Monday, February 06, 2017

Fact-checking Scott Morrison on affordable housing

The Australian Treasurer Scott Morrison has been seeking solutions to the problem of affordable housing in London. So let’s do some fact-checking on his position.

Australian Treasurer Scott Morrison
Australian Treasurer Scott Morrison 
Note: This post first appeared last week on The Fifth Estate.

Australia’s housing crisis

First – the scale of the problem: the thirteenth annual international house price survey by Demographia recently ranked Sydney’s home prices behind only Hong Kong, ahead of London and New York. It concluded:

“Hong Kong is the least affordable, with a Median Multiple of 18.1, down from 19.0 last year. Sydney is again second, at 12.2 (the same Median Multiple as last year). Vancouver is third least affordable, at 11.8, where house prices rose the equivalent of a full year’s household income in only a year. Auckland is fourth least affordable, at 10.0 and San Jose has a Median Multiple of 9.6.”

Whether or not you believe these exact statistics, there is no doubt that there is a supply crisis.

And, as with London, while the obvious solution may be to build more homes, the important shorter-term questions need answering of who owns the homes – occupiers or investors – and whether they are “affordable” or premium. The longer-term solution is: who builds them?

In a tight market, the more homes are owned by investors, the fewer can be owned by occupiers. This simple arithmetic is at the heart of the debate raging in Sydney, which Scott Morrison continues to dodge by refusing to admit that ending negative gearing might be a solution.

Negative gearing

Negative gearing allows property investors who make a loss to reduce the tax they pay on other income. According to ABC there are over two million landlords in Australia, over 60 per cent of whom claimed they made a loss (averaging about $10,000) in 2013-14, and so benefited from this.

Ending negative gearing – critics like Morrison’s own Liberal Party colleagues say – would reduce the incentive for investors to buy properties, easing the supply.

The Capital Gains Tax discount has also been blamed for the housing crisis. This was introduced by the Howard Government and generally results in half the profits from the sale of an investment property escaping tax.

Since being introduced in 1999 buying property as investment has increased substantially.

Whom does negative gearing benefit? Research by the Grattan Institute has revealed that the top 10 per cent of income earners, before negative gearing, get almost half the benefits.

The research body has dispelled the myths propounded by the pro-negative gearing lobby here and here.

The property industry argues that tax incentives for investment housing encourage more homes to be built. But more than 93% of property lending is for existing housing.

The Labor Party has proposed restricting negative gearing to new homes from July 2017, and halving the CGT discount to 25 per cent.

Speaking in London, Mr Morrison said this would not work and that changing negative gearing would make it harder to save for a house, because it would put rents up.

Fact-checking Morrison

Is this true?

No. In fact the opposite is true. While rents rose a little in Sydney and Perth when the Hawke government restricted negative gearing in 1985 they were stable in Melbourne and fell in Adelaide and Brisbane.

The Grattan Institute puts the rise in Sydney and Perth down to population growth and insufficient residential construction due to high borrowing rates and competition from the stock market for funds.

This week in London, Morrison was also quoted as saying: “What’s interesting in the UK is they’ve never had negative gearing. Yet they have the same and worse affordability problems than Australia has.”

That’s not quite true either, because landlords have had other kinds of tax relief. These were curbed in 2015 by the British government, with the then Chancellor George Osborne saying they gave investors buying homes to let a “huge advantage in the market” over people buying homes to occupy themselves.

Morrison also said on Sunday: “They have an even bigger problem than we do here, people pay more of their income in rents there, and they pay more of their incomes on their mortgages than they do in Australia”.

Is this true? According to the Resolution Foundation British high-earners with mortgages pay 20 per cent of their income toward their mortgage, while low-earners pay 28 per cent – and those on benefits are losing more than half their income. (These figures are a year old.)

In Australia, the most recent official data is even older – from 2013-14 – and doesn’t distinguish between high and low earners. It records that on average home owners spent 16% of their gross weekly income on their mortgage (down from 18% in 2011–12), while the figure for renters was 20%.

So Morrison may be right.

How do other countries compare in terms of housing supply and demand? According to the ANZ Bank Australia currently lacks around a quarter of a million homes, or 2.6% of its current housing stock (9.6 million). In the UK, house building is at around half the rate it should be.

In the social sector, there is a severe shortfall. The figure below compares the indexed number of households on social housing waiting lists, the number of vacant dwellings and the social housing shortfall as a percentage of the total social housing stock, from 2010 to 2015 in England alone:

England is not therefore exactly a success story wen it comes to housing. Does this make you wonder if Morrison might be looking for a solution to his problem in the wrong place?

What policies might work better?

In a paper published this month in the journal Housing Studies, the authors, from the universities of Adelaide and South Australia, conclude that “Australian governments need to adopt more effective housing policies if they are to meet the needs of the 700 000 to 1 million households who live in unaffordable housing”.

No surprise there. But what should they be? Morrison favours social bonds as a way of letting investors buy into the provision of affordable housing.

Does this work? In the UK most social housing is provided by housing associations which have charitable status. Most of these do issue bonds to raise finance. Here is a link to a list of the current issues and their returns.

Yet despite this, social renting is in long term decline compared to private renting, according to official statistics. And in the private sector, rents are 50% higher: private renters spend a greater share of their income on housing (30 per cent) than mortgage owners (23 per cent) or social renters (20 per cent) according to the Resolution Foundation.

Bonds may be part of the answer. But it’s more complicated than that.

The Joseph Rowntree Trust in the UK specialises in research into inequality and poverty, including housing and affordability. In 2013 it conducted a major study into how to finance the supply of new affordable housing which Morrison would do well to read.

Analysing innovative policies from the UK and abroad that help to increase the supply of below-market-price housing:
  1. It found that a general shift upmarket, lowering subsidies and trying to encourage affordable rather than social housing doesn’t work: it results in higher rents and more limited security of tenure.
  2. It cautioned against the use of state-backed guarantees in a climate of low interest rates.
  3. And it came out in favour of competition among providers (both for profit and non-profit) because it encourages efficiency and innovation and lowers subsidy costs.

What else works?

