While some developers are already striving for net zero, biodiversity net gain, BREEAM Outstanding and EPC A ratings on new stock, arguably the greatest challenge is how to upgrade existing buildings.
Arguably the greatest challenge is how to upgrade existing stock. Improving the thermal performance, lighting efficiency and heating systems are the main opportunities for reducing built environment emissions. In many buildings, the viable improvement opportunities will be from relatively quick and easy improvements to the services and systems within the property.
Large modern warehouses, for example, typically have high levels of energy consumption – and therefore emissions – from lighting, hence targeting lighting efficiency and utilising natural light can be a good first step. Beyond these ‘low-hanging fruit’ upgrades, the more structural improvements requiring changes to the building fabric pose a more costly solution, such as installing additional insulation and any associated structural or fabric changes which may be required to the building envelope.
Aside from minimising energy use, ensuring renewable energy generation through the installation of heat pumps, solar PV and energy storage systems, while creating many benefits, also come at significant cost.
The IPF report ‘Costing Energy Efficiency Improvements in Existing Commercial Buildings’ highlights the relationship between capital improvement costs and EPC ratings, using an illustrative case study of an EPC grade G industrial building. The costs to improve the building from a G rating to a E (to comply with MEES up to 2023) were relatively inexpensive, however costs increased singificantly to meet a grade B rating, with improvements to the building fabric necessary to bring the building up to the higher rating. This highlights the scale of the task for getting older buildings to meet 2030 standards – especially considering the seven-year payback period mandated by current EPC legislation.
Source: Costar, Avison Young
- The building has an existing grade of G so the landlord is obligated to try to make improvements to comply with MEES regulations.
- Inexpensive roof insulation achieves an EPC grade of D at c. £25 per sq m, while more effective measures come at higher costs from £80 to £120 per m2.
- Without improvement in the building fabric (i.e. roof insulation), it is difficult to achieve more than a high E rating even with packages of measures.
BRIDGING THE PERFORMANCE GAP
EPC standards provide an indication of the energy performance of a building. However, there is still a disconnect between EPCs and carbon savings – known as the performance gap. While many new and refurbished buildings have the ability to operate at a high level of efficiency, earning good EPC grades and other environmental design accolades, very few buildings match their design estimate in operation.
According to a study of 49 buildings conducted by Innovate UK, average total carbon emissions were 3.8 times higher in operation relative to the buildings’ design estimates. Several factors can contribute toward the performance gap, including over-complicated building management systems and facilities which alienate users, a lack of education on the most efficient means of use, occupiers not buying in to sustainable practices and simple human preference and behaviours.
Fit-outs can also impact a building’s operational energy performance, hence it is important to understand a tenant’s fit-out intentions prior to signing the lease to ensure the building will be used in a sustainable way. Although green lease clauses can help to cement this, requiring occupiers to maintain a set level of energy efficiency throughout their tenancy, these are not particularly common, hence fit-outs can be a common driver of the performance gap.
Consequentially, although the environmental standard of new and refurbished buildings has increased in recent years in terms of grades and certifications, this has not corresponded to an equivalent rise in actual environmental performance. Bridging this gap is vital to ensuring that UK real estate can operate at the level required for a net zero economy.
Source: Avison Young, DLUHC
One solution to the problem is carbon and energy auditing, which can help identify and guide interventions to decrease the gap. Through detailed building surveys and energy profile analysis, companies such as Arbnco, Carbon Profile and Compliance 365 provide an operational picture of the energy use within a building. These audits deliver insight into the most and least energy efficient areas of a property, often making use of additional data from sensors relaying building usage data, such as water consumption, power requirements and occupancy levels. Analysis of these insights can be used to identify the most beneficial behavioural and structural changes within the building, resulting in the most effective improvements being found and applied for the greatest efficiency gains with the least cost.
Although these audits are currently optional, there are other mandatory exercises such as the Energy Savings Opportunity Scheme (ESOS) where large companies must assess their power consumption every four years and try to find new ways to reduce this4. More stringent environmental reporting requirements which address the performance gap, such as the Taskforce on Climate-related Financial Disclosure (TCFD) guidelines, as well a the Streamlined Energy and Carbon Reporting (SECR) will become commonplace.
EPC TO WLC
Meeting the EPC standard is a small but important part of the challenge to net zero carbon. While operational emissions from buildings and construction are responsible for 28% of all carbon emissions in the world (from energy used to heat, cool and light buildings), 11% comes from embodied carbon emissions: upfront embodied carbon that is associated with materials and construction processes, use stage embodied carbon emissions and end of life embodied carbon. All of these need to be considered through assessment of the whole life-cycle carbon (WLC).
A holistic approach to reducing carbon emissions is advocated by organisations such as UKGBC. The whole life-cycle approach puts an onus on reducing embodied carbon during the construction, refurbishment and maintenance of buildings, initiating improvements that can reduce energy and carbon consumption during operation and realising those savings with optimal use of the building controls throughout operation.
While every effort is made to extend the building life as long as practically and equitably possible through adaptable designs and retrofitting work, optimal end of life solutions for the building itself are also planned out to minimise or negate entirely the need for any waste to landfill.
Additionally, the whole life-cycle approach will require making greater use of what we already have. Across all asset classes, second-hand space is often perceived as less desirable due to a lack of suiting to exact specifications, or perhaps the amount of work required to become fit for purpose. However, the embodied carbon impact of utilising an existing property compared to building new is significant. Hence, encouraging the re-use of space wherever possible will be a key part of the road to net zero. This will require a greater degree of adaptability to be built into new spaces and installed into existing properties to ensure that each space can feel tailor-made to the tenant, regardless of its original purpose.
REFERENCES
4https://futurepresent.economist.com/distributed-generation-beyond-the-numbers/