Memorandum submitted by Lower Carbon Futures,
Environmental Change Institute, Oxford University
Section headings shown in italic are taken from
the call for evidence, with our responses below each heading.
The significance of existing housing compared
to new build and the different levels of performance each display
Each new home built represents an additional
burden on the environment, so it makes sense to keep that burden
as small as possible through tough environmental standards (and
better compliance with those standards) for new-build housing.
However, by far the greatest share of the environmental burden
comes from existing homes because of the size, age and inefficiency
of the UK housing stock. A graphic representation of these connected
problems was developed by the Environmental Change Institute at
Oxford University in a consultancy report for the Royal Commission
on Environmental Pollution's 26th report, the Urban Environment
(fig 1). This depicts a scenario for a 75% reduction in CO2
emissions in 2050 over a 1996 baseline, taking into account the
impacts from the changing stock of homes over that time: existing
homes and how far they might be refurbished; standards for new
homes; allowance for demolition of older homes and replacement
with new ones; integration of low- and zero-carbon technologies
(LZC) into the built environment of housing.
The large blue rectangle (labelled "existing
stock 2005") represents the CO2 emissions from
the housing stock as it was in 2005—a stock of 25 million
homes with an average consumption of some 22 MWh per year (delivered
energy for all domestic energy demands: space heating, water heating,
cooking, lighting and appliances). Demand reduction measures can
cut energy use by roughly 50%, with building-integrated renewables
and low-carbon supply technologies, such as combined heat and
power (CHP), reducing the carbon intensity of the remaining demand
(see, for example, (Boardman, Darby et al. 2005)). Thus,
in terms of CO2 emissions, significant reductions can
be achieved through a combination of reduced demand and low- and
zero-carbon technologies (represented by the purple rectangle
labelled "refurbished stock 2005". The remaining two
rectangles ("new for old 2050" and "additional
new 2050") represent the average CO2 emissions
from all homes built after 2005, with a zero-carbon standard assumed
to be in force (and complied with) by 2020. It is clear from this
computer modelling work that the existing stock represents the
largest impact and also the largest scope for improvement.
Carbon emissions from refurbished and new-build homes, Scenario C
Number of homes (millions)
Fig 1. Modelled CO2 emissions from
a scenario showing 75% reductions across the entire UK housing
stock by 2050 (1990 baseline) Source: (Royal Commission on Environmental
Pollution 2007)
The respective roles of residents, homeowners,
landlords, local government, central government and the energy
industry in promoting and delivering greater energy efficiency
Whilst all elements of society have a role to
play, it is the responsibility of central government to provide
a coherent strategy that is commensurate with the scale of the
problem. There is an urgent need for a clear framework that combines
housing and energy policies. This strategy may well incorporate:
— devolved carbon reduction targets
for local government, covering the whole housing stock;
— obligations on the energy suppliers
to reduce the carbon emitted per customer;
— the introduction of appropriate financial
incentives, such as feed-in tariffs, stamp duty rebates;
— regulations on the minimum standards
for new products, such as light bulbs and white goods. This would
be in conjunction with the EU.
Work towards a reduction target for 2050 needs
to start now for two main reasons: firstly, the sheer size of
the stock means that any noticeable improvement will take several
years, possibly decades; secondly, opportunities for low-carbon
refurbishment need to be taken whenever other renovation works
are being undertaken as a means of keeping the cost and disruption
to a minimum. Such opportunities may only arise once in several
years or decades.
In order to fit the scale of the policy initiative
to the scale of the problem, a key question is that of intervention
point and timescale. When should incentives, regulation and information
be brought to bear?
With 1.5-2 million property transactions per year
in the UK, the point of sale or rental is clearly a strong candidate
for interventions if the aim is to transform the entire housing
stock (some 26 million homes in 2007) within a few decades. However,
the "headline" figure for the number of property transactions
needs to be analysed further, as the average figure covers a broad
range. Owner-occupiers represent nearly 70% of households in England
and half of these will live in their homes for longer than 11.8
years ((Department for Communities and Local Government 2006)).
This 35% of the housing stock would only be affected very slowly
by policies aimed at property transactions and it may be that
the introduction of such policies would act as an extra disincentive
to this significant minority of "stayers" from putting
their homes on the market. Regulation of major refurbishment (e.g.
loft conversions and extensions) could require improvements to
the existing building as a condition of Planning permission (a
proposal of this kind was included in the draft revision to Building
Regulations part L, but dropped from the final Approved Document
for 2006). Some opportunities for action occur only rarely and
innovative solutions are required to tackle the energy inefficiency
of the homes of the "stayers"—those who do not
wish to move and do not wish to take on major refurbishment work.
