The fourth area of public spending that our Charter 284 campaign defends is the ecological refurbishment of Britain’s houses. Not only is this vital to meet our green commitments, but it is popular, and it could ultimately pay for itself
One in five homes in Britain were built before 1918. One in two are more than 50 years old. This makes our stock the oldest in the developed world. And we’ve got energy efficiency to match.
After a long wait the government last week laid out its plans to kickstart a green refurbishment revolution. Between now and the end of 2011 it aims to insulate 6 million homes; by 2015 it wants to insulate all lofts and cavity walls. And it wants 7 million eco upgrades by 2020.
The argument for greening the houses we live in is hard to ignore. Our 25 million or so homes account for about 27% of the UK’s carbon emissions. As the government has already committed itself to making the country’s carbon emissions in 2050 a mere 20% of its 1990 level, upgrading these homes is not optional.
The scale of the task is frightening. If those 7 million refurbs are carried out by 2020, it would cost between £50bn and £150bn. It would also require an average of 13,400 whole-home makeovers every week. This would involve everything from improving levels of wall and loft insulation to providing water saving devices and renewable energy generation. It would also require a massive expansion in the construction industry: say about 12 more Balfour Beattys doing nothing but domestic refurbishment. And as there are about 500 certified installers of the renewable technology (as opposed to 120,000 gas engineers), it will also require the reskilling of much of the UK’s workforce. Clearly something on this scale is going to require fairly fanatical political will, but the reward would be a 29% reduction in the carbon emissions from the domestic sector.
Delivering that goal would require massive investment, but who is going to provide it? The government has already shied away from forcing the public to upgrade the energy efficiency of their homes when refurbishing them. This so-called “consequential improvement” rule was dropped at the eleventh-hour by two housing ministers: Yvette Cooper in 2006 and John Healey in 2009.
As forcing the public to green their homes is unpopular, Building is calling for the government – whichever party forms it – to give householders incentives to do so instead. Although this would involve a big financial commitment for these stringent times, it’s the only realistic way the UK is likely to get close to slashing emissions and hitting the targets it has said it would.
How to make it happen
A clear trajectory to achieving zero-carbon new homes in England is already in place – even though the industry has been struggling to come up with ways of delivering it. Philip Sellwood, chief executive of the Energy Saving Trust, is calling for a similar road map towards making existing housing low carbon, which lays out standards that homes should reach in 2015, 2020, 2030 and 2050.
If this is adopted, it might help with new low-carbon homes too, says Neil Jefferson, chief executive of the Zero Carbon Hub. He argues that upgrading the existing housing stock would drive up skills and knowledge. “With the lack of construction in the new-build market at the moment the industry simply won’t get the skills, knowledge and capacity that it needs for the future,” he says. “By incentivising homeowners to upgrade their existing homes, the industry will be able to develop”.
The government believes the low carbon home refurbishment plans it set out last week could create up to 65,000 jobs for installers, manufacturers and advisers. The The UK Green Building Council (UKGBC) estimates 100,000.
It could also boost house sales. A recent report by the Zero Carbon Hub found that homebuyers saw zero-carbon homes as experimental and futuristic. “We need existing homes to be upgraded so that people can get their heads around fabric improvements and low and zero-carbon technologies,” says Jefferson. “Consumers have got to see these sorts of things as being normal and the best way to do that is to put incentives in place to encourage people to do it to their own homes.”
The government’s Warm Front scheme for vulnerable households has been in place for a decade and in that time has helped about 2 million householders improve the energy efficiency of their homes. However, what’s needed now is a step change if we are to radically improve the energy efficiency of existing homes.
Pay as you save
The biggest barrier to low carbon refurbishment is, of course, the upfront cost. At the end of last year politicians reached a sudden consensus on the need to bring in a “pay as you save” scheme to persuade householders to consider the idea.
The idea is to use the energy saving from the refurbishments to pay for the work. This is done by adding a charge to a home’s electricity or council tax bill. The theory is that this will be less than the cost savings resulting from the upgrade, and would be spread over a period of up to 25 years.
For it to work, a number of problems will have to be solved. The principal one is to find a way of linking the cost of the improvement to the property rather than the occupant. If the property is sold or rented, the person getting the benefit of the refurbishment should pay the charge. The government has said it will bring in legislation to enable the loan to be tied to the property. Time is of the essence.
It is estimated that more than £5bn a year – 500,000 homes at £10,000 – could be raised from the private sector through bank loans, corporate bonds or equity finance from investors. That money could be made available to the providers of low-carbon refurbishments. George Osborne, the shadow chancellor, has proposed setting up a green investment bank that would raise money to lend to householders by issuing a bond. The proceeds from the loans would be used to fund the next round of upgrades.
A key question of course is the extent of government support that is needed to underwrite the finance from the private sector. The UKGBC has argued that this support is necessary to keep interest rates low and increase the attractiveness of the proposition to householders.
Another essential requirement is that there are enough trained and accredited providers. As mentioned above, this is going to take up a good proportion of the construction industry’s resources. The front end of the scheme could be handled by alliances between energy companies, contractors, high street retailers, supermarkets and local authorities. The aim is to offer the customer a branded, hassle-free product.
So much for the supply side. Will there be enough demand to make the whole system work? Here the experience of the boiler scrappage scheme is useful evidence. This was launched in January, and it gives householders £400 off the cost of replacing a G-rated boilers with an A-rated one.
