Buildings and the 5th Carbon Budget
The last 18 months have seen a lot of change in the policy landscape affecting carbon emissions from buildings in the UK. The trajectory to zero carbon new build has been ‘paused’; government support for Green Deal finance was withdrawn with no alternative mechanisms in place to encourage and enable investment by able-to-pay households; and a review of business energy efficiency taxes has led to proposals for a new tax structure but, as yet, no coherent supporting framework to encourage energy efficiency action.
In July of this year, the 5th Carbon Budget was passed into legislation, set at the level recommended by the Committee on Climate Change (CCC). The budget has been set at a total of 1,725 MtCO2e that can be emitted over the period from 2028 to 2032. In 2015, buildings accounted for one third of total UK greenhouse gas emissions. The CCC’s cost-effective abatement scenario—in which efficiency measures, low carbon heat, and heat networks are deployed—sees direct emissions from residential, public, and commercial buildings together to be 32 percent below their 1990 levels in 2030, and 24 percent below the baseline, or ‘business as usual,’ emissions for that year. Power sector emissions abatement is of course largely driven by the decarbonisation of electricity supply. However, the deployment of efficiency and heating technologies in the CCC’s scenario results in electricity savings of 62TWh in 2030 compared to the baseline (a saving of 22 percent)—an amount 30 percent greater than the electricity generated by onshore wind in that scenario and not far short of the amount generated by offshore wind. Hence, demand side action is also an important contributor to power sector emissions abatement.
The majority of the abatement gap between the Government’s projection and the CCC’s recommended pathway results from direct emissions. This is because of the dominant effect of supply decarbonisation on electricity emissions and the similarity between the CCC and Government projections for this decarbonisation. Taken together, policies as they currently stand are projected by the Department of Business, Energy & Industrial Strategy (BEIS) to achieve a 21 percent cut in direct emissions from buildings by 2030 (the midpoint of the 5th Carbon Budget period) compared to 1990, just 12 percent below the ‘business as usual’ emissions for 2030. In this scenario, emissions exceed those recommended by the CCC for the 5th Carbon Budget, in 2030, by 18 percent.
Current and currently planned policies for carbon abatement from buildings will not achieve what is needed to meet the 5th Carbon Budget. It may not be technically possible, and it is certainly not economical, to close this abatement gap in the power, transport, and industrial sectors instead. Moreover, most of the currently projected carbon abatement from buildings is very far from certain, and with every tonne of CO2 unabated, policies must subsequently work harder within a shorter space of time to meet our climate change targets. The benefits of compliance with the 5th Carbon Budget are considerable, justify significant investment from both the public and private sectors, and require a step-change in abatement policy towards buildings for this investment to happen. The most strategic opportunity at which such a step-change can be signalled is in the forthcoming Carbon Plan; the Building Renovation Strategy due next spring also presents an opportunity.
- Set the right framework conditions—the energy efficiency of, and heat supply to, our buildings are an integral part of our energy infrastructure and have a vast impact on the extent to which our energy system is low carbon, affordable, and secure. They need to be formally recognised as a national infrastructure investment priority, and abatement targets for buildings need to be set, reflecting a shared vision of what successful decarbonisation of buildings means.
- Increase credibility—much of currently projected emissions abatement from buildings is highly uncertain. Present-day policies need to be de-risked by ensuring they are implemented and complied with as intended: this means securing successful implementation of Products Policy for efficient appliances; ensuring strong compliance with the Building Regulations; and ensuring strong compliance with the Energy Performance Certificates regime.
- Increase effectiveness—some present-day policy instruments need to be reformed so that they can support higher levels of abatement: this means fostering more attractive and more widely available finance; transforming Energy Performance Certificates into the information hub of low carbon retrofit; and levelling the regulatory and investment playing field for heat networks.
- Increase timescale—there are a number of present-day policy instruments that need to be extended or renewed beyond their current expiry dates: this means extending the Renewable Heat Incentive to 2032; extending the Supplier Obligation to 2032; and continually renewing Greening Government Commitments.
- Increase ambition—the ambition and level of support provided by some policy instruments needs to be increased: this means increasing the Minimum Energy Efficiency Standard for private-rented sector buildings; expanding the remit of the Heat Networks Delivery Unit to support project planning and delivery; and the roll out of electricity demand reduction and response incentives from the current pilot.
- Introduce new policy—new policy instruments will be needed to tackle segments of the buildings sector left unaddressed by the present-day scope of policies: this means introducing Minimum Energy Efficiency Standards at point-of-sale; tightening new build standards towards zero carbon or nearly zero energy; and introducing long-term incentives for low carbon buildings retrofit.
The policy recommendations put forward here—ranging from no-brainers to ‘inconvenient but necessary’ and everything in between—are available and practicable, with many of them planned, tried, and tested in other advanced economies. The forthcoming Carbon Plan must bite the bullet—by placing at its heart a plan for proposing and consulting on a timetable for the introduction of mandatory minimum energy efficiency standards for buildings at point-of-sale – and deliver a compelling vision, and credible actions and timescales for the step-change in energy efficiency and low carbon heat in buildings that our legal commitment to the 5th Carbon Budget needs.