A Low Carbon Economic Strategy for Scotland: Scotland - A Low Carbon Society

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2.3 Transforming the Built Environment

Section 2.3 focuses on the economic opportunities across the built environment as a consequence of the moving to a low carbon economy.

It also outlines the corresponding Strategic Objectives with associated actions previously detailed in Section 1.3 of the strategy. Wider issues relating to business and industry, transport, energy, and natural resource-based industries are dealt with in other parts of section 2.

Transforming the Built Environment

Building standards have been substantially reformed over the last two decades. However, the built environment still accounts for more than 40% of our CO 2 emissions, generated through the heating, lighting and running of buildings. Clearly it represents a major focus for efforts to reduce emissions and change behaviours and an area where there are both low carbon opportunities and challenges for businesses, investors and householders.

Legislation has provided an efficient and effective means of driving down energy use and carbon emissions in new buildings, challenging a mainly traditional industry sector and providing a clear pathway for both improving building performance and driving innovation and new skills.

EU/ UK and Scottish low carbon regulations ( ETS, CRC energy efficiency scheme, Climate Change targets, new building standards) are already obliging the construction sector to address the growing imperative to invest in research and development and implement the use of innovative products and methods. Future building standards, for example, will deliver further improvements in the environmental performance of new buildings in Scotland.

New housing for which a warrant is applied for from 1 October 2010 onwards will emit 70% less CO 2 than equivalent new buildings in 1990. And we are working towards an overall ambition that all new buildings in Scotland will be zero carbon by 2016/17 64 if practicable. Energy efficient and sustainable building design delivers immediate cost benefits with respect to operational costs, and ensures that the building is fully resilient to future climate conditions.

Improvements in the performance of existing buildings through upgrading and retrofitting as well as improved performance of new build will be essential to meet emissions reduction targets.

The Scottish Government estimates that billions of pounds of investment is required to increase energy efficiency across the built environment to a sufficient standard to meet climate change targets. This is a significant task given the current economic climate. However, as a small and responsive economy with a skilled workforce, Scotland is well placed to drive forward and attract that level of investment.

Local Development Plans are already introducing policies in line with Section 72 of the Climate Change Act 65 to avoid a specified and rising proportion of greenhouse gas emissions from use of new buildings. The Scottish Government's approach to improving the energy efficiency across the built environment is set out in the Energy Efficiency Action Plan 66 and the broader strategy for reducing emission in the Report on Proposals and Policies 67.

Sustainable schools - Inverclyde Academy opened in January 2009, with an Energy Performance Certificate 'A' rating - a significant achievement for a secondary school building. The Council were committed to producing a landmark campus that would also act as an exemplar to inform the design of subsequent schools.

The design of the new Academy makes use of natural daylight and ventilation providing high quality learning and teaching facility for the children and wider community. High efficiency condensing gas boilers and heating and water services systems are. Sustainably sourced materials, such as Forestry Stewardship ( FSC) sourced timber, were specified where practical and affordable. A 50kW wind turbine will provide 15-20% of the power to the school reducing ongoing energy costs and CO 2 emissions.

The Council has incorporated the lessons learned from the Academy project into their PPP Schools programme, which will deliver two new primaries and two new secondaries by 2011. In the first tie-up of its kind in Scotland, the Carbon Trust worked alongside the Council and the building consortium E4i through the procurement process, providing a range of technical advice. The Carbon Trust is now working with other authorities on a similar basis.

More broadly, sustainability is a key theme for the Scottish Construction industry and central to Scottish Construction Forum's68 industry plan: 'This theme will be a key driver for change in the construction industry, affecting planning, design, procurement and working practices in order to reduce the overall carbon footprint of a built structure over its entire lifetime. The construction industry must be encouraged to design for whole-life sustainability, build with minimum waste, dispose of waste responsibly, use sustainable resources, reduce energy consumption, recycle and reuse materials, create minimum pollution and cause the least possible environmental impact'.