Like Morrison, the left-wing think tank the Institute for Public Policy Research (IPPR) (Hull and Cooke, 2012) supports the idea of local authority pension funds investing in housing newbuilds – but unlike Morrison it also supports grants for new home buyers.

But probably the most comprehensive review ever of different funding mechanisms, by the Cambridge Centre for Housing and Planning Research (CCHPR) Funding future homes: an evidence base, found that no one approach wins out. Instead, all the models have strengths and weaknesses.

It also cautioned against importing solutions from one place into another, saying that “any serious cross-national application of innovative models needs to be placed into a suitable context”.

The Rowntree Trust also agrees that you can’t just take a single policy from one country and apply it in another – because conditions are so different.

Morrison therefore needs to take great care if he wants to transplant a policy from the UK to Sydney.

If there is any other single unanimous conclusion it is that the CCHPR and the Rowntree Trust both also feel that the local government level is the one best suited for identifying and driving the most appropriate mechanisms to deliver affordable housing.

“Local fiscal incentives and local institutional structures for mobilising savings or capital set against the local regulatory context for affordable and social housing are important general success factors”, says the CCHPR’s report on page 32.

Perhaps Morrison would have been better off staying at home after all.

PS: Although Morrison himself does not declare any homes he owns for renting out, the Coalition’s MPs own collectively 331, more than double the Labor Party MPs. Turnbull himself owns 4. I wonder how many of them benefit from negative gearing?

David Thorpe is the author of a number of books on energy and sustainability. See my website here.

Tuesday, January 31, 2017

The Green Deal is to rise from the dead

[Note: This is an updated and partial version of the article published last week on The Fifth Estate website.]

The UK Government’s sale of the Green Deal Finance Company, which finances energy efficiency retrofits, has slipped through almost unnoticed – and the Green Deal is to be relaunched by the private sector.

The GDFC’s new owners, Greenstone and Aurium, have stated their intention to commence the financing of new Green Deal loans by the end of the current quarter.

The sale

The sale was ordered by the Conservative MP George Osborne when he held the post of Chancellor of the Exchequer in an attempt to reduce government debt.

Like the Green Investment Bank, the Green Deal Finance Company was set up in 2012 (this was the year when the Conservative-Liberal Democrat alliance wanted to be “the greenest government ever”). It was a not-for-dividend company whose job was to provide low-cost financing to households for energy efficiency improvements to their homes.

It failed.

Originally, its 55 members came from the public and private sector and included energy companies, trade associations, local councils and potential green deal installers. They provided some of the start-up cash, with the rest provided by the Green Investment Bank and the European Investment Bank.

It had expected to deliver around £300 million of financing for Green Deal Plans before 2014. But it was an abysmal failure, and I have documented why here.

Last year it was lambasted by the Public Accounts committee, whose chair, Meg Hillier MP, said: “This blinkered approach resulted in a truly dismal take-up for Green Deal loans and a cost to taxpayers of £17,000 for every loan arranged. Savings in CO2 were minimal.”

The Energy and Climate Change Department (DECC – since abolished) oversaw the Green Deal and believed that the Green Deal Finance Company would provide loans of over £1.1 billion by the end of 2015. The actual figure was £50 million!

The finance company incurred large financial losses as a result of the low demand resulting in DECC writing off £25 million of the cash it loaned to it. It stopped offering new Green Deal Plans in July 2015.

The new owners

The board of the GDFC last week announced the sale of its wholly-owned subsidiary, GDFC Services, for £40 million.

The new co-owners are Greenstone Finance, which invests in organisations focused on financing in renewable energy and energy efficiency, and Aurium, which describes itself as “a structured finance boutique with a focus on renewable energy”.

They say they will continue to service the existing Green Deal loans and will commence financing of new Green Deal loans this quarter.

Richard Twinn, policy advisor, UK Green Building Council, welcomed the sale, commenting that “the limitations of the Golden Rule mean it will only be attractive to a specific part of the able-to-pay market. But in the absence of a policy alternative from government, the possible reignition of a pay-as-you-save mechanism could provide a viable option for households on moderate incomes to make improvements to draughty homes.

“However, one of the big failures of the Green Deal the first time around was the lack of incentives from government to drive uptake. Unless government grasps the nettle this could well become a problem once again.”

The Green Deal was established to address the fact that the UK has some of the most thermally inefficient housing in Europe. Its loans let customers, including landlords, improve their homes by installing energy efficiency products.

The loans are repaid as part of a customer’s electricity bill, which may (critics say: only if heating was provided by electricity) be reduced by the savings generated from the measures the loan financed – a “Pay-As-You-Save” scheme. The loan remains with the property – ensuring the payments are made by the person who benefits from the energy saving.

Kilian Pender, founder and chief executive of Greenstone Finance, commented on the acquisition and the relaunch by saying, “We believe that the concept of repaying your loan as you save on your energy bills is an excellent one and with the significant private investment that we have secured, we’re looking forward to rolling the Green Deal finance scheme out across the country. We will provide homeowners a cost-effective way to improve their homes and quality of life.”

Energy assessment company Elmhurst said it looked as if the new organisation was willing to breathe new life into the pay as you save model, observing that “the private rental market is certainly an opportunity for Green Deal”.

It said that some commentators believed that the legislation on Minimum Energy Efficiency Standards – which make it unlawful for landlords to grant a new lease on properties that have an energy performance certificate rating below E, from 1 April 2018 – actually allow some landlords to avoid bringing up their properties to the required E rating. But “with the re-launch of the Green Deal, this loophole looks like being closed”, it said. “The first task for the organisation will be re-launching the loan scheme and getting traction in the market place. This is definitely one to watch this year.”


David Thorpe is the author of:

The UK's Green Investment Bank should be given an IPO

[Note: This is an updated and partial version of the article published last week on The Fifth Estate website.]

The UK Government’s sale of the Green Investment Bank (GIB) – potentially to Australian financial services group Macquarie Group – is unraveling, with Parliament told the bank has a “dismal and terrible environmental record” and an “appalling track record of asset-stripping”. 

The government is soon expected to announce the winner of a bidding contest to buy the Green Investment Bank. Australian bank Macquarie is understood to be the preferred bidder, although the terms of the arrangement are shrouded in secrecy.

But controversy over the sale has led to reports suggesting it could be abandoned and the bank floated on the Stock Exchange instead.

