Making housing and development more energy efficient

In a Summer of arresting headlines, the Guardian’s piece entitled ‘England’s housing strategy would blow entire carbon budget, says study’ is one which immediately taps into an ever-growing problem: how do you make sure that people live in a proper place they can call home while minimising its effect on the planet?

The report highlights the findings of a paper, originally published in Ecological Economics, that forms one of the first pieces of analysis on the impact of the government’s response to the housing crisis on national carbon and biodiversity goals. It builds on a growing body of literature on Housing’s effect on the environment, including this superb piece of research published by the OECD here. 

It makes for uncomfortable reading. The researchers write: “Secure housing is a fundamental human right. However, potential conflicts between housing and sustainability objectives remain under-researched.” Its headline findings suggests that England would use up the entirety of its 1.5C carbon budget on housing alone if the government delivers its pledge to build 300,000 homes a year; the building of new homes under a business as usual scenario, coupled with current trends on making existing homes more efficient, would mean the housing system would use up 104% of the country’s cumulative carbon budget by 2050. The most eye-catching of quotes in the report was as follows:

“In the long run, we argue that England can’t go on building new houses forever, and needs to start thinking about better and more systematic solutions as to how we are going to house everyone within our environmental limits.” (Dr Sophus zu Ermgassen, Lead Researcher, Durrell Institute of Conservation and Ecology at the University of Kent)

Old and new side-by-side in Holland

This situation is clearly unsustainable and as we’ve expressed in previous reports, immediate action is needed to address it. The research report suggests four areas of action – namely:

• Radically retrofitting existing houses;

• Cutting the number of second homes;

• Stopping people from buying houses as financial investments; and

• Making people live in smaller buildings

Retrofit according to Cornwall Council, 2022

Whilst some of these ideas have merit, we argue through this report that solutions need to be wider-ranging to factor in other key considerations in the development process – moving beyond thinking about homes to thinking about places. It provides examples of where the Real Estate industry is getting to grips with the issue, whilst also highlighting what barriers are in the way that prevent these actions being more widely adopted. 

As for our previous report on Strategic Rail Freight Interchanges, we will be hosting a podcast to discuss the report in further detail. Joining me on Monday 12th September at 6pm on Clubhouse will be Peter Henry (Director of Sustainability at Harworth Group plc), David Cross (Founder of Sky-House Co), Melissa Kroger (Managing Director of Fenwood Estates) and as yet unnamed fourth guest for what promises to be a very lively conversation…..

Sub 2% inflation is only a memory

THE PROBLEM

Providing a sustainable energy supply for the 300,000 new homes the UK needs every year, alongside the country’s existing stock of over 21 million dwellings, is a major and growing public policy headache in four key respects.

1) Urgent action is needed to decarbonise our industries and the way we live, given the catastrophic effects of even a one degree plus rise in global temperatures. The IPCC expertly covers what a 1.5 degree change could mean here.

2) The UK is in the grip of a cost of living crisis, with double-digit inflation being in part driven by significant increases in energy costs. The House of Commons library published a ‘Rising cost of living in the UK’ report on the eve of Liz Truss’ ascension as Prime Minister (insert comment on the timing of its publication here) and it makes for pretty staggering, sobering and frightening reading. On energy costs for households (never mind businesses), it states:

“Another important driver of inflation is energy prices, with household energy tariffs increasing and petrol costs going up. From July 2021 to July 2022, domestic gas prices increased by 96% and domestic electricity prices by 54%. This partly due to a return of global gas demand as pandemic restrictions were lifted and lower than normal production of natural gas.

In February 2022 the regulator Ofgem announced the price cap would increase from 1 April 2022 by 54% to £1,971 for typical consumption across a year. On 26 August 2022 they announced that the cap would increase by a further 80% to £3,549 from 1 October 2022. This cap will last for three months. The latest Cornwall Insight forecast is that the energy price cap will increase by a further 52% to around £5,387 in January 2023. These increases are all down to higher wholesale prices, particularly gas prices.”

How the UK has fluctuated between energy import and export over the past 50 years

3) The UK remains a net importer of energy, making it vulnerable to disruptions to the global supply chain. This House of Commons research report shows that the UK has been a net importer of energy for the best part of two decades following the end of the North Sea oil boom; in 2021, the UK was recorded as Europe’s second largest net importer of electricity. The UK recognises it has an issue – witness the publication of the British Energy Security Strategy in April to ‘achieve long-term independence’ – but a lot of its language focuses on its ambitions rather than its actions, as this report (in part) will show….

