Sunday 8 September 2013

A Million Missing Low Energy Homes

The "Housing Standards Review" is set to eliminate a crucially important driver for renewable energy uptake in the UK and the way the government has gone about it is an absolute disgrace.

Solar panels on new homes - soon to be a thing of the past?

In a recently launched consultation, the Department for Communities and Local Government (DCLG) has revealed its intention to halt a practice where local authorities can require property developers to build to an energy efficiency standard higher than the current building regulations or insist on renewable energy (the so-called Merton Rule).

The background to the Housing Standards Review is that there has been a proliferation of overlapping (and sometimes conflicting) technical standards created in recent years, and local authorities are imposing a variety of these on developers, creating an unnecessary regulatory burden.  

DCLG convened a series of working groups covering eight thematic areas, one of which was energy.  The Energy Working Group concluded that the government should scrap rules that allow local decisions on the energy efficiency of new construction and rely solely on the national Building Regulations to drive future improvements in new build housing.

The justification for this change is that the Building Regulations are ‘moving towards Zero Carbon Homes’ by 2016 so there’s no need to have these alternative requirements – you can’t get better than zero carbon, right? 

While this argument is superficially persuasive, as soon as you scratch the surface you quickly find otherwise – let's take a look at what’s been happening at DCLG since the ‘Greenest Government Ever’ came into power:

  • New Social housing was intended to be at zero carbon by 2013, paving the way for the commercial developers to follow.  This was scrapped and social housing is now built to the same energy performance as commercial housing.
  • The definition of a ‘Zero Carbon Home’ has been diluted so that electricity use from plug-in appliances is misleadingly not included, making it more like ‘30% Carbon Home’
  • The 2013 building regulations are late and will not be implemented until well into 2014, allowing at least 100,000 homes to be built to a lower energy efficiency.
  • These new regulations represent only a tiny (6%) improvement on the previous ones for energy efficiency, when a 50% improvement was required to have any realistic chance of delivering 30% Carbon Homes by 2016.
  • The ‘Allowable Solutions’ consultation may allow developers to pay a tax instead of building genuinely low energy properties.

(See my earlier blog on progress towards Zero Carbon Homes here)

If you had a suspicious mind, you might suspect that DCLG held back on the spectacularly unambitious 2013 building regulations to allow the Housing Standards Review to reach its conclusions based on a belief in government intentions to actually deliver Zero Carbon Homes in 2016, a belief that would have been difficult to continue to hold once the 2013 regulations were revealed.

If you were also of a cynical disposition, you might predict that DCLG is going to announce that it will put back Zero Carbon Homes to 2019 (just keeping within the 2020 deadline in the EU Energy Performance of Buildings Directive), but only after leaving the 2016 target in place long enough to use it to justify killing off local rules for higher energy performance and renewable energy.

Houses are not built to new regulations immediately; it takes many years until granted planning permissions turn into completed homes.  If Zero Carbon Homes is delayed until 2019, it will be 2022 before large numbers of homes are built to this level of performance.  DCLG will have created a ‘Lost Decade’ and a million homes built with unnecessarily low energy efficiency.

Economics not your Strongest Suit?

The ‘Impact Assessment’ for the changes proposed in the consultation claims a net benefit to the economy of more than £0.5bn.  It is claimed that £93m would be saved over the next 10 years by abolishing the Code for Sustainable Homes and £195m from abolishing local targets for renewable energy.

So that’s around £30m a year.

To put this saving in context, have a look a the turnover and profit of just the top three commercial housebuilders in the UK:

The Impact Assessment claims that this £30m/year is the ‘net benefit to business’, but what it actually presents is the net benefit to property developers, who no longer have to pay for environmental technologies or renewable energy. 

An Impact Assessment should assess the benefit to the economy, not one favoured sector

The businesses that would have supplied environmental technologies to help these new homes outperform the Building Regulations will be adversely affected, but the Impact Assessment takes no account of this.  Nor does it attempt to estimate the cost of improving these low efficiency homes later on. 

The Impact Assessment in support of the proposal is flawed and should be repeated taking into account the net effect of the changes on the whole economy.

Not Helping Anyone…. Except Rich Landowners

If building regulations are clearly signalled in advance and consistently applied, then developers can decide how much to pay for land with certainty about their build costs.  So the only thing building to a higher environmental standard will do is slightly reduce the massive windfall that landowners get when they convince a local authority to allow them to sell to property developers.

Conversely, if building costs are reduced then developers, in a competitive market for building plots, will bid up the value of land to a point where their profit margins are maintained. 

I’ve already written about this, often overlooked issue here: 'Who Pays for Greener Homes?'

Surely this isn’t the government’s intention?  To hamper the development of a clean energy industry and land the country with extra costs for upgrading homes that could have been built to a higher standard of energy efficiency – all so that a few rich landowners get a bit richer.  Not this government, surely?

Whatever Joined up Government Looks Like, it Ain't This

At the same time that DCLG is busy paving the way for a million low-efficiency homes, another government department has to shell out taxpayers’ hard-earned money to financially support people in improving the energy efficiency of existing homes.

The Department of Energy and Climate Change (DECC) is spending your money trying to convince people to upgrade the energy performance of their homes.

And boy is it hard work.

It is simply much easier and cheaper to install energy efficiency into a new home as it’s built rather than doing it later once someone is living in it.  It’s ‘common sense’ isn’t it?  It’s so much simpler to do it properly the first time than have to come back and do it all again later.

Compare the cost of putting thicker insulation into the wall as its built with the cost of fixing more insulation to the outside of a building, rendering it, and re-setting all the windows.

Or the hassle of getting a rig into your garden to drill a bore hole for a ground source heat pump – knocking down walls, tearing up your beautiful lawn – compared to doing it when it’s already a building site.

Or the cost of replacing all your radiators, - suitable for a gas boiler, but not big enough for an air source heat pump - compared to installing suitable ones in the first place.

Consider the cost savings from installing solar panels in the roof at the same time as the scaffolding is there for the roofers to tile the roof.

You get the idea.

DECCs incentives such as the Feed in Tariff, Renewable Heat Incentive, and Green Deal need to be set at an even higher level than simply supporting the extra costs to overcome people’s aversion to turning their house upside down to do the improvements.  (So called barrier costs).

The lack of progress in driving up standards in new homes is going to cost the country more in the long run.

How to Fix This

A situation where each and every local authority makes up its own environmental targets is an unnecessary burden on developers.  In my own business, we’ve helped many house builders discharge local authority renewable energy requirements in all parts of the country, and while they are all similar they are also all ever-so slightly different.  There is definitely a case for simplification.

However, the Building Regulations are not providing a pace of improvement that is sufficient.  Nor is the Zero Carbon Homes ‘end point’ adequate – the definition is too weak and proposals to allow property developers to ‘buy’ their way to Zero Carbon will result in homes that are little improved over today's.

The Building Regulations are not some 'gold standard' for energy efficiency that it is impossible to improve upon, they are nothing more than a minimum standard, a lowest common denominator.  Local authorities should be encouraged to exceed this minimum standard  where is is viable, and the assessment of viability should be a local decision in keeping with the DCLG's own Localism Act.

The route to simplification is not for central government to impose a one-size fits all, lowest common denominator standard, but instead to provide a limited menu from which local people can choose.  Fortunately the hard work has already been done because this is a description of the system in Scotland.  Here the building regulations have a special section with a limited number of alternatives to the minimum standard (Bronze) so providing local choice and simplification of regulatory burden for developers at the same time.

Why not adopt or adapt this sensible Scottish idea for the rest of the UK?

How to make your views known to DCLG, with template email can be found here