There are a range of drivers and barriers shaping the low carbon built environment:

Barriers

  • Investment cost;
  • poor information, lack of awareness;
  • Commercial buildings owners not always the user benefiting from improvements;
  • The gap in energy consumption that can exist between buildings as designed and their actual performance on completion;
  • Focus on the initial capital cost rather than 'whole life' costs;
  • Multiple building ownership delays agreement to retrofit; and
  • Inertia to new investment and change.

Drivers

  • Value of energy savings;
  • Higher comfort levels;
  • Health benefits;
  • Co-benefits and intangible benefits;
  • Awareness and motivation;
  • Public sector as exemplar tenant in commercial sector;
  • Public sector procurement of green buildings;
  • Scottish planning policy;
  • Improved energy standards in building regulations;
  • Energy efficient low carbon design;
  • Carbon trading schemes;
  • Demand for 'green credentials' in supply chains;
  • Increasing energy prices;
  • Reducing dependence on imported energy sources; and
  • Enhanced resilience to future climate.

Market Opportunities

Two broad market opportunities exist in relation to the built environment:

  • reducing the current energy and carbon emissions associated with new and existing buildings through energy efficient, low carbon design and specification; and
  • exploiting innovation in sustainable building technologies in both domestic and global markets.

Reducing the emissions of new and existing buildings

A range of current and near-term market opportunities exist in helping reduce the emissions of the current building stock including:

  • passive 'low carbon' design of sustainable buildings and places; as advocated in Designing Streets: A Policy Statement for Scotland 69.
  • insulation for domestic and non-domestic properties (but avoiding additional cooling loads in the case of the latter);
  • installation of energy efficient boilers and other building services and controls;
  • installation of energy efficient lighting and controls;
  • micro-generation;
  • smart meters; and
  • renewable heating;
  • These will be implemented via:
  • energy advice services;
  • upgrading existing skills and developing, delivering and accreditation of new skills; and
  • financial products.

Better energy efficiency in buildings and communities offers savings with respect to operational costs for owner and tenants, and additional benefits for owners from long-term more efficient capital stock of the buildings.

Figure 13: Emissions (%) by sector (2005)

Figure 13: Emissions (%) by sector (2005)

Source: Carbon Trust 2009: Building stock emissions by sector 70

Currently approximately, 45% of the UK's carbon emissions are generated by energy consumption within the building stock: 25% within domestic buildings with a further 18% within non-domestic buildings. In addition it is estimated 71 that around 16% of the entire carbon footprint of the UK construction industry is related to design, manufacture, distribution and on-site operations activities, with 84% accounted for by energy use for electricity, water and space heating within homes and businesses. On top of this the construction process itself is a carbon intensive activity.

Figure 14: Estimate of the carbon footprint of UK construction, 200772

Figure 14: Estimate of the carbon footprint of UK construction, 2007

While the ambition is that all new buildings in Scotland will be zero carbon by 2017, where practicable, it is also estimated that the market opportunity for retrofitting the existing building stock is huge and will be driven particularly by the value of energy savings, given that 73% of UK domestic emissions arise from space and water heating. In addition, significant opportunities also exist in improving the energy performance of the 200,000 or so non-domestic buildings in Scotland.

Case Study: Aberdeen Heat and Power

Aberdeen Heat and Power is an independent not-for-profit company set up by Aberdeen Council to develop and manage combined heat and power district heating schemes. Over the past 10 years they have implemented several phases of their District Heating project. It is currently seeking funding to extend the infrastructure of the district heating network in Aberdeen. The funding would pay for highly insulated district heating pipes to be laid in the ground, plus additional generating capacity. The extension of the network would also make the connection by a number of other buildings on the route which may present additional carbon savings as well as being a good economic proposal for the relevant building users. These include: Transition Extreme (a leisure facility with climbing walls), a hotel, and Satrosphere (a science centre run by a local voluntary organisation.

