Tuesday, April 18, 2017

Developers and politicians failing to protect against climate-related flood risk

Flooding in Germany

With five million Europeans under threat of increased coastal flooding, policymakers – under pressure from persistent demand for low-cost development on the coast and inland – lack understanding of flood risk reduction and management, according to several new pieces of research.

This is a version of an article that appeared on 13 April in The Fifth Estate.

European homes are at risk from flooding from two directions: on the coast from sea-level rise and storm surges; and in floodplains and valleys from run-off during periods of extreme rainfall.

New analysis detailed in journal Earth’s Future shows that the five million Europeans currently under threat from once in a century floods (like those experienced in May last like) could face the same risk once a decade by mid-century and every year by the end of the century, as the climate continues to change.

The research is the first to take into account not only sea level rise due to warming temperatures, but also the impacts of climate change on tides, storm surge and waves when estimating future flood risk.

The authors used observations of the different factors plus climate models to estimate how each factor might change along the coastlines of Europe under different greenhouse gas emissions scenarios.

They found existing coastal protection structures were not up sufficient for protecting the five million homes most vulnerable under high-end warming scenarios.

Governments and building owners in these areas therefore face a stark choice: increase defences or move. Developers need to wake up to the risk of continuing to build in these areas and planners need to question whether approvals should be granted for development. Insurers will need help if they are to continue to provide cover. And property owners are likely to see the value of their properties drop.

Which areas will face the worst potential damage?

Seas are rising worldwide by about 3.2 millimetres a year, though rates vary from region to region because of local land rise and subsidence. If greenhouse gas emissions aren’t curbed, global seas could rise on average by 0.52 metres up to 0.98 metres by the end of the century, according to the most recent Intergovernmental Panel on Climate Change report.

In Europe, the North Sea region is projected to face the highest sea level rise – nearly one metre under a high emission scenario by 2100 – followed by the Baltic Sea and Atlantic coasts of the UK and Ireland. Sea level rise is the main cause of the flood risk, but even more intensive extremes of weather along most of northern Europe will also generate significant local effects.

Least affected will be southern Europe, with the exception of a projected decrease along the Portuguese coast and the Gulf of Cadiz, offsetting sea level rise by 20-30 per cent.

This conclusion confirms the result of a separate report from 10 years ago that the regions most prone to a rise in flood frequencies are northern to northeastern Europe, while southern and southeastern Europe show significant increases in drought frequencies.

The cost will be in the many billions. Storms Desmond, Eva and Frank, which battered parts of Britain between early December 2015 and early January 2016, caused damage estimated to cost insurers £1.3 billion (AU$1.66b) in claims. Multiplying this throughout Europe under the above scenario will see potential costs in the many billions.

Thomas Wahl, who studies coastal flood risks at the University of Central Florida, calls the research “an important step in the right direction and, to date, the most comprehensive analysis of changes in coastal extreme sea levels under climate change for Europe”.

Flood resistant homes?

As I covered in February, the British Building Research Establishment has developed a flood-resilient home designed to be able to resist floodwaters up to a depth of 600mm. In addition, the home features a number of innovations aimed at reducing the damage and disruption caused should floodwaters actually penetrate into the interior of the house.

But this type of development isn’t necessarily helpful. Another paper published recently in Science of The Total Environment found that while combined investment in property-level flood protection and sustainable urban drainage systems could certainly reduce surface water flood risk in times of extreme rainfall, the benefits could be outweighed by continued development in high-risk areas.

The researchers examined surface water flood risk in London, looking at how risk reduction could be achieved by homeowners and government, and the role of flood insurance and the new flood insurance pool, Flood Re, in the context of climate change.

Flood Re is a levy system in the UK agreed between the government and insurance companies to provide flood insurance coverage to homeowners who would otherwise be ineligible for it because of where they live.

Simulations showed that the scheme helps to provide affordable insurance, even under climate change but will face increasing financial pressure as the frequency of incidents increases.