Within six weeks, 55,000 households had taken advantage of the scheme. The Energy Saving Trust, which is running the programme on behalf of the government, said it was receiving 5,000 enquiries a day. This is surely an indicator of the appetite people have for warm, comfortable homes with smaller energy bills.
A new generation
PAYS isn’t the only incentive to persuade homeowners to adopt a greener future.
Feed-in tariffs were announced in February as a stimulus for the renewable energy sector. From April 2010, householders and communities that invest in technology such as photovoltaics, will be rewarded with cash payments for the energy they use and any excess exported to the national grid. The tariff levels will be “grandfathered”, so projects continue to receive the tariff for 20-25 years.
At the same time, proposals were made for a renewable heat incentive, which is similar in design to the feed-in tariff and would reward people for producing low-carbon heat. This is currently being consulted on and is subject to change; however, it is all part of the strategy for meeting the EU’s renewable energy directive, which says 12% of heat must be delivered from renewable sources by 2020.
One thing the incentive does not mention is low-carbon heat from medium or large-scale gas-fired combined heat and power plants, or waste heat from power stations, which can reduce emissions from heating by 30-50%.
Last month the final report was published by the joint task group on Sustainable Community Infrastructure. Among its findings, it said that public sector buildings should be required, where available and viable, to connect to existing or planned community heat networks, to provide an “anchor load” of demand. This would make it more economical for district heating systems to be established, and these could serve existing houses.
Graham Meeks, director of the Combined Heat and Power Association, which represents community heating schemes in the UK, says: “If the government wants green buildings, it has to take the lead in expanding the present small number of community heating schemes in the UK to northern European levels of coverage. At the very least, this means a commitment to join its own buildings to good schemes.”
The industry shows its support
Neil Jefferson, the Zero Carbon Hub
I support Building’s call to all the political parties to protect our construction and housebuilding industries. It is vitally important that we tackle problems with leaky existing homes at the same time as we begin to build low and zero-carbon new ones. The new homes target will only be achieved if we get the benefits of shared new markets for skills and consumer awareness of the benefits of zero-carbon homes. Existing homes are the big issue for reducing carbon emissions and fiscal and regulatory actions must be taken to ensure demand is triggered by homebuyers. Incentives lie at the heart of this challenge but simplicity is key, our research has found that consumers are distrustful of complicated cost structures. New homes have the opportunity to become an even better choice. Government needs to continue collaborating with industry to make this a reality.
The green group
Paul King, UK Green Building Council
What can you say about greening our existing homes that hasn’t been said before? It’s an absolute no brainer. It’s crucial for carbon reductions and it’s great for creating new jobs (potentially over 100,000), alleviating fuel poverty and increasing energy security.
Despite it being cost-effective, the biggest challenge has been the lack of upfront capital. Hardly a surprise – how many homeowners have ten grand down the back of the sofa? However, that barrier is set to fall, with commitment from government and support from opposition parties for a “pay as you save” (PAYS) scheme. We’ve been calling for this for a couple of years now and it’s great to see our recommendations taken forward.
Even with a PAYS scheme, are people going to be fighting each other to be first in the queue? Probably not. We may well need additional incentives to encourage action, which is why I support Building’s fourth manifesto point.
But let’s not kid ourselves – there’s no spare cash sloshing around Treasury, so we should be honest about the fact that such incentives may also come with a flip side – disincentives. For example, if some people are getting stamp duty rebates for green homes, others will have to pay more. We’re up for that debate – I just hope our political leaders are too.
The chief executive
John Frankiewicz, Willmott Dixon Capital Works
We face a real crisis, with rising fuel costs set to plunge many more families into fuel poverty.
We also have a huge amount of homes built more than 50 years ago that are so energy inefficient that they literally pump carbon into the atmosphere. Making them energy efficient is the big opportunity of the next decade, and provides a tremendous platform for economic stimulus. Retrofitting homes in a way similar to the Decent Homes programme will create more than 100,000 jobs, as well as giving us better energy security and helping us to meet our carbon targets.
Mark Goldspink Purcell Miller Tritton
As an architect working in a medium-sized practice with offices from Bristol to Edinburgh, I can see the importance of the green agenda impacting on housing projects throughout the UK. Unless there is a strong and well resourced commitment by the authorities to provide some serious carrot as well as an element of stick, the UK homeowner is happy to stay ignorant of the green agenda. We will be stuck in the status quo and our role as the designers charged with helping bring the green homes agenda to life is as relevant to the task ahead as a wax cylinder is to an MP3 player.
- 27% The percentage of UK carbon emissions that come from existing homes.
- 7 million The number of homes the government has targeted for upgrade by 2020.
- 13,400 The number of homes that will need to be refurbished a week if the government is to deliver its 34% CO2 reduction by 2020.
- 2015 The date set for all lofts and cavity walls to be insulated by.
- 65,000 The number of jobs which could be created installing and maintaining whole house refurbishments.
- £5-15bn The amount that will have to be spent every year if the government is to meet its 2050 target of cutting carbon emissions by 80%.
- 500 - Number of green energy installers in Britain.
- 120,000 - Number of gas installers
- 13,400 - Number of whole-home makeovers needed every week for 10 years
- 80%- The amount the government is committed to slashing from the country’s 1990 carbon emissions by 2050
- £150bn - Cost of hitting the 7 million refurbishments target
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