The Financial Times has quoted an unnamed Whitehall official as admitting that an IPO (initial public offering) was possible but not imminent.

“It’s jumping numerous steps to suggest a decision has already been made,” he is reported as saying. “It’s jumping several hurdles and issues.”

Meanwhile, many others are calling for the sale to be abandonned.

Background

The GIB is a taxpayer-owned “for profit” bank created in 2012 and allocated £3.8 billion of funding from the UK government with a mission to accelerate the UK’s transition to a greener economy. It has done well. The bank invests in a range of renewable energy projects, including energy-to-waste, anaerobic digestion, biomass, offshore wind – and it launched a €100m green bond at COP 22 in Marrakesh in 2015.

The Conservative Chancellor of the Exchequer George Osborne’s plan was always that it should eventually be able to operate independently of Government, although many on the left opposed this. The sale was ordered by Osborne when he held the post of Chancellor in an attempt to reduce government debt.

Controversy

The widely-touted possibility that Macquarie – which has offered £2 billion – could end up winning a competition to buy the bank has raised concerns.

“This preferred bidder, Macquarie, not only has a dismal and terrible environmental record, it also has an appalling track record of asset-stripping,” said Green MP Caroline Lucas during a recent parliamentary debate.

This view was echoed by former Tory Energy Minister Gregory Barker who said on Twitter that he was “increasingly alarmed that sale of #GIB will now see it broken up so much it threatens its future as [an] enduring institution”.

And Labour MP Ian Murray tabled an early day motion calling on the government to halt the proposed sale of the bank.

Furthermore, it has just emerged that Patricia Rodrigues, the former investment banker who helped set up the state-owned bank, is now working for the bidders as managing director at Macquarie Infrastructure and Real Assets.

On Wednesday 25 January the sale was debated in the House of Commons. Business Secretary Nick Hurd tried to reassure MPs the bank would not be sold to an asset stripper but was tight-lipped on the sale procedure.

Macquarie themselves have also fought back against the accusation that they would hollow out the bank but admitted they would dramatically restructure it.

This has not reassured Green MP Caroline Lucas who Tweeted yesterday:


The opposition business secretary, Clive Lewis was quoted by City AM as saying, “The government should never have wasted valuable time and money prepping the GIB for privatisation in the first place.

“With our economy stalling because of the government’s incompetent handling of Brexit, the GIB needs a laser-like focus on developing future low-carbon technologies. Instead it’s had to deal with uncertainty generated by this ideological and ham-fisted privatisation process.”

It has been widely criticised for not being sufficiently visionary or for not backing community energy, but it has been a success all the same, particularly in supporting the difficult-to-finance offshore wind industry.

According to the bank’s chief executive, Shaun Kingsbury, this industry has now “come of age” as a mainstream asset class, driven by rapid improvements (and falling costs) in technology, installation, supply chain, operational maintenance and financing.

Just a few days ago the bank issued a report showing that its Offshore Wind Fund has exceeded its original £1 billion investment target. It has invested in five offshore windfarms with a combined capacity of 1447 megawatts.

Having backed 85 projects to the tune of £2.7 billion, GIB is in need of a capital injection. With the UK government lacking cash even for the ailing National Health Service, those funds are not likely to come from the taxpayer.

Confusion

It is in this context that a previously shortlisted bidder – Jonathan Maxwell, chief executive of Sustainable Development Capital Ltd (SDCL) – threw a spanner in the works two weeks back, offering to match Macquarie’s bid.

He has urged the Tory energy minister Nick Hurd to reject the Macquarie bid, asserting that his consortium – which includes the state-backed Pension Protection Fund (PPF), the US’s Hancock and Japan’s Mitsui – is the “best alternative” to meet the government’s goals for GIB. His move is backed by Caroline Lucas.

Unlike Macquarie, SDCL exclusively provides energy efficiency retrofit project finance, backed by specialist funds in the UK, Ireland and Singapore, with new funds coming on stream from New York and China.

SDCL also provides financial advisory services through an investment banking group that operates in sectors linked to resource efficiency and sustainable development, such as renewable energy, energy efficiency, water and waste management and recycling, sustainable land management and low carbon transport.

Maxwell issued a statement saying: “We believe that an IPO [for the GIB] by 2020 is viable and this has been an important consideration behind our approach to the privatisation. An IPO should be feasible and attractive once the GIB’s portfolio has been built out.

“This government could retain a stake in the GIB in the meantime to benefit from the expected future growth ahead of an IPO and achieve value for money for the UK taxpayer.”


David Thorpe is the author of a number of books on energy and sustainability. See his website here.

Monday, January 16, 2017

Swansea barrage represents a key opportunity

Charles Hendry's report into the exciting Swansea Lagoon has given it the thumbs up.

The former energy minister concludes:
"I started this process with interest but sceptical. The more evidence I have seen, the more persuaded I have become that tidal lagoons do have an important role to play and there should be a government strategy in place to help this happen."
But it is not a cheap source of power. It has enemies. Among them is Jonathan Ford, writing yesterday in the FT,

Strangely, he quotes John Constable of the so-called Renewable Energy Foundation (REF), who lambasts it. The REF is a bogus organisation that does the opposite of what its name suggests. A simple Google search will reveal this, such as this piece

That aside, it is important to factor into any calculation about this investment that the lagoon will last 3-4 times longer than Hinkley or any other nuclear power station, and so its costs should be factored over around 100 years.

Hydroelectric power dams last for a at least this length of time. Admittedly the conditions for the barrage are slightly more stressful, being in salt water, but the area of Swansea Bay to be occupied by the barrage is a doubly sheltered one – both by the Bristol Channel and the horseshoe shape of the Bay itself.

Let's recall nuclear power's toxic legacy, and EDF's abysmal record, and nuclear power stations' own unreliability (often offline for weeks at a time for maintenance and safety), which should also should be factored in. 

Balance this against the modular nature of the turbines in the barrage (if one fails the others will keep working) and the predictability of the electricity (from the predictability of the tides).

Ford argues that nuclear is continuous source of power and the barrage is not, but the barrage has the ability to store energy (as water) within itself. The imminent availability of cheap electricity storage technologies will also help match supply with demand.

