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Meeting our COP26 ambitions

Chris Jofeh asks how Welsh housing can help tackle climate change.

COP26 is a reminder, if we needed one, that climate change is with us and the urgency to tackle it grows every day. Goal number 1 of COP26 is to ‘secure global net zero by mid-century and keep 1.5 degrees within reach’.

The UK has committed to net zero by 2050. What does that mean? It means that, by 2050, the UK’s greenhouse gas emissions will be eliminated as far as possible, with any residual emissions absorbed, probably by increased forestation.

To reduce our emissions substantially we need to do two things. The first is to reduce our consumption of energy, probably by at least 50 per cent; the second is to decarbonise our energy supply, which means moving away from gas to low carbon electricity. The UK has already made good progress in decarbonising its electricity supply, and it is expected that further progress will be made.

We have to reduce our energy consumption substantially to have any chance of producing enough low carbon electricity to meet our needs. A cut of around 50 per cent in energy consumption appears necessary.

What role do homes play?

Homes in the UK are responsible for over 20 per cent of all the UK’s greenhouse gas emissions. It is therefore essential that we act to reduce emissions from our homes. Space heating and water heating as responsible for the majority of energy consumed in most homes, and most heat comes from burning fossil fuels such as gas, which emits greenhouse gases.

What are we doing in Wales?

In Wales, the Optimised Retrofit Programme (ORP) is a large field trial, co-funded by Welsh Government and more than half the social landlords in Wales, in which over 2,000 socially-owned homes are being set on their journey to net zero. Welsh Government has just announced that it is increasing this year’s funding from £20 million to £35 million, which will enable even more homes to be involved and even more measures to be installed.

The Active Building Centre (ABC) in Swansea is responsible for the capture, storage and evaluation of data about not just the technical outcomes of ORP but also the social and economic outcomes of the programme. The ABC’s consistent structured approach to data capture and evaluation are ahead of everywhere else in the UK, and the insights and learnings that will flow will be of immense value to Welsh Government and to everyone else engaged in residential decarbonisation.

Welsh Government has recently announced a further £35 million for the next phase of ORP, in which social landlords will be upgrading not only their own homes but also homes belonging to private landlords. Work will also be undertaken to prepare the ground for owner-occupiers.

As well as creating knowledge that can be acted on, ORP is starting to create supply chains that can deliver retrofit at the scale that Wales will need.

The benefits that residential decarbonisation will bring to Wales will be widespread and profound. Before lockdown, Welsh Government commissioned the Centre for Sustainable Energy (SCE) to prepare a report on the value case for decarbonising homes in Wales. The SCE’s report examined evidence on the benefits from decarbonising homes relevant to the goals of the Wellbeing Act. The report found good evidence that decarbonising homes would contribute to achieving five of the seven goals. The five are a prosperous Wales, a resilient Wales, a more equal Wales, a healthier Wales and a globally responsible Wales. For the other two goals the evidence was mixed or weak. Five out of seven is not bad, and it is hard to think of any other single policy that has the potential to deliver on so many Wellbeing goals.

We get a similar answer if we consider the UN sustainable development goals: it’s clear that residential decarbonisation ticks a lot of boxes.

A recent report, by the New Economics Foundation for the Office of the Future Generations Commissioner, estimates that a Welsh housing decarbonisation programme would create over £19 billion in additional GDP, £3.5 billion of net tax benefit and 26,500 new jobs in Wales by 2030. The report also says that the programme would save £8.3 billion in energy bills and create £4.4 billion in health and environmental benefits by 2040, helping to put more money back into local economies across Wales and reducing the strain on health and social care services, particularly during the winter.

Are Energy Performance Certificates still fit for purpose?

How do we know how energy efficient our homes are? Energy Performance Certificates (EPCs) give a property an energy efficiency rating from A (most efficient) to G (least efficient) and are the UK Government’s preferred policy instrument to drive improvements to the energy efficiency of buildings, both residential and non-residential. They provide information about a property’s energy use and typical energy costs and they make recommendations about how to reduce energy use and save money.

The Better Homes, Better Wales, Better World report[1] recommended that every existing home in Wales achieves EPC A, or as close to it as it can reasonably get. This is echoed in the recently issued Welsh Development Quality Requirements 2021 (WDQR21)[2], which came into force on October 1. It requires new social homes to achieve EPC A and not use fossil fuel fired boilers to provide domestic hot water and space heating.

WDQR21’s directive on fossil fuel fired boilers is a strong pointer that EPCs are no longer doing the job we need them to do. The reason they do not do the job we need them to do is simple – our goal is to reduce greenhouse gas emissions but EPCs are about energy use, not greenhouse house gas emissions.

The inescapable conclusion is that we need to set a new target for our homes, one that accounts for greenhouse gas emissions. We also need to be able to predict and to measure a home’s emissions. That’s not easy, because not only is the electricity grid decarbonising over time, but the carbon intensity of electricity varies from place to place and over the course of a day and night.

Figure 3 shows how electricity generated just after midnight is responsible for much lower carbon emissions than electricity generated just after midday.

Welsh Government has asked the independent advisory group that I chair to make recommendations for a better target than EPC A. The challenges we face are:

  1. a) to set a target or targets that can be achieved and will make a substantial difference
  2. b) to demonstrate how performance against such targets can be modelled (predicted) for individual homes, for the housing stock as a whole and possibly for groups of homes, for example all the homes owned by a housing association, or all the homes within a local authority
  3. c) to demonstrate how the performance of homes and the carbon intensity of the electricity grid can be monitored so that we know how homes are performing, individually and in aggregate.

The performance of homes in aggregate is an important consideration, because not every home will be able to achieve the highest standard, for a variety of reasons. What we need is every home to reach its potential, and for the total emissions from the existing Welsh stock to be cut drastically.

In another context, Matt Golden, CEO of US company Open Energy Efficiency and senior energy finance consultant to the Investor Confidence Project, argued[3] that we need to move towards markets that measure and value energy efficiency as a tradable resource:

‘In order to achieve the potential of energy efficiency, we must transition from the limitations of today’s top-down programs to a system that can animate markets, encourage innovation, and attract private capital. The solution for energy efficiency is not the pursuit of perfection on individual projects but manageable risk at the portfolio level to enable investment-grade energy efficiency.’

Matt was talking about finance, but the second paragraph applies equally well to greenhouse gas emissions: we need to tackle them in a way that achieves our overall goal of substantially reducing the total emissions of the entire housing stock.

Chris Jofeh is chair of Welsh Government’s independent advisory group on the decarbonisation of homes in Wales

[1] gov.wales/sites/default/files/publications/2019-07/independent-review-on-decarbonising-welsh-homes-report.pdf

[2] gov.wales/development-quality-requirements-housing-associations-and-local-authorities-2021

[3] www.greentechmedia.com/articles/read/moving-efficiency-into-project-finance-by-paying-for-metered-performance

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