COP26: Is this the future for UK property?
COP26’s built environment day gave a glimpse of future policy direction in the UK for property, some progress in carbon pricing and an unexpected alliance.
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The UK Green Buildings Council (UKGBC) launched its Whole Life Carbon Roadmap, coinciding with the COP26 summit yesterday. The document included the carbon footprint of the property industry, recommended policy interventions for central and local government, and stakeholder action plans for 14 key industry stakeholders including developers, landlords, occupiers and others.
The report surmises that the built environment is directly responsible for 25% of UK emissions, rising to 42% when including transport elements. To bring the industry to net zero by 2050 they outline five action areas:
• Nation-wide retrofitting of existing homes
• Energy performance disclosure for non-domestic buildings
• Adoption of a design for performance approach
• Whole life carbon measurements and agreed limits
• National infrastructure investment based on net emissions impact
The residential question
As we noted on Wednesday, our homes are the largest contribution to the sectors emissions. Operational carbon from domestic buildings accounts for half of the sectors emissions, when including embodied carbon this rises to almost 60%. The UKGBC estimate that the recommended nation-wide retrofitting of some 29 million existing homes would reduce this by 98% by 2050.
The organisation advocates that measures will also look to eradicate fuel poverty, create 500,000 green jobs, and positively contribute to the national levelling up agenda.
It put forward a number of incentives to help retrofit 97% of homes by 2040 such as: variable stamp-duty adjusted in line with EPC, removal of VAT on refurbishment, council tax reform, government grants, incentivising banks and lenders to offer low interest and mortgage extensions and loans for retrofit, and adjust the gas and electricity tax regime.
Anthony Duggan, chief strategy officer & head of global capital markets research, said: “Starting now, we must consider zero-emissions planning and climate mitigation for all new buildings and come together to ensure the existing housing stock is adapted and future-proof. Buildings designed with this in mind today can reduce embodied carbon and slash operational carbon for many years to come. The best part? A lot of the technology and natural-solutions we need are already out there – our next step is to collaborate, share and invest in these solutions.”
Oliver Knight, head of residential development research, added: “New homes are already more efficient than existing stock. In the past year, over 85% of registered new dwellings were awarded an energy performance rating of either A or B, but with the Future Homes Standard requiring a 75-80% reduction of carbon emissions in new homes from 2025 compared with current standards, there is still a way to go – particularly given the huge skills shortage, and current pressure on global supply chains.
Higher build costs will also need to be considered given the pressure they may place on housebuilder margins as well as land values.”
Measurement then minimum standards
The UKGBC wants to build on, and extend, the proposed introduction of in-use energy performance-based rating systems for large office buildings by May 2022 and for all others from 2025. Once these have been well-established, it proposes introducing minimum standards and fiscal incentives for new office buildings in 2025 with other sectors to follow in 2027.
For new buildings it advocates buildings designed from 2025 onwards must be equipped to deliver the energy performance levels required for net zero and part of the adoption of a 'design for performance approach.' This requires collaboration on ‘design for performance’ achieving in-use energy targets, with all sectors – design, construction, handover and management – coming together.
The unregulated needs to be regulated
With these actions, and others already in motion, embodied carbon will rise to represent half of emissions, from the current 20%. These emissions remain unregulated with the UKGBC recommending legislation to first measure and disclose by 2023 – as part of the Whole Life Cycle – and then introduce targets from 2025 for large buildings.
Will Matthews, head of commercial research, commented: “There is rising investor demand for assets that meet the very best environmental standards and can actively contribute to reducing portfolio-wide emissions. If adopted, the proposals put forward by the UKGBC would increase the pool of assets that meet these criteria.
The UKGBC is right to highlight the important issue of embodied carbon, and regardless of the timing of the introduction of any regulation around embodied carbon in buildings, we expect this will come under great scrutiny from investors as comparable information becomes more readily available.”
Other COP news
A working draft of a proposed COP26 was released (see The Guardian’s annotations) calling on nations to stop subsidising fossil fuels and “accelerate the phasing out of coal.” Zero emission vehicle pledges gathered pace with 33 national governments working towards ending sales of carbon-emitting vehicles by 2040, large carmakers General Motors and Mercedes-Benz joined too.
The US and China surprised many by announcing a joint commitment to “work actively to address climate change” together. This acts as a signal to the globe from the two biggest emitters, yet with little detail. Will it be enough though? New projections from the UN state that the globe is on course to heat up 2.7C from pre-industrial levels by 2100. Although momentum is building with one in three of the largest public companies in G20 countries now has a net zero target.
However, a key element in combatting climate change remains unresolved: the rules for global carbon markets. The FT reported signs of breakthrough as negotiators put forward a plan to create two types of emissions credits in order to resolve issues that have been outstanding for years. Greenwashing fears get air time with many treating the crackdown as a wake-up call.