Tidal barrage and lagoon schemes are a new technology. Backing them will position the UK well as a world expert, leading to further lucrative business for UK plc.  China is already utilising it.

We have delayed long enough and let China get ahead. Let's get on with it.

Monday, December 19, 2016

Why residential eco-retrofits are failing in the UK

Retrofit projects to make homes more energy efficient are failing, especially when their design is dictated only by financial values, according to the Sustainable Traditional Buildings Alliance (STBA).

It is backing a “Responsible Retrofit” program incorporating health and heritage values and not just financial ones, in order to encourage a new attitude to giving old homes makeovers.

About 25 million British homes were built before 1990 and are in need of retrofits to bring them at least up to modern standards for energy efficiency. And it is generally considered more economic to retrofit the whole house at one go, as I argue in my book the Earthscan Expert Guide to Sustainable Home Refurbishment.

Yet there are many unintended consequences of existing retrofit programs, especially piecemeal ones. They may lead to unhealthy indoor environments, condensation and mould, fabric decay and other problems that affect occupants.

Often programs fail to meet their targets for reducing greenhouse gas emissions and energy use, and in some cases even result in an increase in both of these.

Part of the problem is that there is often not a whole house/building approach when retrofit measures are applied. But even when there is a whole building approach similar consequences can ensue. This is because there are different ideas of what is involved in a whole building retrofit. So what are these different ideas?

Table of different types of whole house eco-retrofits



Responsible retrofits

An earlier report from the STBA called Responsible Retrofit of Traditional Buildings found that most of the problems that occur with retrofits are at the interfaces between elements, technologies for building processes, or through the interactions between the measures taken, people, and the buildings they occupy, many of which are not fully understood.

This is not just a technical issue. Buildings, and people, behave differently and interact differently depending upon the social, economic and environmental context in which they find themselves.

All of these aspects need to be taken account of. The aim of retrofits should be to look for multiple wins: such as how to improve occupant health, the long-term condition of the building fabric, and make it easy to live in.

To achieve this they need to examine the way thermal energy is conducted through the building and where moisture travels and how it is managed, throughout the year-round weather conditions and patterns of occupancy. This is especially true where different materials meet each other.

When retrofits do fail, it’s not “just because we do not sufficiently understand traditional buildings, or have the wrong approach or the wrong standards or skills”, the STBA says.

“It is because we have an economic and political system which is driving misallocation of finance, land and housing, depletion of natural resources and pollution.”

This is really the reason why The Green Deal programme failed so abysmally, as I have shown before – and why the German equivalent has succeeded.

What values should be incorporated then? The STBA says we need to account for heritage, well-being, community, biodiversity and health – values which, for most people, give meaning to their world more than money does.

But the organisation is pessimistic this can happen without an ethical approach being taken to the allocation of finances for retrofitting. It believes that this demands that the economy and society should “have sustainability and culture at their heart”.

That is why it is issuing a call to rethink the whole approach. It argues:

“The process of retrofit, if carried out correctly, has great potential not only to repair the environment but also to improve people’s lives. Unless we start with the Whole House Advanced/Responsible Retrofit position our efforts will lead to unintended consequences and may be counterproductive even in the most narrowly measured terms.”

To this end the STBA has launched a Responsible Retrofit website, which is full of resources, one of the most useful of which is the Guidance Wheel.

This interactive tool represents over 50 measures that can be used in the refurbishing of the buildings and allows you to explore their interrelationships including the user’s interest, motivation and knowledge about the building:


SCreen grab of interactive tool for over 50 measures that can be used in the refurbishing of buildings

Since its launch, it has been taken up by several other organisations, including the Society for the Protection of Ancient Buildings and Construction Excellence Wales.

But until it is mainstreamed into the general drive to upgrade the performance of all older buildings, rather than just heritage ones, then piecemeal retrofitting, driven by economics, will prevail in the marketplace, and with it the risk of failure to deliver the desired outcomes.

David Thorpe is the author of:

Monday, December 12, 2016

63 ways to cut the global warming impact of cement

NOTE: A version of this article was fist published on The Fifth Estate on 6 December. 

New techniques and substitutes are now available or up-and-coming to reduce the environmental impact of cement production – the third-most polluting industry in terms of greenhouse gas emissions behind chemicals/petrochemicals and iron and steel.

Last month Nature Geoscience journal published research that claimed an average of 42 per cent of greenhouse gas emissions associated with the creation of cement are recouped from the atmosphere once the concrete is in situ.

This is good news, if true, but work is still needed to reduce the carbon footprint of cement in order to prevent disastrous global warming, and the opportunity exists to turn cement from climate change villain to climate change hero by making it carbon negative – that is, absorbing more carbon dioxide from the atmosphere than was used to produce it.

This article examines the nature of cement and concrete, ways to reduce the impact of its present production processes, and novel substitutes and means of production that, if successful at scale, will eradicate greenhouse gas emissions from its lifecycle.

All in all, this adds up to around 63 ways to cut the global warming impact of cement.

What is concrete?

Concrete is made from varying proportions of coarse aggregate bonded with cement that hardens over time. Most concretes used are lime-based concretes made from calcium silicate, such as Portland cement. The main ingredient is limestone or calcium carbonate (CaCO3).

Portland cement is made by heating the raw materials including the limestone firstly to above 600°C and then to around 1450°C to sinter the materials. This emits carbon dioxide and produces calcium silicate ((CaO)3·SiO2). When it is turned into liquid cement with the addition of water and exposed to the air it absorbs carbon dioxide again, to reform into calcium carbonate (CaCO3), and hardens.

The material is vital to modern construction and ubiquitous; the massive ready-mix concrete industry, the largest segment of the cement market (a staggering 4.3 billion tonnes a year produced), is worth over $100 billion a year.

The global warming impact of cement

Most of the greenhouse gas emissions associated with cement production arise because its production requires very high temperatures, but there are also significant emissions associated with mining and transportation.

Embodied carbon dioxide of cement according to production method.
Embodied carbon dioxide of cement according to production method.
Source: Specifying Sustainable Concrete from The Concrete Centre.

