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Posts Tagged ‘Buildings’

Best Practice,Buildings,Energy Efficiency Finance,Evaluation

Financing energy efficiency in buildings: an international review of best practice and innovation

ACE Research, in partnership with Joanne Wade, was commissioned by the European Council for an Energy Efficient Economy (eceee) and the French Environment and Energy Management Agency (ADEME) to identify and review a wide range of energy efficiency finance schemes from around the world for the World Energy Council (WEC). The research is part of a suite which informed 2013’s World Energy Congress in Daegu, South Korea, this October.

You can download the full report including national case studies here. An overview of what we addressed in the review follows:

Energy savings are among the fastest, highest impacting and most cost-effective ways of reducing greenhouse gases emissions. Low cost energy efficiency measures have long been regarded as the ‘low-hanging fruit’ in delivering a clean energy economy.

However, the groundswell of general interest observed does not in itself produce specific, bankable energy efficiency investment opportunities without other factors being in place. Even with high and volatile energy prices, energy security issues and awareness of climate change policy drivers, there is a mixed picture of actual demand for energy efficiency from both private and public sector clients. Despite the proven cost-effective opportunity to reduce energy consumption, a significant proportion of the energy efficiency improvement potential is not being realised.

A key reason for this relates to the financing of energy efficiency. Barriers to financing mean that, in the past, energy efficiency has not been able to attract significant amounts of private capital.

These barriers take a range of well-recognised forms. The Buildings Performance Institute Europe reported in 20101 that information failure, high subsidies, lack of technical expertise, uncertainty over savings, and externalities still characterise the energy efficiency market, while ‘split incentives’ discourage both building owners and occupiers from investing in energy efficiency measures if direct benefits are not perceived. Financial barriers include the initial cost barrier, high transaction costs, long payback time, and risk exposure. Furthermore, lack of knowledge among finance providers about energy efficiency prevents customers from accessing capital, and the absence of standardised measurement and verification practice further increases transaction costs.

To examine these and other barriers in greater detail, eight case study schemes – from a range of different economies and contexts, targeting different sectors and employing different financing methods – were selected for systematic evaluation and to understand how such barriers are addressed in a wide range of different contexts – covering schemes in China, Estonia, Germany, India, Japan, Kenya, New Zealand and the USA.

The analysis of the case study finance schemes encompasses a comprehensive barrier analysis, highlighting the ways in which schemes have addressed and overcome typical barriers to energy efficiency take-up and finance provision. The barriers identified can be identified as falling into four distinct groups: Finance; Institutions and Stakeholders; Measures and Buildings; and Consumers and End-Users.

Given the diversity of the case studies assessed, and the breadth of the World Energy Council’s membership, recommendations for decision-makers and practitioners in energy efficiency finance are necessarily non-prescriptive. In order to accommodate this breadth and diversity, we highlight broad contextual considerations – in addition to the barriers analysed – that must be taken into account in the design and operation of any finance scheme. These relate to the nature of: political, legal and institutional contexts; social and demographic context; economic and industrial contexts; the built environment; and climate and geography.

To facilitate systematic thought about finance scheme design and operation for a wide variety of different purposes and in a broad range of contexts, we provide an energy efficiency finance scheme ‘decisions map’. This takes the form of a matrix containing conclusions and recommendations for each of the main barriers, mapped out across each of the areas of context. It illustrates the importance of a thorough approach to energy efficiency finance which builds on the vast wealth of experience already accumulated from around the world, and is designed to facilitate this type of approach.

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'Conservatory Tax',Buildings,Energy Efficiency,The Press

Don’t believe everything you read in the press

ImageHow a consultation on extending the energy efficiency requirements for larger buildings to those below 1,000m2 became a ‘conservatory tax’

The satirical magazine Private Eye summed it all up. It printed a cartoon of some plutocrats rowing towards an island. The caption read: “We had our conservatory built offshore to avoid paying tax.”

A week earlier, the Daily Mail had used a wet bank holiday to splash across its front page the headline: “Green Tax on Conservatories.”

The page began: “Millions of householders who want to build a conservatory…will be forced to spend hundreds of pounds more on ‘green’ projects. They will not be permitted to carry out home improvements unless they agree to fork out for measures such as loft or wall insulation”.

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Buildings,Green Deal

Don’t write off the Green Deal. It might just work

ImageDespite dire projections from DECC this showpiece concept might just work – but it will need a little extra help from Government

Throughout Europe governments are seeking to reduce energy usage in buildings. The reason is simple. Almost half of all energy is consumed in buildings.

Motivations differ. They range from a desire to reduce consumer costs. Or reduce the need to invest in new power plants. Or reduce carbon dioxide. Or increase construction industry jobs. Or improve the quality of some of the largest capital assets. Or even to improve run-down neighbourhoods.

To stimulate investment, each government tends to publish forecasts of the levels of demand for these products. In almost every case, these project soaring levels of demand for energy-efficient products. The prospect of a fast-expanding marketplace should entice otherwise footloose capital investment.

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Buildings,Private Rented Sector

A long road to upgrading private rented homes

ImageBy 2018, private sector landlords will not be allowed to let out an F- or G-rated building. Why do we have to wait that long for change?

Everybody else seems to be quoting Charles Dickens in his bicentenary year. So let me do so, by borrowing that “best of times, worst of times, age of wisdom, age of foolishness” paradox in the opening paragraph of A Tale of Two Cities.

The private rented sector offers the best examples of energy-efficient homes. The private rented sector includes some of the worst examples of dreadful, profligate, energy inefficient homes.

Increasingly the private rented sector matters. Since the millennium, there has been an inexorable rise in the proportion of households paying rent to a private landlord. Almost 1 in 6 households now do so.

