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Reducing emissions from UK buildings - are we on track?

Jenny Hill

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Buildings sector accounted for 37% (206 MtCO2e) of economy-wide emissions in 2013

Building emissions by sector:

Res = 65%

Commercial = 26%

Public = 10%

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Energy efficiency improvements have contributed to a 20% reduction in average energy demand per household*between 2004 and 2013 (equivalent to a £165 saving)

* Typical dual-fuel household

• Gas consumed for space heating and hot water has declined by around a third since 2004

• Electricity use has fallen by around 16% since 2004

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Large energy intensity gains since 1990 in public and commercial buildings, though levelling out since 2008

Source: DECC, Energy Consumption in the UK, 2013

1st CB

However, decreasing energy intensity ≠ energy efficiency

Need for better data - BEES results due 2015

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Building sector emissions declined by 14%* since 2007

* Temperature- adjusted basis

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Policy switch to Green Deal & ECO resulted in a sharp drop in fabric insulation rates in 2013

(m)

2013 actual insulation rates well below CCC indicator trajectory (e.g. only 6% of lofts met)

(m)

CCC recommendations to increase carbon ambition under

ECO and set private-rented sector standards. There may be

a case for additional financial incentives.

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Business - overlapping schemes spur calls for simplification…

Overlap FTSE-CRC~400 firms

Mandatory FTSE GHG reporting ~700 firms

CRC2,100

participants

ESOS~7,300

organisations

CCA2,800 firms

SMEs, not covered~2 million firms

Price instruments

Source: Bassi, S. Dechelpretre, A. and Fankhauser, S., 2013

Mandatory information / reporting instruments

Source: CCC, based on DECC Impact Assessments and ONS

EPCsand DECs

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… and levelling the playing field for businesses paying carbon costs

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Implicit carbon prices – economy-wide variation

Source: Advani, A., Bassi, S., Bowen, A., Fanhauser, S., Johnson, P., Leicester, A., Stoye, G., 2013

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Review of commercial sector policies commissioned by Green Property Alliance highlights potential for rationalisation

Main findings include:

1. Large number of policy instruments; overly complex

2. Focus on operational management - but MEPs may help redress this balance

3. Building codes and positive financial incentives tend to be more effective than price instruments or process-driven instruments (e.g. air con inspections)

Call for:

1. Rationalisation, using bundling approach (assessment, labelling, a target/trajectory, minimum standards, sanctions)

2. Stronger incentives / penalties, and more effective enforcement

3. Better arrangements for measuring and monitoring impact; advisory stakeholder group on generating existing / future legislation

Report prepared by Deloitte for consortium of government and real estate bodies (incl. BPF, RICS, Association of British Insurers). Consulted >300 stakeholders

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Non-domestic policy framework is overly complex and should be redesigned to provide one instrument for each of information provision, financial incentives and regulation

Policy framework should provide clear standardized information; and have a strong clear financial incentive in place which minimises distortions (e.g. on electricity consumption)

– Information is key. In principle there is only need for one strong and clear source for information, rather than several weak information sources. This could take the form of enhanced energy audits with an option to make use of DECs.

– The lack of progress to date suggests that financial incentives should not be weakened. Carbon prices should be uniform and consistent - “the carbon price aspect of the CRC should be abolished, and the CCL increased, unless there is compelling evidence that this would weaken incentives”.

Minimum standards are needed for driving energy efficiency, due to the landlord-tenant split (affecting 61% of commercial space).

– Clear timetable is needed

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In summary - are we on track to meet carbon budgets?

Residential. Significant drop-off in insulation rates since 2013 in the residential sector – need to get back on track

Non-residential. There remains significant potential to improve energy efficiency in the non-residential sector. The current policy framework is overly complex and should be redesigned