4) Finally, the National Grid – the cornerstone of the UK’s power network – faces its own challenge in modernising and decarbonising its grid at a time of increasing user demand. As this excellent Eel Power blog relays, there are two main challenges in delivering cost competitive, stable power to consumers in the long-term:

– Power generated by renewable generators is largely intermittent, cannot be relied upon and requires a back-up ‘buffer’ to be useful; and

– The amount of excess power generation is low and will decline further as old infrastructure, including coal-fired power stations, is steadily decommissioned over the next decade. 

Energy consumption by type in the UK, 2021

This is exacerbated by continued fears about the Grid’s ability to cope with the rise in use of Electric Vehicles (as detailed here) leading the National Grid itself to renew its focus on creating a Demand Side Strategy for consumers that:

“incentivises more flexible electricity consumption, long duration storage and early hydrogen uptake….. to avoid significant volumes of renewable energy being wasted during periods of oversupply as well as to ensure capacity adequacy.”

The grid is already struggling to cope in West London. Quite incredibly in a City that already struggles to build enough new homes for its population, the Greater London Authority has written to landowners and developers in three boroughs – Hillingdon, Ealing and Hounslow – to warn them that “major new applicants to the distribution network . . . including housing developments, commercial premises and industrial activities will have to wait several years to receive new electricity connections”. One recent applicant revealed that they were told to wait until 2035 for a connection; given the three boroughs accounted for almost 5,000 homes in 2019-20, equivalent to 11 per cent of London’s housing supply, this is both economically and socially disastrous. 

Emissions by sector in the UK, 2020

HOUSING AND DEVELOPMENT IS A MAJOR CONSUMER OF ENERGY

That last point emphasises the key role that new homes and places has on how and why energy is consumed in the UK. The Government’s latest data release, the snazzily titled ‘UK Energy in Brief 2022’, shows that the domestic sector was responsible for just under one third of all energy consumed in the UK in 2021, broadly in line with its relative position over the past three decades as the graph opposite shows.

The same publication also confirms that just under a fifth of all of the UK’s greenhouse gas emissions emanate from the residential sector. This has gradually reduced over time, reflecting the improved energy efficiency of new properties compared to their forebears.

The ONS also produces an incredibly useful annual statistical round-up that reflects the ‘Energy efficiency of housing in England and Wales’. The latest release is fascinating for the following reasons:

• The age of a dwelling effects the energy efficiency as building techniques and regulations have changed over time, alongside wear and tear. Dwellings in England and Wales constructed after 2012 had a median energy efficiency score of 83 which is equivalent to band B; in contrast, dwellings constructed prior to 1900 had a median score of 54 in England and 51 in Wales, equivalent to band E. This stunningly reflects that retrofitting matters as a key part of any response to decarbonisation.

• In both countries, almost eight in 10 dwellings used mains gas as a main fuel source for central heating. With gas boilers banned in new builds from 2025, builders are already grappling with non-gas power supplies in new homes, whilst energy suppliers have begun advising existing homeowners on what they need to do if they want to make a change – witness this advice from British Gas here.

• Finally, there are significant regional variations in the energy performance of homes. Only one in ten local authorities had over half of their dwellings with an energy efficiency score equivalent to band C or above; two thirds of these were in London or the South East.

All of this data confirms two things you probably knew already: that continuing to improve the energy efficiency of housing has to be a central part of our efforts to decarbonise; and that newer homes are significantly more efficient than their antecedents.

More research from the Energy Saving Trust (image courtesy of the FT)

What is less known however is the following:

• The interrelationship between new homes and places is critical, yet there is little data in how well designed places minimise or reduce greenhouse gas emissions. It stands to reason that there is little point building energy efficient homes if they are in areas that encourage car dependency , are isolated from key employment centres or do not have the local services in place that prevent journeys being made in the first place. The concept of the ‘twenty minute neighbourhood’ will be explored later in this report, as this masterplanning consideration is crucial…..

• In addition, this data assumes homes as a user of energy, rather than as a store or producer to support grid capacity or decarbonisation. As this report shows, this will become increasingly relevant and important over time…..

