A radical plan to turn existing homes green

Energy conservation is a common theme in existing policy on energy in housing and in debates about climate change. The policy approach to date has been to subsume climate change targets under the pre-existing energy efficiency programmes, making the assumption that progress on tackling fuel poverty and improving health and social welfare will be enough to combat climate change as well.

In fact, energy efficiency policies are inadequate for the task in hand (and display a lack of clarity about targets and definitions of savings). The policies motivated by improving social welfare are not enough to help the UK meet its CO² reduction targets, but a more radical agenda for change would be. Both the climate change targets and the social housing objectives can be met, but only if we raise our policy ambitions, clarify the real potential, and look beyond grants for one-off measures such as cavity wall insulation, which meet a narrow definition of cost effectiveness.

A new system and infrastructure for whole-home carbon audit and refurbishment is needed to make UK homes fit for the twenty-first century. A strategic investment of several billions of pounds per year is needed to make the difference, although not all of the money needs to come from the public purse.

The 60 per cent carbon reduction target and older homes

The UK’s 2003 Energy White Paper set out four key objectives for energy policy in the twenty-first century: achieve a 60% reduction in CO² emissions by 2050 on a 1990 baseline; increase security of energy supply; boost UK competitiveness and eradicate fuel poverty.

Different ‘solutions’ can be found to the problem of achieving a 60% reduction in CO² emissions, as this brief summary illustrates. A team from Leeds Metropolitan University’s Centre for the Built Environment developed several scenarios, including an ‘integrated’ scenario, which combined demand reduction measures with a much reduced carbon intensity of grid electricity to achieve well over the 60% reduction target . Notable among the measures put forward here was the assumption that all older, solid-walled homes could have their walls fitted with 150mm insulation. A team led by the Environmental Change Institute at Oxford University developed only one scenario (achieving -60%), which included the uptake of refurbishment measures beyond what is currently cost-effective, including insulation of one million of the seven million existing solid-walled homes and a significant take-up of low- and zero-carbon technologies, as well as a four-fold increase in the current rate of demolition, which can be beneficial in life-cycle carbon terms if the quality of what gets built to replace the older homes is high enough. What these scenarios have in common is a basic assumption that radical change is needed in order to reach or exceed the 60% reduction target by 2050. The shift of perspective is profound: those homes that are conventionally described as ‘hard to treat’ among housing and energy professionals actually have a greater potential for improvement in purely technical terms. The challenge is to conceive of a housing and energy policy framework, in which a significant fraction of this potential could be realised.

Standards: upgrading homes as a condition of sale or planning permission

The scale of the challenge and the need for a truly ‘joined-up’ strategy is highlighted in the Home Truths report, which explores the policy implications of an 80% reduction target. This argues for tough standards and legally binding targets devolved down from national to local government. Energy performance certificates are seen as more than just a source of information: the A - G ratings are proposed as the base for a system of minimum standards, getting tougher over time. If this scheme were to be implemented, any purchaser of a wasteful, inefficient property would be required to upgrade it before it could be re-sold. With rental properties, the onus to upgrade would fall on the landlord: properties failing to meet the minimum standard could not be let.

Property transactions are seen as a key intervention point for several reasons: firstly, this is a process which already requires legal and financial oversight, from the transfer of property deeds, to mortgage lending, to registration for Stamp Duty. Secondly, with 1.5 million property transactions per year in the UK, there is sufficient activity to make more than a small impact on the overall problem, especially if each intervention is built around a suitably ambitious target. The idea of regulating property transactions to make low-carbon refurbishment mainstream has its own problems, notably a distinct lack of political support. Also, the average figure for the ‘churn’ rate of housing hides the fact that a significant minority of homes are occupied for a very long time before being sold on, and these homes would pass through the net of a system triggered only by transactions.

Another route, and one that might be easier to introduce first in terms of political acceptability, would be to extend the coverage of Building Regulations to cover so-called ‘consequential works’ when Planning consent is sought for major refurbishments or extensions. This would mean a condition of planning approval for the new extension would be that a minimum standard be met in the pre-existing building. For example, it would be impossible to get approval for a loft conversion if cavity walls in the original building were uninsulated, among other energy conservation measures.

The key shift in emphasis is moving away from piecemeal activity applied one measure at a time, and towards a whole-home refurbishment process with a quantified outcome that represents a reduction in CO² emissions, and which is consistent with national targets.

Application of a refurbishment standard would need to be supported by other policies, including innovations in billing and metering to improve information on energy consumption, and financial incentives to make the very considerable costs more bearable. This might include rebates on tax (possibly council tax or stamp duty) or additional lending for refurbishment through ‘green’ mortgages, which manage the risk to lenders on the principle that money saved through reduced energy costs can be used to pay slightly higher monthly mortgage payments. Refurbishment can also be part of wider, district-based solutions, such as district heating and community combined heat and power (CHP). These communal solutions can achieve economies of scale compared to single-dwelling systems and they are common in several European countries, particularly in Scandinavia.

Cost

The Sustainable Development Commission has estimated that advanced refurbishment of this kind would cost in the region of £25,000 - £30,000 per dwelling, while the Environmental Change Institute give a range of £20,000 - £60,000, depending on the choice of low- and zero-carbon (LZC) technologies installed. Costs of individual technologies have the potential to reduce very significantly when starting from a low level of adoption, which is the case especially for many of the LZC technologies, such as solar photovoltaics, which are currently among the most expensive options. Where major refurbishment works are being carried out anyway, the marginal cost of energy-related works can be drastically reduced to, perhaps, 10 - 20% of the total project cost. In fact, the marginal cost of advanced, low-carbon refurbishment is broadly on a par with the total VAT element of refurbishment, which is at 17.5% on most items. The Cut the VAT Coalition comprises a wide range of organisations supporting VAT reform to make refurbishment costs more attractive, especially in comparison with new construction, which is zero-rated for VAT.

In total, some £23bn is spent each year on repair, maintenance and improvement in the UK housing stock, a figure well in excess of what is being discussed for low-carbon works. In more affluent areas, certainly, there is plenty of anecdotal evidence of dwellings being bought and renovated, with substantial sums being spent on extensions, conversions and new kitchens and bathrooms. Each of these renovations which fails to take on board the low-carbon agenda – and that is pretty much all of them - can be viewed as a wasted opportunity. This is where innovations – not just new technologies, but also new techniques using well-proven technologies – could begin to make an impact.