Plugging the gaps

What price energy efficient buildings? Representatives from sectors like construction, social housing and renewable energy met in Edinburgh in March to consider how Scotland might ready itself for the challenge of making buildings less wasteful. Paul Marsh reports.

GAPS are all the rage when you’re talking about the construction industry, it seems. Performance gaps, finance gaps, culture gaps – you name it. This event, organised by networking group eCoConnect, was titled “Re-thinking the built environment: Is Scotland ready for the challenge?” It stopped short of offering an affirmative answer to the question posed by the title. Panelists pointed fingers at a number of gaps, or shortfalls, principally within the sector itself but also with the effort to legislate for it.
Around half of all primary energy consumption and carbon dioxide emissions are linked to the construction industry.  So it’s a fairly crucial sector to tackle if the country is to meet its low carbon targets. Given that most of the buildings currently in use will still be standing in 2050 – 80% of current housing and 60-70% of commercial buildings – it seems energy efficient retrofitting and maintenance is how it will mainly be tackled. In Scotland legislation will soon mandate the meeting of energy efficiency and performance targets, as a requirement for the re-sale or rental of property.

Efforts to improve energy efficiency at the consumer level have lessons to impart to the non-domestic sector, where new laws are coming in.

On the panel were David Stewart, Head of Policy, Scottish Federation of Housing Associations; Professor Branka Dimitrijevic, Director Knowledge Exchange, Dept of Architecture, Strathclyde University; Ian Cuthbert, Programme Manager with the Energy Savings Trust; and Jamie Goth of the Scottish Futures Trust.
Chair of the evening was eCoConnect’s Robert Hokim, who in his introduction set out some of the principal challenges and opportunities facing the sector. One key concern is that building standards to date have been too lax, fuelling the sense that a financial time bomb of expensive retrofitting awaits in the future.
There are also concerns, he suggested, regarding the reliability of current energy performance data. Funding challenges have also retarded progress: A traditional over-reliance on government grants has meant easy-to-treat properties are prioritised over those deemed harder to treat. The grant system itself could be seen as confusing, with there being many different schemes administered by different bodies.
But Scotland is making good progress with energy efficiency, he said. More than 1 in 10 households are receiving support in this area, and the energy assistance package to tackle fuel poverty has received high levels of funding. Scotland has a potential retrofit market worth £400m in the next 5 years.
The first question he put to the panel was: Is the Scottish construction industry ready to tackle these challenges? Cuthbert of the EST said no, he didn’t think it was adequately prepared for the retrofit work that needs to be done. Most of the 1000 or so installer firms in Scotland who will carry out this retrofitting are “micro-sized businesses” who will need a lot of support. However the main challenge is around the business case, he said, and the level of confidence the industry can have in government policy and regulation, as well as the paperwork and bureaucratic hoops that will have to be jumped through.
Mention was made of a skills gap, and the expertise construction personnel will need to acquire in energy efficiency and renewable energy, a point the chair put to him. Cuthbert seemed to say it was less about a skills gap than a “justification gap”. Lots of plumbers have the skills to install renewable heat, with just a little upskilling. But firms have to consider the opportunity cost of up-skilling, and taking people and apparatus off other jobs. So it’s less clear-cut than it appears.
David Stewart of the SFHA said social housing has shown quite a lot of leadership and has a lot of experience around low carbon and energy efficiency, which will hopefully be transferable. One of the main drivers has been fuel poverty, now at around 39% across Scotland – a shocking figure. The sector has been implementing energy efficiency measures like solid insulation and district heating. More recently, some associations have gone even further, with schemes such as installing their own wind turbines and solar PV arrays. “What you find with housing associations is that the initial experience with technologies like biomass and heat pumps was poor, but they’ve learned. Those who have invested a lot in renewables are now a lot more confident about it.”
Regulation has been key to making the change, he said, and measures such as the Scottish Housing Quality Standard. The setting of energy rating targets and so on has required easier-to-afford and easier-to-fit techniques  like cavity wall insulation.
The second key thing is funding. It’s very difficult for someone who works for a commercial company or a landlord, as energy efficiency might just be a very small part of their job. They don’t have time to become an expert in funding. “For me, if we’re going to drive energy efficiency and investment in a low carbon agenda, we need clearer regulation and long term, easy to understand funding.”
The Scottish government has set targets for fuel poverty reduction for 2016, but the chair asked whether it was practically possible to meet these. Stewart felt nobody appears to believe it can be achieved, the political will does not seem to be there. But when you look at the funding for projects like the Forth replacement bridge, it seems it could be done if it was a political priority.
Jamie Goth of Scottish Futures Trust (SFT) said his organisation aims to assist public bodies to have “an ambitious, upscale approach to improving the energy efficiency of existing buildings”. A key aspect of this is energy performance contracting. SFT is working on behalf of the Scottish Government to develop contracts that make it easier for public bodies to invest and engage the specialist contractors they need.
Street lighting is one of the areas where the payback from such measures has been swift and impressive, he said, with 20% ROI in year one being standard, in addition to 200% ROI over the life of the asset.

The client needs to lead the process, suggested one panellist.