The researchers say that if the intended transition to risk-based pricing is to take place then a determined and coordinated strategy will be needed to manage flood risk, something that isn’t currently happening.

This will involve a number of measures, including the provision of incentives for householders to make their homes flood-resilient, putting limits on new development in risky areas and installing neighbourhood-scale resilience infrastructure such as sustainable urban drainage systems.

The limits of land management

Other known broader scale methods of reducing the impact of extreme rainfall events include river restoration and tree planting. These aim to restore processes that have been affected by human activities such as farming, land management and house-building.

However, more research shows that although such measures can play a valuable role in flood prevention, a lack of monitoring means their true potential remains unclear.

Experts led by Dr Simon Dadson of the University of Oxford compiled evidence on natural flood management, published this week in the Proceedings of the Royal Society.

It shows that measures to restore natural floodplains by “making room for the river” – for example by removing flood walls and other obstacles – do indeed reduce flood water levels.

But Dr Dadson cautions: “One of the main problems decision-makers face is that differences between catchments make it difficult to transfer evidence from one location to the other – and we don’t yet know whether the effects in small catchments can be extrapolated to larger ones”.

He adds: “What we’ve found is that when it comes to natural flood management, there are some interventions for which there is very strong evidence, but these tend to be in small-scale river catchments.”

For measures such as tree planting that aim to change the way rainfall runs off the land, the evidence of the impact on flooding is mixed.

“Natural flood management can help if implemented well in carefully chosen locations, and it can bring important benefits to landscapes and wildlife, but it’s not a silver bullet for the problem of flooding,” Dadson says.

He recommends that policymakers establish more systematic large-scale surveys and monitoring programs, and feed natural flood management into planning at the catchment scale.

With governments therefore lagging behind in their response to the increasing rate of risk rise to property from flooding, perhaps the best advice occupants can take is simply: move to a less risky location.

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

Thursday, April 13, 2017

Trump, Putin and a new "axis of fossil fuels"

When Trump and Putin finally meet, we could well see the emergence of a new axis of resurgence for the fossil fuel industry.

A spokesman for Russian President Vladimir Putin said a week last Friday that the Russian leader is keen to meet with US President Trump. That now seems an age ago, since Trump's U-turn on Syria.

It seemed likely then that the meeting would be soon. But when they do finally meet, as they must, even if they don't have policy on Syria and the Ukraine in common, there's something else on which they do share much: a love of coal, gas and oil.

A pre-sarin-attack-in-Syria version of this article appeared on April 6 on The Fifth Estate.

Both Trump and Putin support this industry – and the mining industry in general – and deprecate climate change and the Paris Agreement.

People close to the powerful Russian oil community say that both countries see energy cooperation as one of the few common grounds to move the strained relations forward.

Putin and Trump have much in common on the topic of energy. As InsideClimate has pointed out last year:

Russia is the fifth-largest emitter of greenhouse gases in the world. Yet the plan it submitted under the Paris agreement to reduce its greenhouse gas emissions by 2020 is one of the weakest of any government and actually permits Russia to increase carbon pollution over time. The Paris Agreement went into effect last November, but Russia is the only major emitter that has not ratified it. Instead, it has laid out a timetable that would delay ratification for almost three years.

Trump’s climate-sceptic appointee to head the Environmental Protection Agency, Scott Pruitt, has not confirmed whether the United States will remain in the global climate change pact.

Artic exploration

The meeting looks likely to happen in Finland once it assumes chair of the Arctic Council. This is significant because the Council is a forum for discussing access to the mineral rights of the sea-bed within the circle.

Due to climate change (which Trump does not believe in) and melting of the Arctic sea-ice, more energy resources and waterways are now becoming accessible.

Both leaders want access to the vast reserves of oil and gas known to exist there. Their desire is vigorously opposed by environmentalists. Putin’s government famously imprisoned Greenpeace activists in 2013 for protesting about Russian oil exploration in the Arctic.

