Buildings are key to tackling emissions

Any serious attempt to tackle climate change must deal with bricks and mortar. More than 40 per cent of carbon emissions in developed countries come from heating, cooling and providing power to buildings. Cutting UK building emissions by just 25 per cent would have roughly the same impact as taking every car off the road.

The good news is that greening buildings is not rocket science.

Hollywood stars’ solar-powered houses and UK opposition leader David Cameron’s abortive attempts to install a domestic wind turbine have helped popularise the area. But most sustainable building technology is more mundane. A recent renovation of a 1930s brick terrace house in south London by architects ECD and Hyde Housing Association trimmed 70 per cent of emissions by nothing more elaborate than improving insulation, switching to a more efficient boiler, installing triple glazing and recovering heat from a ventilation system.

Official targets are correspondingly tough. The UK wants all new homes and schools to be zero-carbon by 2016 (a passionate and highly technical debate is under way about what “zero-carbon” will actually mean). Meanwhile the European parliament voted this year to make new buildings in the entire bloc zero-carbon by 2019, although there are fears that this could be watered down by the European Council.

The spur of these impending regulatory changes has excited many in the industry. ”This is not about moving the construction industry to a new set of regulations,” says Keith Clarke, chief executive of Atkins, Europe’s biggest engineering consultant. “It’s about moving it to somewhere it’s actually never been. Ten years from now you will be looking at an industry that has radically changed.”

The transformation will benefit designers such as Atkins and companies producing innovative building materials, he argues, but less sophisticated contractors working on building sites risk being squeezed.

Several other companies are striving to get out in front of the coming changes. Barratt, the UK’s most prolific housebuilder, is building a development of 195 zero-carbon homes on a disused hospital site near Bristol. Mitie, a support services group, bought facilities manager Dalkia earlier this year for £130m, largely on the basis of its expertise in environmental consultancy.

However, others are concerned about the uncharted nature of the terrain, especially as the recession has driven the UK’s construction industry into its worst downturn since the early 1990s.

Even mundane sustainable technologies will drive up the cost of building work. In an environment of falling prices for both property assets and construction contracts, that puts a squeeze on profit margins.

“The big issue now [for the housebuilding industry] is that in two to four years a combination of planning policy and the cost of sustainable initiatives will make it harder and harder to get the right land,” says Peter Redfern, chief executive of Taylor Wimpey, the UK’s second-biggest housebuilder.

Moreover, many in the industry complain the focus on new buildings is missing the major problem: in most developed countries, about two-thirds of the buildings expected to be standing in 2050 have already been built. Emissions reduction targets will never be hit unless the existing building stock is comprehensively refurbished.

Renovation is already providing a stimulus for the bottom end of the US building industry, where $5bn was committed in this year’s economic stimulus package to “weatherise” 1m low-income homes – adding insulation and patching up roofs to reduce energy bills.

President Barack Obama described the programme as a “threefer” with multiple benefits that will provide work for recession-hit construction companies, smaller bills for homeowners, and reduced emissions for the planet. But the fact that the programme hinges on government money emphasises the degree to which financing is the main impediment to renovation work.

Reductions in bills mean that energy efficiency work can pay for itself in as little as five years, says Tim Mockett, managing director of Climate Change Capital, a commercial property investment manager. But there is still a considerable up-front cost, and for many investors even that time horizon may be too long: “Quite a few investors in property want to trade up within two years, so there need to be more incentives in place,” he says.

Whatever happens, the carrots and sticks will need to be tangible, says John Alker of the UK Green Building Council, an industry advocacy group.

“On refurbishment, you can go a certain distance without any major hassle, but to get beyond a 50 per cent emissions reduction is hard,” he says. “You’re looking at ripping out ceilings and completely changing facades.”