He approached the question of how well prepared is the construction industry for these challenges by considering “how well prepared is the public sector to get the best out of the construction industry?” Gains made with the latter will be crucial here. With public sector bodies being required to procure sustainably, and to factor in things like low carbon and energy efficiency, the construction industry will be provided with the extra incentive needed to certify and accredit the skills it has in these areas, so it can deliver on the opportunities to which the public sector is committed by regulation.
Some of the legislative changes coming through from the Scottish Government at the moment include a tightening of the building regulations this year, and a need for public bodies to report on their carbon emissions. There will also be a requirement with Energy Performance Certificates (EPCs) for public sector bodies to renovate until a minimum level of “E” is reached (admittedly not very high on a scale that runs from A to G), before the property can be rented or sold. So, he said, the construction industry will need to upskill to meet these needs.
The Chair asked whether or not the audits on organisations, which are intended to lead to the implementation of energy measures, are sufficiently robust and the measures enforceable. The Low Carbon Workplace, for instance, recently reported that only around 30% of its recommendations ever tended to get picked up; there is too much wiggle room available in their interpretation.

More exacting audits planned
Goth agreed the audits which lead to the production of [ energy performance ] certificates are relatively light touch. “They are quite well designed in terms of giving a bit of information that is well understood by the industry. But the fact there’s no requirement to act on it can mean it is merely viewed as ‘a tax on transactions’.” He said he believed the changes now coming through in the Autumn [ requiring bodies to achieve a level “E” in their EPC” ] will start to produce behavioural change.
An audience member mentioned a presentation he had attended from the Green Investment Bank (GIB) looking at the finance models it has been using to assist local authorities invest in measures like energy efficient street lighting. While seemingly low-hanging fruit, in terms of the clear cost benefits to be gained, it has actually proven very difficult to get local authorities to act on an investment like this. Do we need bigger sticks?
Another questioner brought up the Green Deal, the coalition government’s flagship policy for implementing energy saving measures, now widely viewed as a flop. In Scotland there are about 3000 live plans in the system, and around 7000 for the UK as a whole. Cuthbert said that while there has been a lot of focus on the negatives – the confusing finance and so on – one of the successes of the scheme has been with the Assessments. In Scotland around 75k of these have been lodged in the EPC register. People like these: They build on the EPC, fine-tune its findings, look at household behaviour and offer advice to householders.
He believes the “pay as you save” model is probably here to stay, as it doesn’t rely on government funding. Labour has been looking at using it only to address fuel poverty, and offering 0% finance, but that’s the only possible change he has heard about.
It may be a model with promise for the non-domestic sector as well, with forthcoming regulations like section 63 of the Climate Change Scotland Act, effective from June 2016, and incorporating mandatory levels of energy efficiency. “With finance you could argue that having an additional option like that is better than no option at all.”
Goth agreed, praising the pay-as-you-save concept as “financially literate”. Reflecting on the Green Deal he agreed that people like having the information from the assessment as a baseline. They just haven’t seemed to want to go ahead and invest using the finance that’s available.
One audience member asked the panel how we can generate more action from consumers on issues like energy efficiency. Maybe we need the equivalent of the advertising campaigns around issues like smoking and the wearing of seat belts.
Cuthbert said the basis for action lay with the supply chain. If people are looking to replace their boiler they go to a heating engineer, and it’s up to the latter to have the information about biomass boilers and ground source heat pumps and so on. “If you get that in place there is no need to worry about the psychology of householders,” he said. But there is currently a big challenge with getting these specialists to make place for things like renewables.
There is a need to make energy efficiency a national priority, Stewart said, citing a report from Cambridge Econometrics last year, in which energy efficiency came out as particularly beneficial to the economy because it creates so many jobs  in addition to tackling climate change and fuel poverty.
It was a discussion that seemed to highlight the presence of many “gaps”: In skills, investment, certification, targets, funding and so on. Do we have a leadership gap at local authority level? There certainly seems a lack of political will to make it happen.
Goth mentioned a tool developed by the Scottish Government, called Individual Social Material (ISM), which is intended to help people understand the different reasons for change, with an organisational or cultural issue like sustainability, and to develop more effective policies to make it happen. Dimitrijevic suggested any knowledge gap that exists is likely to be with the older generation, as schools now routinely teach sustainability.
Another audience member raised the fact that the construction industry is very bad at adopting new technologies. Dimitrijevic said it’s down to the client to provide leadership. “The informed client has to be in place,” she said, and it’s down to the public sector to be informed. The construction sector is just like any salesman: If you want it, they’ll sell it. Stewart pondered the popularity of district heating in Copenhagen, where he recently visited. “Something’s happened there,” he said. It has become imperative to make energy cheaper. The government has legislated for it, local authorities have formed companies to fund it, and customers just look upon it as the normal thing to do. “It feels as if that should be the case in Scotland but for some reason it’s not happening.”
Cuthbert said a key obstacle was the knowledge gap in the supply chain, in terms of being able to make the business case for it. One audience member said she saw a lot of change happening with the public sector, but it’s the private sector where there’s a problem. Large contractors aren’t interested in it, and energy efficient measures are expensive, while maybe not adding to the prestige or immediate attractiveness of a property. Stewart felt the answer was partly to regulate, and lamented the recent relaxation of building standards, a tweak justified on the basis that housebuilders were already under too much commercial pressure. “Till we get to the point where people are require to produce ‘zero carbon buildings’ or similar, you won’t get the uptake in technology and modern methods of construction,” he said. “After all you don’t really want to be having to go back and retrofit in the future if the technology exists now to avoid that.”