The exam question then: How can new development minimise the energy expended in their build and operation whilst properly supporting the grid? Whilst this report doesn’t have all the answers, it makes a start……

A pathway for retrofit, courtesy of the Green Building Council

HOW IS THE INDUSTRY ATTEMPTING TO REDUCE ENERGY CONSUMPTION AND EMISSIONS?

One of the earliest lessons I ever received in development was from a former Finance Director: “get ahead of the curve or expect change to be put upon you”. Whilst further regulatory change is undoubtedly on its way, a number of leading lights in real estate are already putting power to their collective elbows in tackling this challenge. As the UK Green Building Council emphasised within its hugely detailed Net Zero Whole Life Carbon Roadmap:

“The urgency to act on climate change has never been greater, and the built environment sector has a moral and legal responsibility to address the climate emergency and accelerate sector decarbonisation.”

That same roadmap calls for immediate industry action to decarbonise. Whilst the next section highlights industry progress being made in five key areas across the build of new homes and places to reduce emissions, it is clear we still have a way to go…..

RETROFITTING

As the data above shows, retrofitting must form part of the industry’s response to decarbonisation – with the UK Green Building Council rightly calling for the creation of a National Retrofit programme to ‘eradicate fuel poverty, create 500,000 green jobs, and positively contribute to the national levelling up agenda’. 

Whilst it is unclear what Liz Truss’ brand-new Government will initiate in policy terms beyond its immediate plan to introduce a new energy cap for consumers and businesses, it has been the public sector – particularly local authorities – that have stepped up to the challenge first, with support from forward-thinking businesses. The most eye-catching examples of this was London Councils announcing a £98bn London-wide plan to retrofit more than three million homes in October 2021 in a bid to achieve net zero carbon in properties across the capital, as reflected here. The full action plan can be found here.   

Despite this public sector leadership, it is a nationally co-ordinated programme that is needed in two key respects: to address the regional variation in energy performance (given energy performance is at its worst outside of London and the South East); and to help support those in older, privately owned homes access the skill and technology to upgrade their properties. A national ‘Retrofit’ loan programme must form part of this thinking, given how the worked example opposite from the Energy Saving Trust show that efficiency measures would be cost negative within two decades.

Part of the need for a nationally-sponsored programme is also derived from the nature of retrofitting needing to change over time; today’s retrofitting will not look the same in five years’ time. Consider the retrofit pathway that the UK Green Building Council has proposed below; whilst heat pumps are increasing in popularity now, hydrogen-based boilers may well be the product to have within the next decade. A centrally-managed programme that can flex over time to offer support to transition to new technologies provides, in our view, the best chance of retrofit success.

REDUCING CONSTRUCTION EMISSIONS

Reducing emissions in the process of building new homes also matters, given the industry’s predominant use of diesel to power principal off-road machinery. Read our previous report here to see how the industry is moving away from diesel in powering its operations. 

CONTINUING TO IMPROVE THE EFFICIENCY OF NEW HOMES

Ultimately retrofitting is an example of ‘failure demand’ – work that needs to be undertaken which could have been previously avoided. Making new homes as efficient as possible now will reduce (though not eliminate) the extent of future retrofitting works – and it is pleasing to see a number of well-explained examples coming to the fore. Whilst the Energy Saving Trust provides this excellent report on the key features of efficient new homes over the next two decades, we thought we’d share two live examples of housing developers picking up the baton.

Northstone homes in Bolton (2022)

NORTHSTONE: FABRIC FIRST

Peel L&P created their new housebuilding business Northstone in 2019 to create ‘the new new build’ – with a clear mission that focusing on thoughtful design to improve quality, keep bills low and home owners happy. 

Its first developments in Cheshire, Lancashire and Greater Manchester have stuck to the sustainability principles it outlines within this detailed guide, emphasising its careful deliberation over design, source materials and on build quality. Consequently:

• Northstone homes deliver up to 25% savings on the cost of providing heat and power per year, in comparison with other new homes.

• They go well beyond current building regulation requirements for energy performance by making homes more airtight with thicker walls, bigger cavities for insulation and carefully positioned windows. When combined with the use of mechanical ventilation, heat-save shower systems and smart home technology, their homes perform around 15% above the Building Regulation requirements.

