Today’s announcement of the Clean Growth Strategy aimed at delivering on UK’s 5th carbon budget gives some clear messages to some sections of the UK economy. The strategy does mark a change in tone – placing a low carbon agenda at the heart of economic growth alongside billions of pounds set aside for innovation. We know that the UK will need to accelerate its renewables capacity and the strategy hints at this. The Government has given a clear message on electric vehicles; and green finance is becoming more prominent.
Here Sustainable Homes looks at the implications of the Clean Growth Strategy on the housing sector. Carbon emissions from homes account for 22% of all UK emissions and there is an opportunity here for developers, landlords (both private and social) and owner occupiers to be empowered to reduce this. The Government could achieve this with clear policy signals combined with market action.
‘We also need to reduce the emissions created by heating our homes and businesses, which account for almost a third of UK emissions’
There are three areas of the plan that are central to both multi-tenure landlords and private developers: business emissions, homes and transport. Here are some of the highlights that are most relevant to the housing and property sectors.
The Sustainable Homes view
It is clear that some of the policies outlined will not go far enough to meeting our obligations under the Climate Change Act (2008). Sustainable Homes’ view is that housing, property and construction are far behind in their efforts to become more efficient and low-carbon. That said, there are some clear statements of intent that all of those involved in housing and property need to take heed of.
‘We … need to avoid new homes needing to be retrofitted later to ensure that they can all accommodate low carbon heating’
‘The demands on our energy infrastructure will change as low carbon heating technologies take over from fossil fuels, with greater dependence on electricity…’
Recent research by Sustainable Homes (Safe as Houses, 2017) has shown that emissions from housing stock, business mileage and procurement are under-reported by the sector. Our research also demonstrated that the sector is largely inefficient – with productivity growing by 11% over 25 years compared to over 40% for the rest of the economy. We have also shown that our sector is not decoupling emissions from growth like the rest of the UK economy.
Given that installations of insulation – one of the most basic measures of energy efficiency have fallen significantly since 2012, as shown in the chart below, there really does need to be much more tangible and simple action. If the UK is not doing the basics, how can it hope to deliver on ambitious targets?
Whilst the Clean Growth Strategy sets out the need to decarbonise our heating systems, it is less clear what exactly the housing sector as a whole needs to do. A clearer signal on a zero-carbon standard would have been welcome – this is the only way to reduce the emissions from our new and existing homes. There is scope for this laid out in the document – and there will be a consultation on this soon. Relying solely on Building Regulations to reduce emissions will get us nowhere near our 2050 target, so it is welcome that the Government has recognised the need to look at standards. Those building and refurbishing homes should prepare themselves now for higher standards. Given that emissions from buildings went up 4% in 2015/16 compared to the power sector that reduced its emission by nearly 25% in the same period it is clear that those who design, build and manage property need to look at the building and performance of the homes they build.
However, this plan represents significant challenges for those developing, managing and refurbishing homes. The housing sector is not keeping up with wider trends.
Those that build and manage homes should be doing more to prepare their customers for a future using heat pumps rather than boilers; vehicle sharing rather than ownership; increased water scarcity; renewable technology as standard; a real focus on energy efficiency and a climate with more extremes of weather than today’s. Homes being refurbished or built today may not be fit for purpose in 2040 – what are our housing providers doing about this?
Energy supply and new technology
Globally there is an increasing focus on energy efficiency and demand side management. The strategy says very little about battery storage, but here is a great opportunity for the Government to embrace a new technology that fits well not only with clean growth but also tackling fuel poverty. The move to more electric based heating (heat pumps) and a gradual phase out of gas has serious implications for asset management strategies. The current approach by most multi-tenure landlords and developers to favour gas will not only create more stranded assets for investors: more importantly it will leave end users with higher energy costs.
Adapting to new transport needs
Those building new homes and regenerating neighbourhoods in both rural and urban areas cannot ignore the upcoming revolution in electric and autonomous vehicles.
House builders have a responsibility to plan for integration with local transport and car sharing, as well as electric car charging. They need to manage emissions in their own fleets and look for cleaner low-emission construction methods.
This will have cost implications which cannot be put off until the market matures. Assessment of the exposure of landlords to regulation on electric vehicles, charging and air quality need to find their ways into corporate strategies now, to plan until 2030.
Heating systems: old & new
The housing sector as a whole has been slow to embrace low carbon heating, such as heat pumps, decentralised energy and combined heat and power (CHP).
This does not just apply to maintenance staff – there must be a step change in the procurement of such systems, as well as the quality assurance and installation. With support from Government, landlords must now aim to deliver low carbon heat networks better, rather than burying their heads in the sand about the technology. At the same time, planners must take a much more nuanced approach to the appropriateness of the technology for the schemes that they are being suggested for.
Value for money & efficiencies
Given that within the Strategy there is a focus on business efficiency, value for money assessment for RSL’s will come under more scrutiny. Housing providers should also prepare themselves for more whole life costing approaches and Sustainable Homes would recommend that the Home England and the largest housing providers move to a single whole life costing method within the near future.
Following the Grenfell tragedy, building regulations are likely to change. The Each Home Counts (Bonfield) review and the Grenfell Inquiry will hopefully lead to more joined-up regulations to take account of fire safety issues; assurance and quality coupled with aspirations on low carbon buildings and hopefully much better enforcement.
The Strategy sets a course and a vision for how the UK must move to a low carbon future that has not been set by previous governments. The Clean Growth Strategy presents economic opportunities to all businesses within the housing sector to deliver low carbon, comfortable and efficient homes, while also changing their practices to become efficient and greener. The other clear message is that the Government wants to see innovation, with billions set aside for all sectors. The housing and property industry must make the most of this. The Government has set a course and it is easy to criticise them , but– now is the time for the housing industry to respond with ambition and quality homes.