Igor Yusufov, Tillerson and Russia

Igor Yusufov, Russian energy minister (2001-2004) who presided over the privatisation of the industry is now, oddly, head of US$3 billion energy investment Fund Energy. This fund does deals in oil and gas projects with the likes of US oil service multinational Halliburton.

Yusufov has issued a statement supporting greater cooperation between the two superpowers. He believes that Russia and the USA will discuss the development of coal production and corresponding technologies. Russia is in possession of the world’s second largest coal reserves.

Yusufov has known Trump’s Secretary of State Rex Tillerson, formerly head of ExxonMobil, since 2002. He is enthusiastic about Tillerson’s involvement in building bridges between the two countries – and forging links on energy.

Tillerson has been involved in Russian energy projects since January 1998 when he took over ExxonMobil’s operations in Russia and the Caspian Sea region.

ExxonMobil and Gazprom did very well out of Tillerson’s involvement in Russia. Both sides will be hoping this success can be repeated.

In connection with the ongoing suspicions about Mr Trump’s connections to Russia, and the degree of support he received from Mr Putin, John McCain, a senator from Arizona, has said he is “very concerned” about Tillerson’s 2013 acceptance of Russia’s Order of Friendship from Mr Putin.

The man Tillerson will be talking to is foreign minister Sergei Lavrov, whom Yusufov speaks admiringly about and says “also possesses a profound knowledge in energy”.

Trump will be jealous of Russia’s achievements with its coal industry. Contrary to the state of affairs in the US, which he wants to reverse, in the last five years Russian coal production increased by 12.7 per cent. Yusufov attributes this to the benefits of privatisation.

Much of the increase is due to open-cast mining, which has lax environmental controls – another (non)-policy favoured by both Trump and Putin.

The end of the Paris Agreement?

Yusufov says that Russia is concerned about the likely slowdown in global demand for coal due to the Paris Agreement. But its Energy Ministry still forecasts an increase in production to 425 million tons in 2020 and to 480 m tons in 2030.

How does this square with being a signatory of the Paris Agreement? It doesn’t. Russia says one thing and does another. This is its form of Orwellian “doublethink”.

An example is Yusufov’s statement: “We see [the Paris Agreement] as a cornerstone of the future environmentally conscious world. At the same time we clearly understand, that at this stage the Russian economy would not survive without hydrocarbons our companies explore and produce.”

At least Russia is honest about wanting to have its climate cake and eat it.

As with the West’s misplaced faith in carbon capture to achieve this dual end, Putin believes in nanotubes. He mentioned them in Paris prior to the climate change conference. He said that these Russian-made fibres, one billionth of a metre in diameter, will “cut Russian CO2 emissions by 160-180 million tons”.

Russia currently emits 2322 Mt CO2 a year, or 5.4 per cent of global emissions.

In the US last week, Trump signed an order – which would need to be passed by Congress – rolling back former President Barack Obama’s climate change policies, including the Clean Power Plan to slash carbon emissions from power plants.

This would damage the United States’ ability to meet its Paris commitments.

Only the U.S. Congress stands between this emerging alliance and the goals of the Paris Agreement.

The world will be watching this summit more closely than it has watched any summit in the last few years.

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

Tuesday, April 04, 2017

Why does the UK have lower energy bills but rising fuel poverty?

Note: A version of this piece first appeared last week on The Fifth Estate.
Average fuel bills have fallen and investing in energy efficiency does not need to push up energy bills according to new research from the UK’s Committee on Climate Change (CCC). Yet a recent debate in the Houses of Parliament on fuel poverty shows that ministers still lack the necessary political will to tackle its scale and are complacent about the effect of their efforts.

The UK ranks 14 out of 16 western European countries for fuel poverty, and ranks bottom for the proportion of people who cannot afford to adequately heat their home.

Yet household energy bills have fallen since the Climate Change Act was passed – despite fears expressed at the time that measures to tackle climate change would push bills up.

So why has fuel poverty slowly been creeping up? The fuel poverty gap, which is a measure of the difference between a household’s energy bill and what it can afford to pay, increased from £235 in 2003 to £371 in 2014, according to Rebecca Long-Bailey the Labour Party Shadow Secretary of State for Business, Energy and Industrial Strategy.