• Their homes also provide electric vehicle charging capabilities as standard for future-proofing.

• Finally – and tied to the need for less carbon intensive construction – their house types are designed as simple rectangles, to brick dimensions, to reduce brick wastage through offcuts.

You can also see their plans for their latest development in Lancaster here. 

The 20-minute neighbourhood in all of its glory

As Northstone homes are part of wider Peel L&P developments, they also benefit from being within well planned schemes, including access to green spaces, clear active travel ways and links to major local employment schemes. A number of these considerations form a key part of the ’20 minute neighbourhoods’ advocated later within this report in emphasising the need for the industry to develop efficient places and not just efficient homes…..

More Sky-House developments on the CGI drawing board

SKY-HOUSE: Carbon neutral in construction, energy efficient on completion

Sky-House, the brainchild of ebullient Barnsley entrepreneur and architect David Cross, is a Yorkshire-based housebuilder and another reasonably new entrant into the new homes market. Their ethos is similar to that of Northstone – with David insisting that their homes be carbon neutral in construction, energy efficient on completion, beautiful to look at and pleasant to live in.

Their latest development at Oughtibridge Mill in North Sheffield embodies these principles in a competitively priced package versus standard builds, including:

• App-enabled all electric heating and solar PV panels as standard;

• The inclusion of an air source cylinder and heat recovery system;

• Intelligent double glazing; and

• Provision for electric car charging points.

Critically, this is another development that has been designed with its place in mind – with Oughtibridge Mill having access to plentiful woodland and open space, public transport to key employment schemes and community infrastructure including the repurposing of the site’s former mill into a community food hall. David will naturally explain more on the podcast. 

Energy-House 2.0 – Salford’s finest

PROTOTYPES

Others are coming forward with prototypes which go even further. National housebuilder Bellway has partnered with the University of Salford’s net-zero research facility Energy House 2.0 to create ‘FutureHome’. The house will test innovations in building materials, the effects of double and triple glazing, storing solar energy, recovering heat from waste water, and how to make most efficient use of air source heat pumps.

The critical difference in this project – and why its results should be closely monitored and then acted upon – is the project’s commitment to test each of its energy efficiency elements in both regular and extreme temperatures, with varying weather conditions simulated inside a specially built chamber in the facility including wind, snow and solar radiation – testing how the home performs in temperatures ranging from -20 degrees Celsius to 40 degrees Celsius. 

The house opens later this year and we’ll be visiting, given Bellway’s expectations of the programme:

“Energy House 2.0 will enable us to find out how everyone can operate their homes more efficiently and how new technologies can assist our efforts in reducing carbon emissions by building more efficient homes. The research will produce reliable data that can help us all to make changes. We will compare the theoretical and real performance of different energy methods, finding out how our habits impact on energy consumption and retention.”(Jamie Bursnell, Bellway)

Sky-House at Waverley, 2022

THINK ABOUT PLACE: MASTERPLANNING CONSIDERATIONS

Whilst the efficiency of homes themselves is clearly important, both the Northstone and Sky-House examples above show that tackling emissions from the built environment must also look at the environment homes are built within. Peter Henry, Harworth’s sage Director of Sustainability, has summed it up best by stressing that:

“It’s not just about the homes, it’s about the places.” 

We agree entirely; whilst it may take time for carbon measurement to catch-up with how places influence emissions, the principle of ’20-minute neighbourhoods’ are increasingly being referred to and adopted by master developers throughout the UK.

The principle is a simple one – a neighbourhood in which we can all get the goods and services we need within a twenty minute walk of our home. It touches upon most public policy outcomes and if done well, should lead to healthier, happier, more vibrant communities with – arguably – reduced demands on the state and a reduced need to travel, thereby reducing energy usage and emissions. The concept was originally promoted in the USA and has been taken up across the world, as this blog on the finest of Victorian Cities, Melbourne, shows. 

Alconbury Weald in Cambridgeshire – worth a look

Can this utopian principle be achieved in practice however? I’ve yet to meet a master developer that doesn’t aim for this vision and I’d strongly argue that the best new mixed-use developments in the UK – places like Waverley in Rotherham and Alconbury Weald in Cambridgeshire – already provide a significant proportion of these considerations and have a plan to tackle the remainder. Both have been developed with the respective master developers – Harworth Group and Urban & Civic – both re-using former assets where possible and agreeing design codes with the respective local authorities to build in these principles. If you haven’t been to either site, I’d encourage you to do so.

