Innovation and Growth Team Sets the Low Carbon Challenge

The Government’s Chief Construction Adviser, Paul Morrell, described the quantum change required of the construction industry in order to meet the demands of the low carbon agenda as both a challenge and an opportunity as he launched the final report of the Low Carbon Construction Innovation and Growth Team this week.  ‘It will require radical change to the way we do business as well as government action to meet the scale of the challenge,’ he said.  ‘There are no easy answers.’ The Climate Change Act commits Britain to reducing its carbon emissions to 80% of 1990 levels by 2050, and the report estimates that construction could potentially influence around 47% of total UK emissions. The scale of the task is staggering, not least in retrofitting existing buildings: there are approximately 21 million minutes to the end of 2050, in which time we will need to upgrade 25 million homes.  But at an estimated average of £7,500 per dwelling, that amounts to around £200bn at current prices, or £5bn a year of new business every year for the next forty years.  Even bringing that down to cover homes where upgrading is technically or economically feasible, the figure is still £170bn.  It is estimated that this will include the full or partial replacement of windows in 6m homes. The report team found the construction industry was well aware of the carbon agenda, and largely accepted the science.  However, it lacked an understanding of the scale of the requirement, and did not believe that the difficult decisions needed to make the changes would be taken.  So the report pulls no punches in telling Government that it must lead ‘to overcome the greatest market failure in history’, but that leadership must ‘cascade’ through the industry.  The construction industry has equally to accept that it needs to undergo a culture change to develop the kind of co-ordination and integration of the supply change which has been advocated in numerous reports over the years, but has yet to become mainstream.  The practicalities of construction must change, with a greater emphasis on thinking about buildings as systems and the standardisation of solutions, as well as a new focus on assessing how buildings perform in practice.  The report calls for the formation of an Existing Homes Hub to match the Zero Carbon Hub for new build. There remains a big question as to whether the industry has, or can develop, the capacity to tackle the problem.  Skills development will be essential, and the report recommends the merger of ConstructionSkills, ProSkills and Asset Skills, the three Sector Skills Councils dealing with buildings, to achieve the single strategic view necessary to ensure integration and collaboration. Industry normally responds to consumer demand, but in this case, the report believes that demand will have to be created.  If people are not persuaded to be more energy efficient, they will have to be priced or regulated out of using energy or offered incentives to change.  Price will not drive demand, so industry will have to lead it.  The Coalition Government is reluctant to regulate, so its proposed Green Deal is the first move – but cannot be the last – towards an incentive, overcoming the lack of immediate capital or the concern about payback time which is currently a barrier to upgrading.  Consumer confidence in new products and processes is likely to be fragile, so industry has to develop proper standards, supported by an accreditation scheme, which may need some form of additional insurance backing. The Government will respond to the report next year.