If you’ve taken out a tenancy, bought a house or just browsed online platforms like Rightmove, you’ve probably come across an Energy Performance Certificate (EPC). It explains just how energy efficient a property is, using the same familiar colour coded A to G rating that we also see on household appliances.

But despite its seeming simplicity, it’s a long standing and widely held view that EPCs are in desperate need of reform.

What started off as a simple information tool in 2007 has grown into a convoluted system which attempts to solve problems it wasn’t designed for: advising homeowners about how to improve their property, monitoring financial institutions’ lending portfolios, and being a basis for net zero regulation, legal targets and eligibility for government subsidies.

After years of mounting calls for change, multiple housing ministers and now a change in government, the Ministry of Housing, Communities and Local Government (MHCLG) has finally promised to publish a consultation on overhauling energy efficiency standards.

But much of what people will have to say won’t be news to anyone in the sector, the EPC’s longstanding issues of accuracy, reliability, trustworthiness are well versed. The hard bit for the government is working out what to do.

When we speak to experts in the field there’s a clear consensus around the overarching challenges in the existing EPC system, but there’s much more disagreement around how to tackle them. At Nesta we’ve been thinking about EPC reform for some time; we think it can be an important enabler for our mission of substantially decarbonising home heating by 2030.

Here are four key things we think the government should focus on when reforming the system.

Fundamentally, we think EPCs need to be about two things: energy bills and carbon emissions.

Although EPCs have the potential to be used in many different ways for different insights, we think these are the two issues that EPCs should communicate most clearly and be the main focus of recommendations to homeowners.

Users should be presented with the two different metrics on their EPC and shown two different user journeys: one for how they can decarbonise their heating system and the other for how they can reduce their energy bills.

We’ve developed a quick prototype, which has similarities to the way EPCs are currently presented in Scotland:

This dual metric would increase the prominence of the carbon rating (historically more of a technical detail), and present users with meaningful options and trade-offs for upgrading their home, with each metric showing a set of actions for improving the property’s rating.

For instance, knowing how much a low carbon heating system would reduce emissions and bills would be helpful for evaluating whether it was worth installing one, likewise knowing that expensive solid wall insulation on its own would not do much to reduce a property’s carbon footprint would help decide whether it was a meaningful long term investment.

Carbon and energy bills are also the two areas we should be targeting government subsidies and regulation, and so EPCs could become both a useful source of data for designing and structuring incentives and a useful engagement tool. For example, we can imagine better integration with local area energy planning, where EPCs are used to facilitate a community level conversation, helping neighbourhoods to understand if street-based low carbon heating (such as heat networks) could be an option in their local area.

From a regulatory perspective, it would equip the government with the information it needed to be a bit smarter about the outcomes and actions it needs to drive.

We think the government should systematically explore the current and potential users of EPCs - from landlords to mortgage lenders - so it can understand how the system could be re-designed to maximise value.

In their current state, EPCs don’t deliver optimal outcomes to any users. They don’t accurately tell users what their bills are or will be, they don’t give useful and actionable advice about how to upgrade their property, and they fail to provide the right incentives to decarbonise homes.

We think there are useful things you can do to improve these outcomes for traditional users (for us, one of the most obvious is to update the way that heat pumps are evaluated and recommended so as to incentivise their uptake) but we should also be considering how to make the system more valuable for wider types of users and use cases.

We spoke to businesses in the retrofit industry and found that some simple changes to the data collection within an EPC could be transformative. For instance, better information on heating systems could allow heat pump installers to better target suitable properties or help local authorities to better identify homes that are eligible for subsidised funding.

We know that EPCs are not an effective way to engage or drive action. There are many reasons why, but the main problems are all rooted in EPCs failure to create a response in consumers, whether that’s the way the certificates are designed, how they actually look or how users behave in terms of follow-on actions.

We don’t have the perfect answers here, but we believe MHCLG should iterate and experiment until it finds a template that works best. This process should go beyond aesthetics: the government needs to consider the scope of data collection in order to experiment with providing useful, action-oriented recommendations to users.

We think the government should be embracing an approach that tries to understand user behaviour so that EPCs can be reformed in a way that maximises their potential.

There have been calls from industry to improve the assessment process itself by adding further detail or using more skilled assessors. Whilst in general we think adding complexity could translate to higher costs for consumers and should be avoided, in some cases, we think further detail could be justified, such as where there is outsized value to be gained by collecting new, simple data. For example, gathering more detailed information about a home's heating system can lead to clearer, more actionable recommendations for improvements.

However, in lots of cases we think it’s worth being a bit more pragmatic about what we want EPCs to do and how accurate we need them to be. Given that EPCs are mandatory when renting or selling a home and affect millions of people (there have been over 27 million assessments to date) it’s sensible to keep costs low while maximising their value.

Leveraging new technologies (such as smart meter data and other in-use monitoring) and novel assessment methods (such as non-intrusive testing) as part of the EPC assessment could allow you to collect better data at a low cost, enhancing it’s accuracy and insights. We should aim for a simple as possible product aimed at effectively serving defined user needs, rather than creating an unnecessarily complex system without any clear applications.

More in-depth assessments beyond an EPC could benefit those undergoing significant renovations or requiring specialised heating advice, but we think such assessments should be optional and tailored to those who genuinely need them.

These four key principles will help make EPCs better, and help translate them from their initial objective to help homebuyers compare houses to become an effective tool for a modern, net zero energy system.

They should incentivise new smart technologies, take into account the increasing role for flexibility of energy use, and crucially, help users on their journey to decarbonise energy use in their homes.

Let’s make EPCs an enabler for these things, rather than a blocker.