbon homes policy by the Energy and Climate Change (ECC) select committee, which has again raised concerns over investor confidence in the UK.

The policy was first trialled by Gordon Brown in 2006 and would have required all new dwellings from 2016 to generate as much energy on-site – through renewable sources such as solar power – as they would use in heating, hot water, lighting and ventilation. Despite almost a decade of preparation by the house-building and associated industries, the decision was made to scrap the standards in July last year in an effort to increase the rate of house-building.

Following the publication of a damning report last week on investor confidence in the UK, the ECC committee has published the outcome of an a separate inquiry and claimed the unexpected decision to end the policy damaged confidence in the low carbon economy.

It supports this by referencing an open letter sent to chancellor George Osborne almost immediately after the decision was made from over 240 businesses in the construction, property and renewable energy industries.

The letter stated: “This sudden U-turn [to scrap zero carbon homes] has undermined industry confidence in government and will now curtail investment in British innovation and manufacturing in low carbon products and services.”

In a statement released alongside the report, ECC committee chair Angus MacNeil MP said: “Sudden policy changes in this area, like other areas of energy policy, have created uncertainty in the market. It is crucial that the government establishes a stable long-term framework for energy efficiency.”

The report also cites a separate report from the House of Lords select committee on National Policy for the Built Environment which suggests the government should reverse its decision to remove the zero carbon homes policy. It added that a new trajectory towards energy efficiency in new homes should be set out and implemented.

Following receipt of these judgements, and a series of other comments on zero carbon homes notes throughout its inquiry, the ECC committee report says: “Zero carbon homes was an ambitious policy which was a positive step towards ensuring that all new homes are energy efficient. Whilst we recognise the government’s desire to stimulate house building, the unexpected decision to end the policy was disappointing to many businesses that were ready to deliver the government’s original objectives

“We recommend that the government reinstates the zero carbon homes policy or sets out a similar policy that will ensure that new homes generate no net carbon emissions.”

Despite consistent claims by government in the months following the announcement, there has been little evidence to suggest the removal of the zero carbon homes standards has resulted in an acceleration of house-building.

Louise Sunderland of the UK Green-Building Council pointed out that house-builders could not increase their prices to compensate for more spend on energy-saving measures as “that is not the way the housing model works.”

The effect of zero carbon homes policy of slowing residential construction was also challenged by the outcome of a survey on SME house-builders by the Federation of Master Builders, which found that the ‘cost of national regulation’ was ranked well behind issues such as ‘lack of available and viable land’ in a list of barriers to building more homes.

The government has continued to argue its case in spite of these points, although there have so far been no published studies on the effect of the policy cancellation on house-building.

However, as zero carbon homes had been used to fulfil the UK’s European-set energy efficiency obligations, the government has conceded that it needs to revisit the policy.

Speaking to the ECC committee in February, Lord Bourne said: “We need regulation, specifically on the zero-carbon homes. [The decision to remove the policy] is to give a respite, really, to concentrate on another area of Government activity, which is the need for more building. We may revisit that; we are looking at other measures.”

It has already been confirmed that from 2020, the UK’s building regulations will include the nearly zero energy building (NZEB) standard imposed by the European Commission. NZEB structures have high energy performance achieved through a range of design features, with the low energy demand met to a significant extent by energy from renewable sources either on-site or located nearby.

There has been no word of any standards being put in place before the introduction of nZEB standards.

MacNeil added: “If the Government takes action now it can help to insulate consumers from future energy price rises, while preventing the requirement for wide-scale retrofits and costly energy efficiency programmes in the future.”