There are clear environmental and economic benefits from increasing the use of timber as a construction material and in supporting innovation within the Forest Industries sector more advanced engineered timber-based products. Whereas the total value of the new-build sector in Scotland is currently worth over £3 billion annually (where 80% of all new homes are timber-frame construction), the US market is worth £300 billion (where 90% of homes are timber-framed). The potential for exporting innovative timber-based products is significant. This is a key objective of the Scottish Forest Industries cluster 73 in addition to meeting the Scottish Government's target to grow forest cover to 25% by 2050.

Given the significance of heating in contributing to carbon emissions, large and growing opportunities also exist in implementing alternative forms of heating such as district heating, industrial waste heat, and combined heat and power, including heat generated from biomass and waste. These various forms of lower carbon heat present a range of infrastructural issues and costs in relation to the built environment, requiring the close involvement of planning authorities in the design of residential or commercial developments.

There are also environmental and economic benefits relating to low carbon design and planning, through the development, implementation and articulation of passive design techniques as a means to delivery low carbon buildings and neighborhoods. In addition to new build, the adaptation of the existing building stock presents a big challenge and is important in terms of carbon reduction. It brings significant opportunities for innovation and skills development in the upgrading and retrofit of existing buildings, in particular housing.

Roof Truss Company ( RTC), Elgin

The Passive Wall is a pre-insulated closed panel wall system which can reduce building energy consumption significantly RTC have developed the product using materials sourced locally to minimise carbon emissions. The Passive Wall has been used in passive certified houses in Scotland, most recently at Scotland's Housing Expo in Inverness.

RTC's range of innovative products is helping to significantly boost the company's growth, taking them from a £3.1 million to a £5.5 million business in only three years. This will be achieved by sustaining their current market position; expanding their current premises to accommodate their expected growth; developing new technologies to improve efficiencies and support modern construction methods; and developing new products for the low carbon housing market.

Permitted development rights have been extended for domestic microgeneration 74. Consultations are underway on extending permitted development rights still further for domestic microgeneration and also for non-domestic microgeneration 75.

Exploiting new sustainable building technologies

The main sub-sectors relating to the built environment are; building technologies and energy management. It is estimated that these sectors alone will support 15,000 low carbon jobs by 2019/20 in Scotland. Overall sales are projected to increase from £1.1 bn in 2008/9 to £1.4 bn to around £1.9 bn in 2019/20, with the breakdown shown in Figure 15 76

Figure 15: Sales projections for Built Environment Sub Sectors

Figure 15: Sales projections for Built Environment Sub Sectors

The majority (approximately 84%) of employment in this sector within Scotland will be in supply, installation and manufacture of the low carbon technologies with around 16% of employment in consulting, R&D or training.

Figure 16: Employment in Built Environment Sub Sectors 2019/20

Figure 16: Employment in Built Environment Sub Sectors 2019/20

Source: Scotland's Low Carbon and Environmental Goods and Services Sector Study, Innovas Solutions, 2010.

Scotland has the opportunity at an early stage to develop comparative advantages in these low carbon sub-sectors and foster companies that can provide market leading solutions not only to a Scottish market but to a growing global low carbon market.

Analysis on potential for comparative advantage ( RCA) in the built environment sectors (An RCA above 1 indicates that Scotland's exports/imports ratio for a particular item is greater than Scotland's ratio of exports/imports for all goods). It shows that Scotland has advantage across all sub-sectors and that this increased across all bar one from 2007 to 2008 77. There are potential opportunities for this sector to develop and not only service the Scottish supply chain, but become globally competitive companies and supply the low carbon global export market.

Figure 17: RCA Built Environment Sub Sectors

Figure 17: RCA Built Environment Sub Sectors

Source: Scotland's Low Carbon and Environmental Goods and Services Sector Study, Innovas Solutions, 2010.

Potential for growth lies in the high demand for retrofit technologies utilising new technology and new construction ideas e.g. new material development and smart sensors. The Building Technologies and Energy Management areas of Environmental & Clean Technology ( ECT), being supported by the ECT Partnership, will play a crucial role in the development and deployment of these technologies. Scotland has over 500 companies (many in the construction industry) who can address the UK market opportunity which is expected to be £21bn by 2014/15.