The UK’s first ‘Government-backed’ push towards 20-minute neighbourhoods has now emerged in Scotland, with the devolved Government making this approach a priority within their proposed National Planning Framework, a detailed research paper underpinning any potential implementation and a series of places now developing plans for them – including Airdrie, Stirling, Dunblane, Glasgow and Edinburgh. Whilst they are still at plan phase, the scope of what is suggested – and the anticipated measurement of their effects – means they are worth monitoring, particularly to see how it influences other state-mandated action across the rest of the UK.

HOMES AND DEVELOPMENTS AS ENERGY GENERATORS & STORES

The other key factor to consider is a forward-looking one – homes and developments acting as their own energy generators or stores to either provide off-grid power or to support the grid at times of peak demand. The installation of solar PVs on domestic rooves over the past twenty years, often mated to battery storage, has resulted in nearly a million homes now having them – yet what else is coming forward?

Solar PV – more elegant than you may think!

Birmingham City University’s take on retrofit

MICROGRIDS

Step forward an innovative idea from St Modwen. As part of its long-term regeneration of Longbridge near Birmingham – historic home of MG Rover – it is building up to 350 fully electric homes powered with pioneering smart grid technology. This is being developed with SNRG, a developer, installer, and operator of smart grid networks in the UK. SNRG was formed in 2018 with backing from Centrica.

St Modwen’s planned microgrid system for Longbridge

SNRG “offers customers a ‘one-stop-shop’ for smart grid solutions comprising grid connections, distribution networks, solar PV panels, batteries, heat pumps, and community EV charging.” A visualisation of how the smart grid will work in practice can be found here.

The first homes will be built on-site this Autumn and I am genuinely fascinated to see how quickly this comes into being and how quickly it can be scaled to any of St Modwen’s other sites across the UK. Their ambition cannot be faulted; the company has already built two carbon negative homes in West Sussex to act as a ‘pathfinder’ across the rest of its UK portfolio and I look forward to seeing how these perform in practice.

SOLAR PV AND BATTERY STORAGE

Let’s also go back to that 1 million homes with solar panels number. That accounts for less than 5% of all homes across the UK, creating significant scope for improvements in local energy generation and for storage. This again emphasises the need for a nationally-sponsored retrofit programme to accelerate take-up.

That sort of programme could alleviate the occasional grumbles of the energy industry in working with housebuilders to accelerate the roll-out of this technology. Some solar power companies have previously expressed that the housebuilders are more comfortable with tackling easier, more traditional issues – such as glazing – rather than engaging with the comparatively expensive and time-consuming process of installing panels and linking it to battery technology, as expressed here. 

MAJOR CHALLENGES FACING DEVELOPERS AND HOUSEBUILDERS TO REDUCE ENERGY CONSUMPTION AND EMISSIONS

All of those examples show that plenty of activity is taking place, but let’s go back to the quote at the start of this report that talks about the need for us to live within ‘our environmental limits’. The nagging feeling remains that the UK ought to be doing far more. What’s stopping us?

IT’S (IN PART) ALL ABOUT THE MONEY

The obvious place to begin is the thorny subject of costs and returns. Even before the significant economic shocks of 2022, research undertaken by Lloyds Bank and YouGov (see here) show a lingering negative public and industry perception in making ‘green’ improvements or builds:

“While making UK homes more carbon efficient has been a top priority for the UK Government, this research has shown that the prospect has become less appealing to homeowners and landlords, due to this perception that making greener improvements will be expensive, with little financial return.”

For the builders of new homes and developments, this has been thrown into further sharp relief by skyrocketing costs in 2022, in particular:

• The BCIS has reported that material costs have grown at an unprecedented rate, with annual growth in excess of 20% in both November 2021 and April 2022 – the highest level since 1980. Huge increases have been reported in steel and oil products, in addition to aluminium products (43.2%), precast concrete structural components (36.2%), lifts and escalator materials (29%), metal structures (26.7%) and timber (25.9%).

• A shortage of skilled construction labour, exacerbated by a number of leavers during the pandemic, has resulted in record vacancy levels in the industry – driving an increase in the cost of labour and having a knock-on effects with contracts, as reported by Avison Young here.