The role of the public sector will be key, not
only in its role as regulator but also in its role as property
owner, estate manager and client for building work (both new-build
and refurbishment). If the public-sector requires low carbon standards
for its existing housing stock, this will provide industry with
experience of new technologies, high standards of construction
and reduce the threat of fuel poverty for the occupants. The public
sector working to perfect future standards will foster innovation
and training, and hence reduce the risk of failures. The government
as client needs to ensure that lessons learned from the process
are widely disseminated. By creating a market for innovative refurbishment
projects, the public sector will attract innovators from the private
sector and send a signal to the construction industry supply chain
that new products and techniques are set to take a significant
share of the market. The public sector as client can demand standards
in refurbishment which are currently only the preserve of a few
enthusiasts. This in turn can lead to reductions in unit costs
and a "mainstreaming" of advanced refurbishment options,
which is then more readily available (and cheaper) to owner-occupiers
and private landlords.
The provision of information for households and
prospective house buyers, including energy performance certificates
Energy performance certificates (EPCs) have
the potential to be a powerful tool but they will only achieve
this potential if strong complementary action is built around
them—a true case for market transformation. Ingredients
for a transformation of housing refurbishment:
— wide use of the Energy Performance
Certificate in public awareness and education campaigns, e.g.
the energy rating should be prominent in property advertisements
on websites, in print media, in estate agents' windows and on
the web;
— demonstration projects with post-completion
monitoring to gauge the results;
— research to establish reasonable
standards for (different types of) refurbishment of existing housing;
— long-term signal to property owners
that minimum standards are coming, e.g. homes achieving band G
of the Energy Performance Certificate will not be saleable or
rentable from a certain date (say, 2012), and that subsequent
revisions will make the standard tighter;
— strong reinforcement of the Housing,
Health and Safety Rating System to ensure that action is taken
on the worst housing;
— commitment of money to improve public
sector stock (using existing structures through Housing Corporation,
Registered Social Landlords);
— complementary energy tariff structures:
for example, feed-in tariffs for building-integrated renewables
and increasing block tariffs for energy supply (i.e. price increases
in blocks as total consumption increases).
An additional form of information to households
will come from the improved metering, monitoring and billing procedures
being trialled by DEFRA's Energy Demand Reduction project. This
should include carbon information, to alert people to the amount
of pollution their actions are causing.
Government efforts to reduce carbon emissions
from existing housing stock whether in private or public ownership
and other related programmes including Decent Homes
The existing decent homes programme is based
on a poor minimum trigger standard (e.g. 50 mm loft insulation)
and is motivated by a desire to make incremental improvements
in that section of the housing stock which is both thermally inefficient
and occupied by the vulnerable.
A second, tougher decent homes standard is required
for all public sector housing, to stimulate public sector investment
and to combat the growing problem of fuel poverty. The target
for improvement should be set at about a SAP 80 level and include
the installation of low and zero carbon technologies, as well
as insulation measures in hard-to-treat homes. Such investment
goes beyond conventional definitions of cost-effectiveness but
application of these narrow, cost-based criteria cannot deliver
deep enough cuts in CO2 emissions, nor do they give
long-lasting insurance against fuel poverty to low-income households.
The climate change mitigation agenda complements other agendas,
for instance on equity and energy security.
The technologies available to reduce emissions
and the Government's role in facilitating relevant further technological
development
Technology is important but so is quality of
installation, servicing and repair. The biggest emissions reductions
come from high-quality installation of existing technology (e.g.
insulation). The historic focus on low-cost, low-disruption measures
(e.g. loft insulation) needs to shift towards a whole home audit
and refurbishment process. The energy issues need to be addressed
along with other desires of the householder (e.g. new kitchens,
bathrooms). The home improvement market in the UK is large, with
some £23 billion spent annually on repair, maintenance and
improvement of the existing stock ((Department of Trade and Industry
2006)). This scale of investment in property is being made without
a systematic attempt to integrate low-carbon options at the time
when they make most sense, ie when other work is being carried
out.
The costs associated with reducing carbon emissions
from existing housing, who should meet those costs and particularly,
in respect of low-income households, interaction between carbon
emission reductions and the Government's ambitions to reduce poverty
The Government in England and Wales has a legal
obligation under the Warm Homes and Energy Conservation Act 2000
to ensure that "as far as is reasonably practicable, persons
do not live in fuel poverty" by 2016. Similar legislation
exists in the devolved administrations.