Existing ways to reduce emissions from cement production

The International Energy Agency (IEA) estimates the global cement industry could save between 28 per cent and 33 per cent of total energy use by the adoption of best practice commercial technologies. So what are these?

1. Heat recovery for efficiency savings

Best practice involves energy efficiency savings in the production and supply chain. These could result in savings of between 60 Mt CO2/year (at the low end) and 520 Mt CO2/year, according to the IEA.

One of the most effective techniques is heat recovery and reuse, but this remains relatively unexploited. Waste Heat to Power is one form of heat recovery and reuse. The high temperatures associated with cement production can also be used to generate steam that is then used in steam turbines. This approach has been widely used in China, which hosts over 700 installations in the cement industry.

2. The GreenConcrete LCA

This web-based tool is based on MS-Excel and has been developed to analyse environmental impacts of production of concrete and its constituents (such as cement, aggregates, admixtures, and supplementary cementitious materials).

The tool is not a conventional database of inventory of resources (materials, energy, and water) and emissions from manufacturing that only considers direct impacts, for example, only tailpipe emissions during transportation of concrete materials or emissions from electricity generation.

In GreenConcrete, the supply chain impacts of each process during the production of concrete and its materials are evaluated. This makes it possible to analyse where the savings can be generated the most and what technological improvements to make.

Primary energy used (in the form of fuel and electricity) throughout the production and transportation processes is one of the main environmental impacts analysed as part of the study.

Materials substitution, for example the addition of wastes and geo-polymers to clinker, can reduce CO2 emissions from cement manufacture and save energy.

Clinker may be blended with alternative materials like blast furnace slag, fly ash from coal fired power plants and natural pozzolans. Use of granulated slag in Portland cement may increase energy use in the steel industry, but can reduce both energy consumption and CO2 emissions during cement production by about 40 per cent.

3 to 53. Over 50 energy efficiency opportunities

This EnergyStar guide for energy and plant managers, Energy efficiency improvement and cost saving opportunities for cement making, outlines over 50 specific energy efficiency opportunities for all stages of the different production processes of different types of cement.

This includes over fifty changes to production methods such as: using high-efficiency roller mills, energy management and process controls, kiln shell heat loss reduction, use of waste fuels, conversion to pre-heating for the kiln, pre-calciner kilns, better maintenance and optimisation of parts and systems, oxygen enrichment, high efficiency motors and variable speed drives, using steel slag in kiln and much more.

54. Recycling and reusing

Savings can also be made at the end of life of a concrete structure. Currently only 50 per cent of concrete is recycled for use in new building projects (compared to up to 99 per cent for structural steel).

Down-cycling does help to reduce the use of aggregates, but does not help to reduce the supply of materials needed for new concrete.

Alternatives to Portland cement

There are also several candidates for substitutes for Portland cement that have less of an impact on global warming.

“Limestone-free cements can be achieved through chemical ‘activation’ of by-product materials or by producing an array of cementitious compounds based on magnesium oxide,” according to Jenny Burridge, the head of structural engineering at The Concrete Centre, UK. Here are the main ones:

55. Magnesium silicates

This involves the accelerated carbonation of magnesium silicates instead of calcium carbonates under high temperature and pressure, with the resulting carbonates then heated at low temperatures to produce magnesium oxide, with the CO2 generated being recycled back in the process.

The use of magnesium silicates eliminates the CO2 emissions from raw materials processing. In addition, the low temperatures required allow the use of fuels with low energy content or carbon intensity (biomass), thus potentially further reducing carbon emissions.

As with Portland cement, production of the carbonates absorbs carbon dioxide by carbonating part of the manufactured magnesium oxide using atmospheric/ industrial CO2.

In recent years it was hoped that the claim of manufacturers Novacem (a spin-out company from Imperial College London) – that making one tonne of cement using this method absorbs up to 100kg more CO2 than it emits, making it a carbon-negative product – could revolutionise the industry. However, there have been problems associated with trying to scale up production and the company became insolvent in 2013.

56. Calera

Calera’s process involves the capture of raw flue CO2 gas from industrial sources and converting it into calcium carbonate cement-based building materials. By converting the gas into a solid form of calcium carbonate it permanently sequesters the CO2.

Commercial demonstrations have included the capture of flue gas from power plants and burning coal, without concentrating the CO2. The flue gas is contacted in a scrubber with an aqueous alkaline solution that effectively removes the CO2 and a calcium source that results in the formation of the special calcium carbonate product that is then dried to a free flowing powder.

It requires sources both of alkalinity and calcium. Some industrial waste streams contain both, like calcium hydroxide (Ca(OH)2). Another option is separate streams, one for alkalinity, such as sodium hydroxide (NaOH), and one for calcium, like calcium chloride, which can be naturally occurring or found in the waste streams of existing chemical processes.

The result is a high strength material that can be used without any other cement or binder system to make concrete products from countertops, plant holders and benches to fibre cement board sheets on a commercial line, exceeding strength requirements but of a lighter weight than many existing cement board products.

57. SOLIDIA

SOLIDIA cement is a related product and process that cures concrete with carbon dioxide, say, from flue gases, and is currently at commercialisation stage. It requires less limestone as a result and can therefore be fired at lower kiln temperatures. It requires less energy and generates around 30 per cent less greenhouse gases than ordinary Portland cement.

58. Celitement

Celitement is a cement substitute produced at temperatures below 300°C under a process developed by the German Karlsruhe Institute of Technology KIT. It will therefore require less energy and emit fewer greenhouse gases.

Celitement is calcium hydrosilicate, a raw material already containing calcium (CaO) and silicon (SiO2), though in the wrong ratio. It must be processed using an autoclave under saturated steam conditions, grinding and the addition of water.

All of this emits around 50 per cent less carbon dioxide than Portland Cement. But it is still at the R&D stage.

59. Fly ash cement

Alkali activated and “geopolymer” cements gain their strength from chemical reactions between a source of alkali (soluble base activator) and aluminate-rich materials.

The source of the aluminate-rich materials will be an otherwise waste product – fly ash, municipal solid waste incinerator ash (MSWIA), metakaolin, blast furnace slag, steel slag or other slags, or other alumina-rich materials.

They tend to have lower embodied energy/carbon footprints than Portland cements (up to 80-90 per cent, but this is dependent on the source of the aluminate-rich material).