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Buildings,Green Deal,VAT

Cut VAT and create construction jobs

ImageReducing the rate of VAT to 5 per cent for energy-saving products would be a clear signal of the Government’s commitment to the Green Deal

The 2011 Budget provided this unequivocal pledge: “The Government is committed to the success of the Green Deal and will act to encourage and incentivise take-up so that the Green Deal will appeal to households, businesses and prospective providers alike, before it is introduced in 2012.” In other words, we should expect some exciting new incentives within Budget 2012.

The sales tax, VAT, is the one tax all member states of the EU must raise. Governments are allowed to charge fuel at 0 per cent. But once VAT is on an item, it cannot go below the minimum level of 5 per cent. This is the rate levied on UK domestic fuel ever since 1993, introduced by then-Chancellor Kenneth Clarke on the specific basis that “for the first time the rate of VAT on domestic fuel and power will be the same as that charged on goods which improve energy efficiency. This will bring an end to the current anomaly which makes a nonsense of any attempt to use the tax system to improve the environment.”

Sadly, the anomaly mostly continues. Unless specified, everything else – including energy saving items – is taxed at the full VAT rate (20 per cent). So we have the present absurdity that, for each consumer unable to reclaim VAT, energy conservation measures are now taxed at four times the rate of energy consumption.

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Buildings,Energy Company Obligation,Fuel Poverty

Is this the key to finally beating fuel poverty?

ImageA new mechanism to pump prime capital investment will soon emerge. But how does the Energy Company Obligation differ from previous attempts?

The UK government has no plans for public expenditure to stimulate energy efficiency investments in buildings. Full stop. Not even for those five million households now deemed to believing in fuel poverty.

But the UK government does have other ambitious plans. Both to improve the energy performance of the building stock, the cheapest way of saving carbon. And to eliminate fuel poverty during the next five years.

To achieve this, there is a growing political consensus that the easiest way to square the circle is to allow improvements to be made via loans incurred by borrowing against the value of the building. The necessary investments are funded by venture capital. With the capital being repaid with help from the lower fuel bills that then ensue. The scheme will be entitled Green Deal Finance.

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Buildings,Energy Efficient Buildings

DECC and CLG call for views on how to improve the energy performance of buildings regime

ACE has submitted a written response to DECC and CLG’s call for views on how to improve the energy performance of buildings regime.

ACE and Friends of the Earth submitted a joint response to this call for views issued by Lord
Marland of Odstock and Andrew Stunnell MP. To read our full response click here.

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Buildings,Homes Bonus,Housing

CLG Consultation on the New Homes Bonus

ACE’s Director Andrew Warren has submitted a written response to Consultation on the new homes bonus 

The Association for the Conservation of Energy represents the major manufacturers, distributors and installers of energy saving equipment. As its director, I have recently been invited by the Minister for Energy & Climate Change to chair the government’s stakeholder forum regarding maximising the impact of the Green Deal in British buildings.

I welcome the concept of rewarding local authorities for facilitating new construction , and believe that the financial rewards mooted should vary according to the sustainability standards required of such homes : the higher the standards, the greater the bonus.Those authorities which opt to require standards higher than those minimum required under Parts F and L of the building regulations should be rewarded.

There is however one question raised in this consultation which, as currently posed, has the potential to counter a key strand of government policy, regarding the delivery of the Green Deal. This question reads:Do you agree with the proposal to reward local authorities for bringing empty properties back into use through the New Homes Bonus?

Whilst this Association welcomes moves to incentivise restoring occupancy of existing homes currently unoccupied, we insist that the provision of any such bonuses for the relevant housing authoritycan only be if the home in question has at minimum an Energy Performance Certificate of C rating or above. It would be entirely contradictory for government to be endorsing financial rewards which endorse the occupancy of energy sub-standard properties.

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Building Regulations,Buildings,Energy Efficiency

Britain pays a high price for personal prejudice

ImageThe removal of key words from the proposals to strengthen standards in Parts F and L of the Building Regulations is costing over £700m in savings

An arbitrary decision, made by one Minister in June 2009, is costing the nation approaching three-quarters of a billion pounds. And the public justification he gave directly contradicted all the objective facts provided for him, all of which his fellow Cabinet Ministers had endorsed.

The full scandal behind this wilful perversity has finally come to light over a year on, but only thanks to the refusal by the Freedom of Information Commissioner to put up with a litany of obfuscation which the Minister set in train, to stop the true facts emerging.

The issue concerns a last-minute decision by the government to drop plans to make property owners improve the energy efficiency of the original building, whenever an extension is constructed. Or in the terminology, to avoid expanding the building’s overall “carbon footprint.”

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Buildings,Domestic Energy Consumption,Double Glazing,Windows

Can the double glazing industry sell itself to government?

ImageAlthough a fifth of domestic heat loss is through single-glazed windows there is little acknowledgement of the benefits of double glazing in recent government strategy

Most people don’t spend much time thinking about saving energy in buildings. If they do, what they think about first remains: double glazing. Funny that. Because if you ask the policy makers, it scarcely registers on their priority list.

Why is this, when the average home can still be losing upwards of 20 per cent of fuel through any single-glazed windows? Why, when the majority of homes still don’t have any form of secondary glazing throughout? Why, when this is one of the very few energy-saving measures that property professionals agree puts up the perceived resale value?

The reason for this divergence is rather more complex than might appear at first sight. It has much to do with departmental responsibility divisions, prejudice regarding how markets work, and just ignorance.

The government‘s new “Household Energy Management” strategy sets out in detail its energy-saving policy for existing homes for the next decade. It has lots to say on microgeneration and photovoltaics. But the only acknowledgment that energy can escape as much through windows as it can via roof or walls is a grudging footnote.

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