Doing the right thing – either in upgrading the energy specification of homes or in providing infrastructure to reduce car dependence – whilst delivering the same level of financial return has become significantly harder for housebuilders and developers. It could be made easier however by the UK introducing a more stable regulatory and incentive regime to drive energy efficiency, as we suggest below. 

KNOWLEDGE AND TECHNOLOGY

Secondly, it’s worth reflecting on the list of interventions within the body of this report. A number of them are at the prototype or pilot phases – carbon-negative homes; the use of non-diesel fuels in construction; the adoption of 20-minute neighbourhoods; the development of local microgrids – which means that:

• Knowledge dissemination and transfer is limited until further data, analysis and evaluation is made available; and

• Until further development is made, a number of these programmes will be at an unaffordable cost to some parties.

This could be helped by a more expansive – and open source – information portal for the decarbonisation of the built environment – suggested later in this report.

SKILLS: A PERENNIAL ISSUE

All of these schemes require a workforce that possess skills in sustainable working practices. However, an evident lack of experience in newly developed sustainable working practices is an issue.

While there have been improvements, with the Global Green Skills Report 2022 finding that ‘green talent’ in the workforce across sectors has increased by 38.5% since 2015, the demand for ‘new’ skill remains unsated; this causes delays in the adoption of sustainable projects as the industry tries to catch up by upskilling workers. This is an issue that will be explored at length on the podcast.

BITTY INCENTIVES AND REGULATIONS

Finally, the speed of decarbonisation has undoubtedly been slowed by two other Government-related factors: the flip-flopping of the regulatory regime governing energy and real estate; and a lack of consistent or wide-ranging incentives for industry. 

Superb analysis by Carbon Brief showed that the removal of some genuinely progressive policies in the middle of the last decade has subsequently resulted in UK domestic energy bills being some £40-£60 higher per annum than if policies had remained in place. As it succinctly describes:

“The changes included gutting energy-efficiency subsidies, effectively banning onshore wind in England and scrapping the zero-carbon homes standard. They were introduced after a November 2013 Sun frontpage reported that then-prime minister David Cameron’s answer to rising energy bills was to “get rid of the green crap”, meaning to cut climate policies.”

More of David Cameron’s terrific legacy

Removing the sustainable homes standard and cutting incentives for renewables look particularly foolhardy moves when you consider where we are….

If this was genuinely based on a desire to remove ‘red tape’ (real or otherwise) from the housing, planning and energy systems, then the incentives that have come in their wake over the past seven years have done the exact opposite. This House of Commons research note shows a fairly dizzying patchwork of fairly limited measures, including private backed green deal loans, guarantees, a handful of local authority schemes, boiler grants for biomass/air source heat pumps and the Government’s favourite current mechanism, the ‘Energy Company Obligation’; even the fourth phase of the latter is only projected to help 450,000 homes, well short of what is required to make a serious improvement in efficiency or a dent in emissions. Neither are any of them particularly well publicised.

The most frustrating element of this is the competitive element of some of the funding set up by Government. The worst example is the Sustainable Warmth competition of 2021; only the winners of this contest can provide Home Upgrade Grants or Local Authority Delivery schemes for efficiency. Given the issue of domestic energy efficiency is an issue for each UK region, it is absolutely baffling that such a programme wasn’t widened and made universal to accelerate decarbonisation. 

This is a long-term issue that needs a stable, consistent, well-evidenced and universal regulations and incentives to help deliver accelerated progress, not half measures or soundbites to appeal to your apparent core vote. 

HOW CAN WE ACCELERATE PROGRESS?

Being more aggressive in making homes and communities more energy efficient is not optional. Our initial view is that there are six principal methods to immediately accelerate progress; we’d welcome debate on their contents or what else could or should be included. 

Getting to the Future Home Standard according to the UKGBC

INTRODUCE A NATIONAL RETROFIT PROGRAMME

The first – and probably most important – part of any approach must be as the UK Green Building Council as advocated – a properly funded and resourced National Retrofit Programme. Pages 25 to 31 of the UKGBC’s Net Zero Whole Life Carbon Roadmap provides a workable framework to follow, beginning with both the adoption of a National Retrofit Strategy and a Central Retrofit Agency this year.