Production is now covered by a standard: PAS 8820:2016 Construction materials.

60. Ferrock

Created by David Stone, it is composed partly of iron dust reclaimed from steel mills and currently sent to landfill. Stone has patented the name Ferrock and formed a company, IronKast, which is in the early stages of commercialising the patent with pilot implementations in marine environments being tested and benchmarked by the University of Arizona.

It emits no carbon dioxide during production and, in order to cure it, as with Portland cement, carbon dioxide is required as a catalyst thereby making it carbon negative.

When CO2 dissolves into water it forms carbonic acid. If iron dust is present it combines with carbonate molecules and precipitates back out of solution as solid iron carbonate. The resultant material has a greater compressive strength than mortar made with Portland cement.

However, because of the limited availability of the iron dust, it will never completely replace all uses of Portland cement.

61. Hempcrete

Another substitute for concrete is Hempcrete, which is made from hemp and lime. Hemp, when growing, absorbs atmospheric carbon dioxide. Lime, when applied this way, also absorbs atmospheric carbon dioxide, making the material carbon negative.

While not having the structural strength of concrete (its typical compressive strength is around 1MPa, over 20 times lower than low grade concrete and its density is 15 per cent that of traditional concrete), with a k-value of between 0.12 and 0.13 W/mK, it offers some insulation value.

It can be used in many situations where concrete is currently used.

It is of interest also because of its breathability, which lends it to use with other national building materials to create buildings that have a pleasant internal atmosphere that does not suffer from damp or condensation.

62. Aether

Aether is a partnership by Lafarge, a world leader in building materials, with two technical centres, BRE (UK) and the Institute of Ceramics and Building Materials (Poland).

Technically, this is a Belite-Calcium Sulfo-Aluminate-Ferrite compound. Trials found that Aether generates 20 to 30 per cent less CO2 per tonne of cement than pure Portland cement (CEM (I) type) and had a compressive strength similar to Portland cement. There is a European standard now underway.

This is still at the R&D stage however; the key problem is that it hydrates slowly.

Summary so far

In terms of embodied CO2 alternative cements are showing good promise, but there is a lack of experience, a lack of codes and standards, and some concerns about raw material availability and about durability.

A study of the recent start-up attempts in this area, Towards low-carbon alternatives for OPC, concluded that the technologies are still at an early stage: “High-end cement science using new analytical techniques and modelling is just beginning and marks a methodological breakthrough”.

It advocates “collaboration between interested industry partners and basic research institutes and resources for long-term research projects as a necessary precondition for the progress of radical inventions”.

This is exactly the approach being taken by LEILAC, a new collaboration between European and Australian partners.

63. LEILAC

The LEILAC (Low Emissions Intensity Lime And Cement) project is trialling a new type of carbon capture technology called Direct Separation. To this end it is about to build and operate a pilot plant at the HeidelbergCement plant in Lixhe, Belgium.

Diagram of the LEILAC (Low Emissions Intensity Lime And Cement) project with carbon capture technology
Diagram of the LEILAC (Low Emissions Intensity Lime And Cement) project with carbon capture technology.
This aims to capture about 60 per cent of total CO2 emissions from both industries without significant energy or capital penalty, with throughputs of up to 240 tonnes of cement per day and demonstrate that the technology works sufficiently robustly to begin scale-up planning.

The technology is already proven at commercial scale for processing magnesite in Australia – a similar ore to limestone, albeit at lower temperatures (760°C versus 950°C exhaust temperatures).

The company operating this, Calix, is lead partner in the project. It has already partially calcined limestone, albeit to around 70 per cent in a 22-metre long tube with no pre-heating. It uses the Catalytic Steam Calcination of limestone, dolomite and magnesite for cement and building products.

The project has received €12m (AU$17.3m) in grant funding as part of the European Union’s Horizons 2020 program. HeidelbergCement, CEMEX, Tarmac, Lhoist, Amec Foster Wheeler, Calix Limited, ECN, Imperial College, PSE, Quantis, and the Carbon Trust are all working to apply this critical technology to the cement and lime industries.

All these partners recognise that the long-term future of the cement and lime industries, which are both vital for many aspects of the European economy, hinge upon a reduction in their CO2 emissions.

The separate elements of capture, transport and storage of carbon dioxide have all been demonstrated, but integrating them into a complete CCS process and bringing costs down remains a challenge.

There are two large projects currently working in Europe, at Sleipner (operating since 1996) and Snøhvit (operating since 2008), capturing and storing around 1.7 million tonnes of CO2.

However, the technology has not been applied to the cement nor lime industries, as traditional methods of capturing the CO2 are either too complex or expensive.

The new trial aims to do just this by beginning a full Front End Engineering Design (FEED) phase. Results should be available in 2020.


When integrated into new plants, or retrofitted into existing plants that are fired with biomass or by waste combustion, and using current best practice as outlined above, by using “Direct Separation” technology the total CO2 emissions of cement production would be reduced by more than 85 per cent compared to conventional fossil fuel fired lime and cement plants, without significant operating issues, energy or capital penalty.

If to this was added the figure of 42 per cent – of greenhouse gas emissions associated with the creation of cement using conventional means that are now known to be absorbed by concrete after its creation – then this would mean that conventional concrete would actually be potentially carbon negative.

That is surely a dream worth pursuing.

David Thorpe is the author of:

Monday, December 05, 2016

Wanted: a serious business model for eco-retrofitting homes

[NOTE: A version of this article appeared on The Fifth Estate on 29 November.]

A new approach is needed to retrofit the UK’s housing stock to allow it to contribute to a cost-effective decarbonisation strategy, according to a report published by the Energy Technologies Institute.

But the report does not make it really clear what this approach might be.

Although deep retrofits of houses for energy efficiency are technically feasible, as detailed in my book the Earthscan Expert Guide to Sustainable Home Refurbishment, at present doing it to the proper standard might cost around the same as rebuilding the entire UK housing stock.

New homes built to modern UK Building Regulations standards will cost approximately half as much to heat as a Victorian home, according to the British NHBC Foundation. These new or refurbished homes mean reduced bills for heating, hot water and electricity bills, due to better standards of insulation, draught-proofing and improved airtightness, double glazing and efficient controls (programmer, room thermostats and thermostatic radiator valves).