Experience from pioneering low-carbon refurbishment
projects suggests that costs can be as high as £20,000-£60,000
per home (at current prices), depending on the home, the choice
of technologies used and on the target emissions reduction. However,
cost and disruption can be substantially reduced if the work is
scheduled at the same time as other improvements (e.g. re-plastering
work, fitting new kitchens or bathrooms), and the marginal costs
of a low-carbon refurbishment over a conventional refurbishment
are likely to be in the range £2,000-£10,000 (again,
depending on the home and on the target emissions reduction).
Given that approximately 50% can be achieved through demand reduction
measures, a key question is how much extra investment is required
in LZC to achieve tougher targets. Expensive renewable energy
technologies, such as solar photovoltaics (PV), will tend to skew
the cost-benefit analysis considerably at current prices.
If the market for low-carbon refurbishment were
more mature, then these costs would be highly likely to come down
as products and services move from niche markets into the mainstream.
Indeed, the potential for unit cost reductions is considerable,
given the low level of take-up at the current time. In order to
realise this mainstreaming and unit cost reduction, a concerted
strategy will be required. Initiatives to date have been unambitious
and piecemeal, built around the notion of cost-effectiveness and
the promotion of individual measures (eg, loft insulation, cavity
wall insulation, upgraded heating controls). Instead, a process
of whole-home audit and refurbishment is needed, with the aim
of achieving deep CO2 emissions reductions. Embedding
this process within the existing market for home refurbishment
(ie getting the low-carbon work done at times when work is being
done for other reasons) will help reduce costs and disruption
to the householder.
The argument for major investment in the energy
performance of the housing stock can be viewed in the context
of the Stern Review ((Stern 2006)) on the economics of climate
change, which argued that significant financial investment now
would avoid even higher costs in the future.
The cost of upgrading social housing will need
to be borne by the public purse. If this is done in a spirit of
innovation and collaboration with private sector partners, then
it has the potential to stimulate new economic activity in the
construction sector as well as drive down future costs by establishing
supply chains for refurbishment products. For private housing
(owner-occupiers and private landlords), a set of policies is
needed to set standards for low-carbon refurbishment and ease
the cost burden. The proposed tax rebate on Stamp Duty for zero-carbon
new homes could be extended to cover refurbishment. Increased
sales of energy-efficient and low-carbon technology will boost
VAT receipts at the same time, so one policy objective could be
revenue neutrality for the Treasury.
Generally speaking, measures to reduce energy
demand (insulation, measures to improve airtightness) achieve
the most and are most effective both in terms of cost and carbon
emissions reduction.
Tariff structures for energy are currently retrogressive,
resulting in higher costs per unit for low consumers (often those
on low incomes) because fixed standing charges are a higher percentage
of total cost when consumption is low. Also, pre-payment methods
(mostly taken up by low-income groups) typically involve high
unit costs, while more affluent households tend to be the ones
to benefit from discounts from suppliers for other payment options
(e.g. monthly direct debit). A recent report by Centre for Sustainable
Energy for WWF models the likely CO2 emissions reduction
that could be achieved by implementing increasing block tariffs
(IBTs), including a literature survey of the price elasticity
of demand for energy ((Thumim, White et al 2007)).
The specific challenges which may arise in relation
to housing of special architectural or historical interest
Heritage conservation needs to be balanced against
climate change mitigation—more interventions should be possible
in heritage/conservation buildings than are currently allowed.
Re-creation of original features (e.g. cornicing on top of internal
wall insulation) should be seen as desirable, not rejected because
of the intransigent position of conservation bodies, which argues
that no original features should ever be lost.
REFERENCES
Boardman, B., Darby, S., Killip, G., Hinnells, M.,
Jardine, C.N., Palmer, J. and Sinden, G., 2005. 40% House.
31. Oxford: Environmental Change Institute.
Department for Communities and Local Government,
02/10/2006, 2006-last update, table 802 household characteristics:
length of residence, by tenure, 2005-06. Available: http://www.communities.gov.uk/documents/housing/xls/141494
[05/10/2007, 2007].
Department of Trade and Industry, 2006. Construction
statistics annual report 2006. London: Stationery Office.
Royal Commission on Environmental Pollution, 2007.
The urban environment. 26. London: The Stationery Office.
Stern, N., 2006. Stern Review: the economics of
climate change, executive summary. London: HM Treasury.
Thumim, J., White, V., Redgrove, Z. and Roberts,
S., 2007. Waste Not, Want Not: Energy Tariffs for Sustainability.
Godalming: WWF-UK.
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