Whilst the short-term Government (and media!) focus is on domestic and industrial energy bills, the UK Green Building Council’s first message to the new Prime Minister was loud and clear:

“It is vital that Liz Truss tackles energy waste as well as low-carbon supply in her long-term plan if she’s going to get a grip on costs. Homes, businesses, and public buildings are already paying over the odds for heat to leak from every uninsulated window, wall, roof and door. Without a major energy efficiency drive, an emergency subsidy package would mean the Government will also have to foot the bill for years to come.”  

As we’ve already emphasised, this would only be the first round of retrofitting and that as technology develops and becomes more affordable, new phases will be needed. Only by setting up a co-ordinating body can this be practically delivered. 

BAM using HVO fuel on-site, 2022

CREATE A LONG-TERM REGULATION AND INCENTIVE FRAMEWORK FOR A LONG-TERM ISSUE

Whilst the Government has proposed a new Future Homes and Building Standard for 2025 following consultation in 2021, it remains low on detail and ‘not ambitious enough’ according to the UK Green Building Council. Developing and implementing a strong and easily understandable standard is essential to make progress and to act as the catalyst for other work in its slipstream. 

In addition, the development of universal and non-competitive funding programmes for what are essential areas of public policy should also be introduced. This report from the Independent reflects the confusion across the UK that the current incentive scheme delivers; programmes could be practically delivered through either a central retrofit agency or (if that idea is rejected) by beefing up the role of local authorities.   

MAKE GREEN MORTGAGES THE CHEAPER OPTION

Analysis has already shown that UK banks can’t hit their net-zero targets without Green mortgages – and yet existing green mortgages are more expensive, and harder to access, than traditional mortgages, representing just 2% of the book of both Barclays and NatWest. This isn’t sustainable.

An era of rising interest rates however could help catalyse the green mortgage market if banks are able to pass on more meaningful rate reductions to their customers, thereby acting as a clear incentive to do the right thing. Lloyds and NatWest appear to be ramping up their efforts to offer these products and we look forward to other banks and building societies doing the same thing. 

Banks have also begun to recognise that they have a responsibility to offer products that support the move to more efficient homes and growing this would also support the transition. NatWest is planning to launch green “additional borrowing” later this year, which will support its existing customers to improve the energy efficiency of their homes.

Lloyds, which has set a £10bn by 2025 green mortgage target, already offers customer incentives such as cashback on £1,000 loans and grants to install ground-source heat pumps, but this remains small-scale.

STICK TO THE RED DIESEL BAN IN CONSTRUCTION AND INCREASE R&D SPEND ON ALTERNATIVES

As we’ve already advocated in this report, the Government should step up its Research & Development funding to help deliver alternative off-grid power to the diesel generators for construction sites, whilst maintaining its resolve to keep the red diesel ban live on construction sites. Read more here.  

Virtual reality in construction, 2022

SKILLS PROGRAMMES

A ramp-up in the upskilling and reskilling of workers must form a central part of accelerating progress. Training across a number of disciplines, from NVQ to degree level, must be reconsidered with an emphasis on building factors such as energy efficiency, heat pump and EV installation, and smart features installation. We also agree with the call of the UK Green Building Council for apprenticeship and training standards to be updated to align with any implemented retrofit delivery programme. This issue will be explored further on the podcast.

PROMOTE LEARNING ACROSS THESE TOPICS IN A SINGLE PLACE

Finally, this is a huge, complex topic with literally millions of stakeholders. Despite its importance, there is no recognised central repository of information to show key developments or lessons learned across real estate, finance and energy – making it difficult to access information that should be freely and easily available. Pulling this report together has been no easy feat.

A single, open source, industry funded ‘Data Hub for the decarbonisation of homes and places’ ought to be the aim, albeit with a snazzier title. We’d be delighted to work with others to make it a reality; contact us if it has piqued your interest.   

LISTEN TO THE PODCAST

Joining me on Monday 12th September at 6pm on Clubhouse will be Peter Henry (Director of Sustainability at Harworth Group plc), David Cross (Founder of Sky-House Co), Melissa Kroger (Managing Director of Fenwood Estates) and as yet unnamed fourth guest to run through the main points of this report, as well as considering just how interested the general public are in being part of the required change. 

If you can’t listen at the time, don’t fret – it will be made available in full via the website the day following recording. 

Thanks for reading and get in touch to discuss any of its contents.