Graphic: The difference in heating costs between a new and Victorian home.
The difference in heating costs between a new and Victorian home. Source: NHBC

Housing Retrofits – A New Start, written by the ETI’s chief engineer Andrew Haslett, looks at the role of housing retrofitting when seeking to tackle the 20 per cent of emissions that comes from heating the UK’s 28 million homes.

Its conclusions come from a two-stage process. The ETI first identified two particular retrofitting approaches that were the most cost-effective in terms of getting the most from time and materials by industrialising the planning and execution of projects. They followed this up by testing them out on five typical UK dwellings (terrace, semi-detached, detached) built from pre-1919 to post-1980, to work out what might be deliverable in the real world. Here are the results:

Retrofits were successfully completed on four of the houses, with gas usage reduced by 30-50 per cent. But the costs ranged from £32,000 to £77,000. The experience led the team to conclude that proper investment in supply chain and training might reduce this by about half to £17,000 to £31,000.


Building retrofit infographic

The incentive gap

That’s still a lot. So how do we persuade someone to spend the money? The report highlights that most consumers are not motivated to spend money on efficiency measures because efficiency savings are a very weak driver. That is the “incentive gap”.

Instead, the report recommends that improved comfort, health and amenity should be the main incentive to fill this gap, with saving money on bills as a secondary benefit.

Meanwhile, at the back end, finding savings in the supply chain by scaling up manufacture and supply, and rewards to investors or installers, and/or legally binding targets for carbon savings (carrots and sticks), would seriously help, both in the social and private sectors.

The ETI has made a video about the project:



But the route to market is still fuzzy.

The need for investment

UK Government spending on grants for home energy efficiency is currently languishing at a 20-year low.

This year has seen a massive fall in the number of households helped by government to become more efficient, with the annual number of major energy efficiency measures installed in homes declining by 80 per cent from 1.74 million to 340,000 between the height of delivery in 2012 and 2015, according to the Association for the Conservation of Energy.

The government seems to lack any sense of the value of energy efficiency compared to investing in large scale energy projects. The ETI reckons that with carbon prices at such a modest level one way to improve housing efficiency lies in more effort to tackle the approximately four million hard to treat cavity walls across the UK. But governments have been trying for years to incentivise this and not even all the “easy wins” have been fixed.

Wanted: a serious model

Although the ETI wants to make eco-retrofits “an integral part of improving the amenity and value of the dwellings”, rather than seeing them as a series of independent measures, it does not present a financial model for doing this.

The only hope it offers is a vague one for “a new kind of service provider (integrator)” to replace existing energy providers, on a franchised basis (local teams), “that aims for a much higher level of service provision, starting with existing energy supplies”.

Such companies would have “a plan for the decarbonisation of supply of each dwelling” but “only if a market environment can be created over the next five years”.

Given the current preoccupations of the UK Government – Brexit – and the lack of any mention of climate change or social care in the government’s budgetary spending plans announced last week, that’s a big ask.

It’s not as if the ETI is asking for a lot of cash compared to the scale of the task. It says: “£10 billion of private and public funds over the next 10 years would provide a platform that would enable investment of roughly £100bn out to 2050″.

Financial Disclosure

The incentive gap is to be addressed by yet another report, soon to be released, this time from the UK Financial Stability Board’s Task Force on Climate-related Financial Disclosures.

It will contain their first set of recommendations about how to help close the gap between the climate/sustainability world and traditional finance thinking.

It will say that all infrastructure projects – not just housing retrofits – have a climate-related element to them, be that energy efficiency (mitigation), resilience against adverse weather events (adaptation) or others.

Therefore policy to encourage the reporting of more information on these topics will help to bring more visibility to the benefits.

And standardising how this information is reported would ensure that it can be used for investor analysis, enabling investors to set targets, and the creation of more products that are attractive to investors.

Well that’s what the Investor Confidence Project is doing. I wonder if the FSB knows about it.

The ETI is conducting important research. What they have done is expose the difficulty of the task but they have only begun to chart a path to accomplishing it.

David Thorpe is the author of:

Monday, November 28, 2016

COP22 put built environment at the forefront of climate change action

Note: This post was originally published on The Fifth Estate on 23 November 2016. 

Cities and local governments were especially evident at the Low-Emissions Solutions Conference held during last week’s COP22 global climate talks in Marrakech, Morocco, where a Handbook on creating dynamic local markets for Energy Efficient Buildings was launched.

The handbook uses a business-led approach piloted in 10 cities over the last four years to develop and implement action plans on energy efficiency in buildings.

Multi-stakeholder relationships in the building value chain and how they need to come together to promote energy efficiency in buildings.
Multi-stakeholder relationships in the building value chain and how they need to come together to promote energy efficiency in buildings. Source: WBCSD (2015), adapted from Energy Efficiency in Buildings, Business Realities and Opportunities, Facts and Trends.

The handbook goes through the steps involved and how to bring together the many different groups that comprise the buildings sector.

A key example from the handbook is taken from Poland, a country not normally noted for its action on climate change. It describes how a multi-stakeholder partnership set up in 2014 has, by November 2016, already set up a residential buildings energy efficiency financing facility of €200 million (AU$287m), produced a benchmarking report on operation costs in commercial buildings, and created a platform for public-private dialogue and action.

It is part of an initiative called EEB Amplify, launched on COP22’s Buildings and Cities Day with the aim of scaling up the Energy Efficiency in Buildings program from 10 cities to 50 by 2020. ICLEI – Local Governments for Sustainability is currently working with 1500 cities across the world.

EEB Amplify is a partnership with the World Business Council for Sustainable Development (WBCSD) and Climate-KIC in Europe, the US Green Building Council and US Business Council for Sustainable Development, and the Indian Green Building Council. Its expansion will begin in 2017 and aims to include 50 cities by 2020.

Why different stakeholders should get involved in an energy efficiency market engagement, in what capacity, and what they stand to gain.
Why different stakeholders should get involved in an energy efficiency market engagement, in what capacity, and what they stand to gain. Source: Extract from Energy Efficiency Market Report 2015, IEA adapted from IEA (2014), Capturing the Multiple Benefits of Energy Efficiency, OECD/IEA, Paris.