Real wages have fallen over the last decade since the banking crisis and the austerity politics era begin. That's part of the picture. But there is more.

Compared to Sweden. Britain’s winters are mild yet due to good insulation of homes levels of fuel poverty in Sweden are about half those of the UK. A typical Swedish wall is three times more energy efficient. So what is going on in the UK?

Why have fuel bills fallen?

Graph: Changes in annual energy bills from 2004 to 2008 and from then to 2016.
“Changes in annual energy bills from 2004 to 2008 and from then to 2016.” Source: CCC analysis. Estimates are for the average dual-fuel household with gas heating. 2016 estimates are based on consumption of 3,550 kWh for electricity and 13,500 kWh for gas. Note: 2004 is the first year for which comparable data is available to allow comparison over time.

Fuel bills in Britain have fallen not because of energy prices falling or homes being better insulated but because more energy efficient goods are on the market. This is in line with patterns found in Australian energy consumption.

Although the cost of measures to deliver a cleaner, low-carbon electricity system have added around £9 a month to the typical UK household energy bill in 2016, this was more than offset by a cut of over £20 per month due to reduced energy demand mainly from more efficient lights and appliances (according to the CCC’s fourth independent assessment of the impact of carbon budgets on energy bills).

This assessment finds that typical households which use gas for heating/hot water and electricity for everything else, paid (in real terms) £115 less per year for energy in 2016 than they did in 2008 when the Climate Change Act was passed. The total annual bill includes just over £100 to pay for decarbonisation measures.

Improvements in energy efficiency have saved the typical household around £290 a year since 2008.

This is largely due, as Green MP Caroline Lucas pointed out in the Parliamentary debate, not to the refurbishment of homes but to a European Union directive – the Ecodesign Directive – which, she said, is projected to produce average annual savings of £153 by 2020 – 20 per cent of the average annual energy bill.

This has been so successful that it has led to the virtual phasing out of all inefficient goods, including household appliances, boilers and windows, below the A rating since the energy rating label for goods was introduced 20 years ago.

It has encouraged the development of ever more energy efficient products. Consumer surveys show that about 85 per cent of European citizens look at energy efficiency labels when they purchase products.

The European Commission last week therefore decided to replace the current confusing A+++ to G labels for products by a clear and easier to use A to G labels to make energy labels more understandable.

Once this is approved by the European Parliament and the Council, product registration and public databases will be provided to make it easier for people to compare the energy efficiency of household appliances.

Fuel poverty and policy

But still fuel poverty is rising.

A household is said to be living in fuel poverty if its income is below the poverty line and it has higher-than-typical energy costs.

On 21 March, British MPs debated fuel poverty. The minister responsible for energy reminded everyone that in 2014 the Government adopted a target for England for improving the homes of all fuel-poor households to a band C energy efficiency rating by 2030. Along the way they are to be improved to a band E rating by 2020 and to a band D rating by 2025.

Only 7 per cent of fuel-poor households currently live in a band C rated property – most in much worse homes. Improving E, F or G-rated homes to band D can reduce energy costs by an average of £400 a year.

This is a lot more than the money saved by switching appliances to the most efficient, however much that helps. Besides, the poorest people cannot afford to buy new appliances.

A revised Act of Parliament that obliges energy companies to refurbish customers’ homes is about to see 500,000 homes improved over the coming 18 months. This is an extension of the Electricity and Gas (Energy Company Obligation) (Amendment) Order, which will prolong the Energy Company Obligation scheme from 1 April 2017 to 30 September 2018. It is well overdue and its tardiness has created uncertainty in the industry.

Seventy per cent of the support available under the Act will be directed at low-income homes. However there is currently no clear indication of what will happen to the obligation after 2018.

New private rented sector regulations will target the least efficient F and G-rated properties from 2018 by requiring landlords to improve those properties to at least a band E.

But is this enough?

The failure of policy

There has been an 88 per cent fall in the number of measures taken to retrofit homes since 2010 as a result of government policies, according to Long-Bailey.

Policies to date have failed to support the development of a large-scale sustainable market for energy efficiency investments.

The Association for the Conservation of Energy believes this is “because there has been a lack of a stable and long-term framework within which the energy efficiency supply chain can develop its market. Energy efficiency policies have proved susceptible to decisions driven by short-term political priorities”.

The Committee on Climate Change estimates that 4.5 million cavity walls remain un-insulated, 10 million easy-to-treat lofts could benefit from additional insulation and seven million solid walls are still without any insulation.

The case for further government intervention is clear, but the political will to spend money on this area is lacking.

The economic benefits of insulating homes

It’s not just about bills. It’s about human health and winter deaths, of which 8000 were said to occur last winter due to fuel poverty. But if that fails to persuade MPs to take action there are financial arguments too.

Analysis by consultants Frontier Economics suggests that the net present value of investing in insulating homes could be as valuable as the High Speed 2 rail link being backed by the government. It sees this type of investment as an infrastructure priority.

Opposition parties Labour and the Greens, Plaid Cymru and the Scottish Nationalists are united with the NEA that the National Infrastructure Commission and the UK Government must act on the strong case for domestic energy efficiency to be regarded as a hugely important infrastructure priority.

A further report by Cambridge Econometrics found that for each pound spent on insulating homes £1.12 is generated for the Treasury and £3 for the economy in GDP, and 42 pence is saved by the NHS.

The future effect of climate change targets on electricity bills

If it will not cost – but benefit – the taxpayer, will it cost the bill payer?

Graph: Central estimates for changes in annual household energy bill from 2016 to 2030.
“Central estimates for changes in annual household energy bill from 2016 to 2030.” Source: CCC analysis. Estimates are for the average dual-fuel household with gas heating.
The CCC calculates that the gradual shift towards low-carbon electricity could add a further £85-120 a year to a typical bill by 2030 if further policies to meet UK climate objectives are put in place, but that further improvements in energy efficiency have the potential to deliver even more savings for households in future (around £150, or more if wholesale costs continue to rise). That’s a net benefit to consumers of at least £30.

It points out that, “There is also a range of opportunities for business arising from the transition to a low-carbon economy. The UK low-carbon economy already makes up 2-3 per cent of GDP and employs hundreds of thousands of people.”

Jesse Norman, the Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy), concluding the debate on fuel poverty for the Government, called their target to reduce fuel poverty “ambitious”.

But seen in this context it does not appear nearly as ambitious as it could be.

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

Wednesday, March 29, 2017

Post-occupancy study reveals how to really cut energy use in offices

One of the buildings studied in the research.
 Note: A version of this article appeared in The Fifth Estate on 21 March.

A new comparative study on the energy performance of existing office buildings has thrown light on the impact of tenant behaviour and the value of comfort.

Energy efficient buildings will only perform as intended with close collaboration between project teams, property managers and technical staff, a new study commissioned by Skanska, Go4Energy and Cushman & Wakefield has found.

The study analysed 20 office buildings in Poland, 16 of which hold LEED or BREEAM certification – meaning they are intended to be highly energy efficient.

By separating the energy consumption of tenants from the building’s total energy consumption, the research highlights the importance of tenant behaviour on performance.

Go4Energy analysed the energy use of the buildings and found that “the share of electrical energy consumed by tenants in the building’s overall energy balance ranged from 14 per cent to 65 per cent”.

The tenants have a significant impact on the energy consumption of the building and the electricity it consumes, dependent upon what type of tenant they are and the technological processes they use, which is why the share of electricity consumed by tenants varies so much.

The study is intended to make it easier to develop better, more targeted energy management systems for buildings in order to realise further improvements.

Waldemar Olbryk, director for support functions at Skanska, said the report was “a comparative analysis” between their buildings and other office buildings in Poland, and that no such study had been done previously.

“We looked at them in terms of their features, age and environmental specification,” he said.

Suisse Credit building, Poland
One of the buildings studied in Poland.

The investor must care

The study found that the influence of the investor was a decisive factor in the designed energy performance of the building.

By supporting certification systems, the investor can achieve more than 30 per cent energy savings during the operational phase, meaning that the operating cost is reduced by up to £500,000 a year for the new office building studied in the report.

Certified buildings have a higher potential for energy savings due to the implementation of energy efficiency processes from the beginning, the report said.

But once completed and in use any further savings can only be made by the implementation of proper management processes.

The European perspective

European policymakers have identified the renovation of Europe’s inefficient building stock as a way to boost energy efficiency, as well as the economy. More than 75 per cent of European building stock is inefficient and the annual renovation rate across the EU is languishing at just one per cent.

The EU is currently revising its Energy Efficiency Directive, in order to put measures into law that will help it meet its UN commitments to cap global warming.

The European Commission’s bill is being amended by both the Council of Ministers and the European Parliament. Both members of the European Parliament and national diplomats must agree on an identical text before it becomes law. At the present moment Malta holds the six-month rotating presidency of the EU, and this is one of its priorities.

But leaked documents reveal that although member states will accept the executive’s proposed 30 per cent increase in energy efficiency compared to 1990 levels, they want them to be non-binding rather than compulsory.

Previously, in October 2014, EU leaders watered down the 2030 energy efficiency target to 27 per cent from a 30 per cent binding goal. Now, the Commission, which has vowed to put “efficiency first” in its energy policy, is arguing that the Paris Agreement justifies returning the draft target to 30 per cent.

Meanwhile, the European Parliament has backed resolutions demanding a 40 per cent binding efficiency target and is likely to call for greater ambition in the bill.

One of the results of the Polish study is a proposal to create a mechanism enabling the analysis of buildings according to the study’s methodology, which could help the wider European agenda.

There is a proposal to coordinate this project with the National Association for Sustainable Building Construction, which could bring huge savings across Europe, where the construction industry accounts for nine per cent European GDP and employees 18 million people.

Efficient buildings are evolving

The progressive areas of the industry are moving beyond where the EU leaders are debating, however.

Currently, the selling point for office buildings is around “performance based” comfort. This means the comfort level available for the user forms the basis of monitoring and verification by the management systems. The user’s working conditions, including ventilation, HVAC, lighting and so on are automatically adjusted and controlled.

With such buildings the most important goal is no longer to bring the greatest savings for the building owner but to provide a balance between the economics and the comfort and health of workers in the buildings.

Due to this trend, the definition of comfort is constantly expanding, in contrast to the traditional idea that there is only one factor (energy) that needs to be managed at the expense of others (for example, environmental quality of the internal atmosphere).

This is a valuable study that deserves translation into English (currently it is Polish only) and wider dissemination.

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

Monday, March 20, 2017

How to reduce embodied emissions in the building supply chain

New guidance has been issued to help clients and the built environment know how and when to begin requesting embodied carbon measurements.

Julie Hirigoyen, chief executive of the UK Green Building Council
Julie Hirigoyen, chief executive of the UK Green Building Council.

 The built environment sector places a strong focus on reducing operational carbon emissions in buildings, however embodied emissions often fall by the wayside, despite often accounting for a large proportion of overall emission. New guidance from the UK Green Building Council seeks to fix this by helping clients of built environment projects to commission embodied carbon measurements.

There is already much guidance on measuring the embodied carbon of buildings, but the unique feature of this new guidance is its focus on the contractual demands clients can place on their supply chains.

It begins by outlining the basics of embodied carbon and goes on to give an overview of possible approaches with examples of clauses that could be included in supply chain contracts and practical tips on how to use the outcomes of the resulting assessments.

Launching the guidance at Ecobuild, the UK’s annual exhibition and festival of ecological building, Julie Hirigoyen, chief executive of the UK Green Building Council, said: “We want to see the built environment fully decarbonised and this has to include both embodied and operational carbon. So we continue to advocate for embodied carbon to become a mainstream issue in building design, construction and maintenance.

“As such, we are encouraging our client members and other clients in the industry to create their own embodied carbon briefs by making effective use of this guidance.

“Also, we are working with cities and other local and national authorities to encourage the assessment of embodied carbon within the public sector planning and procurement process.”

David Picton, from multinational facilities management and construction services company Carillion, is one of the supporters of and contributors to the guidance.

“Measuring, tackling and reducing embodied carbon is the hidden prize in shaping a better built environment,” he said.

“We are hoping that this guidance will drive clients, designers, contractors and suppliers to work side by side to develop and maintain infrastructure with the lowest possible carbon content.”

The document will be useful for any financial investors whether in the building of new structures, or the refurbishment of existing ones, and can apply to any type of built structure.

It is not a methodology or standard for the measuring of embodied carbon. Instead it sets out a framework within which such measurements can be gathered and acted upon.

Why do it?

Globally, buildings account for 32 per cent of energy use and 30 per cent of energy-based greenhouse gas emissions. To contribute to the goal of limiting global temperature increase to 2°C the sector must reduce its emissions by a total of 84 gigatonnes of carbon dioxide by 2050.

Since the Paris Agreement 91 countries have included some kind of commitment relating to buildings in their Intended Nationally Determined Contributions – their declarations of their commitments to meeting the terms of the Agreement.

There is a strong economic case for considering embodied carbon. For example, buildings have a relatively low cost when compared to many operational carbon saving solutions.

Action to reduce embodied carbon in the building process encourages more efficient “lean build” and resource efficiency, thereby lowering costs. It also unlocks innovation and can be a helpful way for clients to compare the pros and cons of assets. It also achieves credits in some building assessment sustainability rating schemes.

Chart showing the relative embodied and operational carbon of present and projected future buildings.
Chart showing the relative embodied and operational carbon of present and projected future buildings.

What is it?

A structure’s embodied carbon is the total greenhouse gas emissions associated with its production.

International standards have been developed to help companies manage their carbon footprints, such as PAS 2080:2016 Carbon management in infrastructure.

The embodied carbon impact of building assets is more significant than has been previously thought. Recent research has uncovered that over a 30 year period these emissions typically account for over 50 per cent of the total carbon emitted for some kinds of buildings.

Charts showing the relative carbon costs of different building types.
Charts showing the relative carbon costs of different building types.

Julie Hirigoyen says that as buildings themselves become better insulated and more airtight, thereby reducing the carbon emissions associated with their use, the proportion of the total carbon emissions that are associated with the production of the elements increases.

It is important to remember that all assessments of embodied carbon are only estimates unless they are based on data specifically relating to the constituent parts as used up to the point of the handover of the building to the client.

They are only as certain as the quality of the data available at the time of assessment, and may be based on standardised assumptions about the life cycle of assets, such as maintenance regimes.

It’s also important to decide when the measurements are to start, what the boundaries are, and whether you are comparing like with like.

When should the process start?

Chart showing the process of producing a 'carbon brief'.
Chart showing the process of producing a 'carbon brief'.

Achieving embodied carbon emissions reduction has the greatest impact if considered at the early stages of the construction project when the design and choices of materials can be influenced.

The two major wins for improvement arise from retaining and re-using elements of an asset – in other words minimising the introduction of new carbon emissions associated with production.

Chart showing the opportunities to achieve embodied carbon emissions reduction at different stages of a construction project.
Chart showing the opportunities to achieve embodied carbon emissions reduction at different stages of a construction project. More opportunities for reductions exist earlier in the construction process.
Chart showing how the ability to influence the whole life carbon cost of a building reduces over the building's life in contrast to the accuracy of assessments of that total carbon cost, which improves.
Chart showing how the ability to influence the whole life carbon cost of a building reduces over the building's life in contrast to the accuracy of assessments of that total carbon cost, which improves.

Conceptual diagram showing the different options to influence carbon reduction (and how much you might save) at the successive stages of infrastructure delivery.
Conceptual diagram showing the different options to influence carbon reduction (and how much you might save) at the successive stages of infrastructure delivery.
Since elements such as the sub-structure or super-structure and assemblies like walls are the aspects of a design that typically have the highest material volumes and masses, significant gains can be made by reducing these.

For example is possible to examine and improve the proposed mixes of concrete to incorporate higher levels of cement replacement or recycled aggregate.

The guidance lists various datasets and tools that could be used as well as targets that might be adopted, and goes on to describe how the assessments could be benchmarked.

British Land, which is one of the largest property development and investment companies in the UK, is already adopting the above approach. It expects embodied carbon emissions to be measured and reduced for all developments it undertakes costing over £50 million (AU$80.7m).

The company has an aim to reduce the measured emissions from product stage and construction of “landlord” elements by 15 per cent. Each review that it conducts has a champion, usually the structural engineer, and he or she will conduct the review with reference to British Standard EN 15978.

This divides the product stage into three elements – raw material supply, transportation and manufacturing process. The reduction in carbon emissions must be demonstrated through clear assessment and detailing.

Civil engineering company Walsh Construction has also been adopting this approach. It has found that involving clients in reducing embodied emissions from their projects helps carbon savings to “rise considerably”.

“Walsh have shown that it is possible to achieve over 60 per cent savings,” Walsh director Peyrouz Modarres said at Ecobuild.

“Such significant savings of embodied carbon clearly demonstrate the importance of close client engagement as a vital contribution to reducing embodied carbon.”

David Thorpe is the author of a number of books on energy, buildings and sustainability:

Visit his website here.

Tuesday, March 14, 2017

A common language for energy efficiency could encourage investment

 This article originally appeared on The Fifth Estate on 7 March.

A US-European initiative has been launched to standardise data on energy efficiency in buildings so that investors, building owners and developers can amalgamate, share and analyse data in a common format. What’s more, its adoption is being made easy and free.

The purpose of developing a common language is ultimately to create a marketable financial product that enables investors and building portfolio owners to compare the relative benefits of investing in energy efficiency projects in different buildings or portfolios of buildings.

The “Building Button” Specification is an initiative of the Investor Confidence Project (ICP), and applies to commercial and multifamily occupancy buildings. It is applicable in three contexts: technical due diligence, financial underwriting and actuarial data.

The specification will allow any organisation to share project data across platforms to reduce underwriting costs, build confidence in energy savings and ultimately drive greater market demand for energy efficiency.

The specification is for a standard XML dataset, and is based upon the US Department of Energy’s Lawrence Berkeley National Laboratory’s (LBNL) Building Energy Data Exchange Specification (BEDES) for a building energy efficiency retrofit.

It also fits into the full range of existing ICP protocols to facilitate data collection for ICP investor ready projects. A project overview spreadsheet containing 388 rows can be seen here, colour-coded according to which context the data is relevant.

Typically data necessary for actuarial underwriting and to conduct technical due diligence for investment in energy efficiency projects is locked away in PDFs, spreadsheets and proprietary tools.

Standardising this data helps to give investors and building owners increased confidence in energy savings because they are based on the experience derived from empirical, project-level data from many previous projects.

?Institutional investors, rating agencies and markets for secondary transactions also demand volumes of normalised data in order to have confidence that the industry can deliver results prior to making large capital investments.

Involved in developing the Building Button Specification were project developers, technology providers, investors, insurers, program administrators and other market actors.

They were able to point out and evaluate what type of data, and their formats, they themselves used and felt were helpful when they examine the cost effectiveness of an energy efficiency project.

ICP sees this as the first step towards the reality of standardised industry-wide “big data” for the energy efficiency industry and is calling on all those interested in energy efficiency data to participate in further development of this opportunity through upcoming webinars, technical forums and more.

The BEDES team has allocated engineering resources to make adoption of Building Button easy and cost free for anyone who collects or distributes building energy performance data by offering to map their existing data sets into Building Button / BEDES-compliant formats.

You can sign up here.

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

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.