Why low carbon refurbishment is crucial for building sustainable cities

  Ask ten people about their vision of a sustainable city of the future, and you will get ten different answers. Some will focus on the renewable energy: shining solar panels on the rooftops, wind farms rotating gently on the horizon, or advanced heat pumps drawing low carbon energy from the surrounding area. But what you probably won’t hear many people talking about is how large parts of the sustainable cities of the future will look very similar to the cities of today. But that’s the reality, at least in the UK, where the Carbon Trust estimates that over half of the buildings that will exist in 2050 have already been built.

The case for refurbishment

There are plenty of buildings where it doesn’t make sense, economically or environmentally, to knock down and rebuild from scratch. Instead, the smart and sustainable thing to do is to refurbish them into more energy efficient buildings. This may not be sexy or futuristic, but it will take the UK (and many other countries) further towards meeting carbon reduction targets than almost any other measure. While the business case for energy efficiency refurbishments is generally very strong, progress to date has been frustratingly slow and only a fraction of the overall opportunity in the UK has been realised. There are many reasons for this, including misaligned incentives between landlords and tenants, a lack of knowledge on how to develop and operate energy efficient buildings, and capability gaps within the supply chain. Predictably, there doesn’t appear to be a single silver bullet solution to these issues. However, there are some relatively straightforward ways to improve buildings with poor energy efficiency, such as setting minimum performance standards. For example, the UK government plans to introduce legislation making it unlawful to let residential or commercial properties with the worst grades in its Energy Performance Certificate (EPC) rating system. Whereas the UK’s approach is based on buildings’ theoretical (‘as designed’) energy efficiency, an even better approach is to set minimum standards for a building’s operational (‘in use’) energy efficiency. This is exactly what is happening in Australia through the government-backed NABERS rating system, which awards a star rating to a building that represents its actual operational performance, based on 12 months of measured energy data. While NABERS is a voluntary system, the Australian government has used it to set minimum requirements for government-owned and leased offices. In most states, a building must have a NABERS rating of 4.5 stars (out of 6) or higher to be used by the government. This has helped to stimulate the market to the point where over 70 per cent of buildings in Australia now carry some form of NABERS rating.

Energy efficiency support

Another proven way to drive energy efficiency improvements is to raise awareness of the opportunities, then provide technical assistance to organisations wanting to take action. The Carbon Trust regularly helps organisations to identify and implement cost-effective energy efficiency measures that can reduce their buildings’ energy consumption by as much as 30%. Straightforward measures such as upgrading lighting systems can save enough energy to repay the upfront investment in under two years.

The government’s recently-launched Energy Saving Opportunity Scheme, which requires large organisations to undertake energy audits, is helping to ensure that more organisations are made aware of the many financially attractive energy efficiency opportunities available to them. The government conservatively estimates that the net benefit of the policy to the UK between 2015 and 2030 will be £1.6 billion.

Finding the business value

There is a lot that can be done when national or city governments help to drive change. But this support is by no means always necessary. There is ample opportunity for the private sector to take the initiative and develop new commercial models that unlock the value in low carbon refurbishment.

This is exactly what the Carbon Trust has done. Frustrated by the lack of progress being made by the commercial property sector on energy efficiency, the Carbon Trust decided to demonstrate what could be achieved by creating its own property development partnership, Low Carbon Workplace.

Low Carbon Workplace is a partnership between the Carbon Trust, asset manager Threadneedle and property developer Stanhope. The partnership buys commercial office buildings and refurbishes them into modern, energy efficient workplaces. Occupiers benefit from on-going support from the Carbon Trust, helping them to minimise their energy costs and carbon emissions. Energy and carbon performance is monitored and assessed against the Carbon Trust’s Low Carbon Workplace Standard, ensuring that buildings are operated as intended following their refurbishment. After five years of activity, the Fund is performing strongly. Overall investments to date stand at £175 million and the portfolio currently comprises eight buildings. On average, Low Carbon Workplace occupiers’ emissions are 65 per cent lower than the commonly used ECON19 industry benchmark, have an average EPC rating of ‘B’ and a BREEAM rating of ‘Excellent’.

What does the future look like?

Above are just some examples of the many positive steps being taken to create more energy efficient buildings. There are many other examples besides, and collectively they are starting to make a difference. However, much more needs to be done. The challenge now is to build on the good work to date to the point when energy efficiency refurbishments are the norm, not the exception.  

Read more about Low Carbon Workplace.