It’s time to get down to business

COP22 was all about implementation. There was a shared feeling that the Paris Agreement and the adoption of the Sustainable Development Goals have created an irreversible and irresistible pathway to a low-carbon world and now, despite what has happened in America, the task is just to get on with it.

On display at the conference were materials, construction innovation, technologies for energy efficiency, adaptation and resilience, and sustainable mobility across electric and fuel cell vehicles.

No new fossil fuel infrastructure

NGO and government leaders spoke at a press conference about how subnational governments and major cities around the world – including in the US and Canada – are adopting No New Fossil Fuel Infrastructure policies and pledges.

Cities across the Western US who have signed up to the No New Fossil Fuel Infrastructure policy include Portland, Oregon and Vancouver, and uptake is accelerating.

100 per cent renewable energy

Many cities and governments signalled an intention to move cities and regions away from all fossil fuel export infrastructure and towards 100 per cent renewable energy. Many already are.

US Secretary of State John Kerry announced the Obama Administration’s plan for deep decarbonisation, even though the Trump administration could well undo it.

While acknowledging the uncertainty Trump’s win creates, he predicted that markets would continue to drive the transition to clean energy sources for economic reasons, and that the question was whether it would happen sufficiently fast to avoid catastrophic climate damage.

“The US plan for deep decarbonisation Secretary Kerry unveiled today is a welcome recognition of the need for urgent action, however, it does not go nearly far enough,” observed Daphne Wysham, director of the climate and energy program at the Center for Sustainable Economy.

So city representatives joined 47 governments forming the Climate Vulnerable Forum, business and civil society including from Morocco, Ethiopia and Costa Rica, the City of Oslo, the Australian Capital Territory Government, Sumba Islands and corporations like Mars and IKEA to talk about the movement towards 100 per cent renewable energy cities.

COP22 President Salaheddine Mezouar said that “renewable energies do not only mitigate our impact on climate change but open the way to new models of sustainable development with new investments, new industries and new jobs”.

Sustainable cities and built environments

The COP22 Low-Emissions Solutions Conference established four work streams:

  1. National and regional low-carbon strategies: mid-century strategies, deep decarbonisation pathways, and implementation at national, regional and local scales; and solutions and innovations spotlight
  2. Information and communications technologies: the contribution of ICT to climate action in other sectors; and innovative approaches to raising commitments towards climate action
  3. Sustainable cities and built environments: local climate action – strategies and implementation; and smart low-carbon and sustainable cities
  4. Low-carbon transport: introduction to mobility challenges and innovation in the transport sector; and electric and hydrogen mobility.
The built environment is at the heart of all of of these work streams.

Following the conference, Gino Van Begin, secretary general of ICLEI, called upon all stakeholders – business, the research community and all levels of government – to get together with local governments to “implement and take up new technologies that facilitate low emission, resilient development” and to “allow innovation to happen and to be effectively applied”.

Only by working together will they, and by definition, the world, “build a strong architecture needed to support implementation of the Paris Agreement”, he said.

Peter Bakker, president and CEO of the WBCSD echoed this, saying the conference showed “how business, government, academia, cities and other experts are already delivering the solutions that will define future competitiveness in the low-carbon economy”.

Cities100

Cities100 was another highlight of the cities day at COP22. It showcased leading solutions to urban climate challenges in 10 sectors, ranging from solid waste management to transportation, and, for the first time, solutions that address the nexus of climate change and social equity. Amongst the examples in Cities100 were:

  • Guang­zhou, China: planning for an increasing population and rising demand for energy using a multi-sector, low carbon plan for green growth targeting infrastructure and buildings
  • Kampala, Uganda: instituting energy efficiency and sustainability in all its operations to make itself an example for other African cities.
  • Taoyuan, Taiwan: which has a development plan targeting lifestyle changes and the creation of a renewable energy industry.
  • New York City, US: its Hous­ing Au­thor­ity has a building retrofit strategy to reduce CO2 emissions, heating costs and make sure that residents in affordable housing have resilient homes.
  • Auckland, New Zealand: has set up a revolving fund to enable the city to invest money generated from municipal energy-saving projects into further energy-saving improvements.
C40 chair and Rio de Janeiro mayor Eduardo Paes gave a keynote address at the Sustainable Innovation Forum, which highlighted the importance of mayors and cities in tackling climate change, saying that cities are taking bold actions, but much more needs to be done, including a “coordinated collaboration between all levels of society”.

He talked about how carbon intensive and traditional businesses needed to be reinvented because they “will not have a place in a world facing climate change”, calling this “a great economic opportunity”.

“In the next 15 years, the world is expected to invest around USD $90 trillion in infrastructure. Much of that will happen in cities … Municipal governments cannot leverage those resources alone,” he said.

Climate finance

According to C40’s research, urban policy decisions made in the next four years alone could lock-in almost a third of the remaining global safe carbon budget. This is why C40 supports its member cities in developing targets and climate action plans that are aligned with a 1.5 degree pathway.

C40’s Climate Finance Facility, now in its pilot phase, will support cities in low and middle-income countries in preparing climate change projects to attract investments.


C40’s demands for municipal infrastructure finance.
C40’s demands for municipal infrastructure finance.
At the end of November, at the C40 bi-annual Summit in Mexico City, C40 will adopt a new four year business plan with the ambition of the Paris Agreement at its centre.

No to Trump

The 200 countries attending the COP22 conference were united in the face of Donald Trump’s campaign threat to quit the Paris accord on climate change.

“No one country, no one man, no one person can control the outcome of the destiny that we all see as part of the writing on the wall that climate change is real, we need to act and we are going to do everything we can so I definitely think that the speeches over the past several days had that impact and effect on us as a civil society and over other countries as well,” concluded Tina Johnson, policy director at the US Climate Network.

The Marrakech Proclamation, issued at the conclusion of the conference, serves as a message of solidarity against Trump’s threat. The Proclamation contains a resolution to hammer out a rulebook by 2018, and this is its concluding sentence:

“As we now turn towards implementation and action, we reiterate our resolve to inspire solidarity, hope and opportunity for current and future generations.”

David Thorpe is the author of: