Building back better: What role should construction and retrofit sectors play in the UK's green recovery?
EXCLUSIVE: The Treasury this month launched a £3bn package to improve the energy efficiency of existing buildings while boosting employment post-pandemic. But what needs to happen now to ensure that the schemes it funds align with net-zero, and what about new buildings?
When Chancellor Rishi Sunak provided his Summer Economic Update earlier this month, the tabloids were quick to cover his half-price ‘meal deals’. But the Treasury’s £3bn package for improving the energy efficiency of the nation’s building stock will have a longer-lasting impact than £10 off at Nando’s next month.
Of the funding, £1bn will be spent on public sector buildings and social housing. The remaining £2bn will create a ‘Green Homes Grant’ for homeowners who do not live in social housing, covering
Given that the UK’s built environment sector accounts for 40% of national annual energy use and around one-third of emissions – with housing proving a notorious blocker to progress – the funding was broadly welcomed across the green economy. Economists were pleased, too, given that government investments in energy efficiency have proven more effective at creating jobs than funding for either fossil fuels or renewable power generation.
Nonetheless, the Conservative Party had promised £9.2bn for energy efficiency in its Manifesto, leaving many asking when and where the remaining £6.2bn would be spent. Moreover, details as to whether the schemes funded by the package will be fully aligned with the UK’s net-zero target remain to be seen – and there’s the small matter of the 300,000 homes the Government is hoping to build annually.
With this in mind, edie spoke exclusively to UK Research and Innovation’s (UKRI) deputy challenge director for transforming construction, Mike Pitts, to garner his insight as to what must now happen to ensure a truly green and resilient Covid-19 recovery for the built environment.
Seizing the challenge
Since 2017, UKRI has funnelled £170m of central government funding into projects which aim to modernise the construction sector, to the point that buildings can be delivered 50% faster and with half the average lifetime emissions. Meeting these milestones would also increase productivity by 15%, UKRI claims, bringing the construction sector’s productivity in line with that of the automotive industry.
While the funding, allocated through the Transforming Construction Challenge, has gone ways to demonstrate the potential benefits and commercial viability of smart building technologies, low-carbon and recycled building materials and modular buildings, only a select few developments have met all of the above percentage targets – and even fewer at cost parity with ‘traditional’ structures.
With the UK’s building stock accounting for around one-third of national emissions and energy demand on an annual basis - and the net-zero target and need to get more than 650,000 people back to work looming - Pitts believes that policymakers must now scale up innovative processes provide additional support for the retrofit sector.
“Most of the technology already exists and has been there for some time – a lot of this is about building the ecosystem,” he explains.
“We’re not necessarily funding a lot of technological innovation – process innovation is a large part of it… there are some big wins to be had right now.”
One of the main process innovations UKRI is backing is the shift to a platform-based approach, whereby the same digital platform is used for all components (windows, doors, and so on) and for all parts of the building life-cycle, from design to deconstruction.
Such an approach, Pitts explains, would help standardise public sector buildings like schools, prisons and hospitals, bringing down the cost of planning and development and “preventing every project from being a prototype”. This, in turn, would help constructors to optimise designs for energy efficiency more rapidly – which is necessary given that 2050 is within the life-cycle of most buildings being erected today. Moreover, if all public buildings were standardised now, Pitts argues, they would be cheaper to retrofit in the future if necessary.
Supply chain changes and social sustainability
UKRI is also advocating for better integration in construction supply chains – a call to action many sectors are facing in the wake of Covid-19.
In the context of the pandemic and the climate crisis, shorter, more localised or simply better-integrated supply chains are touted as a way to minimise transport-related emissions, increase transparency and safeguard against physical, transition and reputational risk in the future. For the construction sector specifically, a supply chain rethink could help prevent the energy “leaks” which occur when different suppliers make doors and doorframes, windows and window frames, without collaborating, Pitts says.
The good news is that, in a recent survey of 500 UK-based decision-makers whereby the built environment sector was represented, one-quarter of respondents said their organisation is planning to make major changes to their supply chain in the name of sustainability in the next 12 months. CDP has also charted a 24% year-on-year increase in companies calling on their suppliers to disclose more environmental information.
Moreover, many big construction firms have either set or expanded on net-zero targets covering Scope 3 (indirect) emissions in recent months, including M&G Real Estate and Barratt Developments. One of the latest announcements in this area comes from Derwent London, which, after bringing its net-zero target forward to 2030 in February, published a roadmap for meeting the goal this week.
Aside from the logistical challenges of changing supply chains and processes, then, what is stopping construction firms from innovating systems and processes – especially given their ability to rapidly adopt innovative materials and technologies for single projects in the past?
For Pitts, the answer is twofold – a lack of holistic policy support and a “baked-in” culture, in which upfront cost is given higher priority than considerations
Ministers have faced criticism on the former for years, from green campaign groups, businesses, trade bodies and its own climate change advisors. It is hoped that the Buildings Strategy and Heat Strategy, both due in Autumn after a string of delays, will go some way to addressing the challenge – particularly after Downing Street unveiled a £36m boost for process and material-related innovations for constructors. UKRI is advising the inclusion of new standardisation mandates for public-sector buildings and measures to ensure that the Future Homes Standard results in an improvement on existing standards nationally.
On the cultural piece, UKRI, through its Construction Innovation Hub, recently launched a ‘Value Toolkit’ – a framework which will help the sector factor the “true cost” of projects, materials and approaches into decision-making processes. The toolkit uses the ‘five capitals’ model, helping users measure not only the manufactured and financial costs and benefits of a project, as they usually do, but also the value of its impacts on humanity, society and the environment.
Pitts explains that the construction sector has been slower than some others (fashion and finance spring to mind) to account for the broader value of projects partly due to a lack of metrics; partly due to a failure in creating consumer demand for ‘green’ homes and offices; and mainly due to “years of baked-in thinking”.
“When you’re handling taxpayers’ money, you have to make a very strong argument around value for money,” he says, given that most process innovations are trialled on government buildings before being rolled out. “In most peoples’ heads, this still means ‘the cheapest upfront’… We want to shift that to a whole-life, whole-value approach.”
The toolkit and any future process and supply chain innovations, compounded by new biodiversity net-gain requirements, the Future Homes Standard and net-zero, will doubtless change the face of new buildings. At a time when many towns and cities are undergoing extensive redevelopment, this is key.
But, what about the UK’s existing building stock – repeatedly raised by the Committee on Climate Change as a key reason for the nation’s failure to align with its fifth carbon budget?
The £3bn pot for retrofitting, launched at the Summer Economic Statement, was broadly welcomed by the green economy and by homeowners. But are also fears that the move could create a ‘boom and bust’ for the retrofit sector, with jobs created being low-quality and short-term, and that the work funded may not be deep enough to create net-zero-compatible buildings.
To help combat the latter of these concerns, Pitts would like to see the Treasury publish more information on the project requirements of the loan and grant scheme, and for Ministers to create supporting policy frameworks that would “level the playing field” for the retrofit sector.
Aside from public building standardisation and the platform-based approach, Ministers could provide temporary VAT relief, he explains. VAT is applied to retrofit materials and project but not to new building materials at present. Ministers could also change parameters the 'Help To Buy' scheme so that only homes with an 'A' EPC rating are compatible.
“The supply chains and capability are still evolving for retrofit – it’s a part of the sector that needs to industrialise urgently,” he adds.
Pitts also believes that, while businesses are starting to give buy-in to retrofits, putting new demands on their suppliers and their contractors, policymakers and businesses have made a poor job of “selling the wider benefits” of energy-efficient homes to individuals. As such, “green” homes are still being pushed rather than pulled, with many believing that they are more expensive and that their benefit will be felt by ‘the planet’ (abstract, impersonal) rather than the inhabitant.
He summarises: “Energy-efficient, low-carbon homes tend to have healthier environments because they are ventilated properly. They enable the resident to utilise all the space, because there are no cold spots and they don’t need radiators on all the walls. They tend to be acoustically better performing with greater comfort. Most people would love to have their home performing this way, and there’s more we can do to create that demand.”