In spite of the strong regulatory drivers, a range of barriers exist that inhibit the development and widespread adoption of low carbon building technologies including:

  • industry fragmentation: across the built environment sector there are disconnects between the sources of technology development and supply chain capability;
  • access to testing and demonstration facilities: new technologies need to be validated and demonstrated to potential customers and investors in a safe, independent environment; and
  • commercialising new technologies: a significant gap often exists between the development and market exploitation of new innovations and this is particularly acute in a traditional and risk-averse sector such as the construction industry.

The Low Carbon Building Technologies Gateway will for the first time establish a Scottish low carbon building technologies innovation pathway by enabling the development and integration of two initiatives and allowing for a clearly articulated support system from concept through to market demonstration within Scotland. Led by Edinburgh Napier University's ( ENU) Building Performance Centre and supported by Scottish Enterprise, ERDF and SPIRIT funding, it combines with the ongoing development of the Building Performance Centre in Glenrothes (aka Hangar 17) which provides discrete test facilities which also protect commercial sensitivity, with an Innovation Park intended to provide a showcase for Low Carbon Building Technologies.

The project will provide continuous support for innovation and enterprise in relation to Building Technologies from concept through to market outreach. This will provide faster, better, more efficient processes to support innovation by SMEs in order to meet the future market demand for low carbon construction products. Additionally, the project will link to wider centre of excellence work being undertaken across Scotland via the Scottish Energy Laboratory and the CIC-Start online academic consortium. Specialist technical work that cannot be delivered by ENU/ BPAC or will be procured by ENU from wider project partners in Scotland. There are also important synergies with SE's recently LCBE Supply Chain Innovation Support project through provision of the physical resource to support the innovation process.

The Project will remove barriers and de-risk commercialisation of low carbon innovation while retaining the process within Scotland. Over a ten year period following intervention, the Project is forecast to contribute a total cumulative net gross value added of £182m. This unique approach has the potential to attract considerable interest from non- UK firms.

Strategic Objectives for government and the wider public sector

This section sets out strategic objectives for the built environment, previously described with associated immediate actions in Section 1.3 of the strategy.

Objective 7: Moving towards a low carbon built environment. Reducing carbon emission, from all phases of the building process, from design to construction, through operation and maintenance, within the new and existing building stock.

In the new build sector, we can expect that better performing construction materials and a change in methods of construction as staged improvements in energy standards within building regulations in 2010, 2013 and 2016 require, for example, much improved thermal performance.

Scottish Government has worked closely with industry in developing sustainability labelling for new buildings through building regulations. Proposals would recognise the achievement of reaching the demanding mandatory regulations from October 2010, as well as providing optional upper levels for those who wish to demonstrate their green credentials. The aspirational levels reflect a broad range of aspects of sustainability for domestic buildings and include challenging enhanced targets for carbon emissions reductions for all new buildings. Ministers have approved for proposals to go to public consultation in 2010. The system's intended introduction would follow during 2011.

A significant programme of refurbishment of Scotland's existing building stock will be needed to accompany the ambition of net zero carbon new buildings from 2016/17. This will build on existing Scottish Government programmes such as the Home Insulation Scheme and Energy Assistance Package. Local Authorities have a significant role to play, in particular, through Local Housing Strategies, influencing and identifying area planning initiatives and/or regeneration projects in statutory local development plans.

For the existing housing stock, improvements are driven by householder action to reduce fuel bills through energy efficiency measures, supported by Government action on fuel poverty and promoting insulation, including through obligations on the energy companies. Significant opportunities exist for company expansion to meet the scale of activity that will be required, accompanied by new recruitment into the industry and skills upgrading among existing employees.

While demand for retrofitting homes and premises is increasing it is still not at the levels required by our emission reduction targets, and the current range of market drivers and incentives need to be strengthened. Anticipated rising energy costs and greater affordability of retrofit technologies over the next decade should provide strong levers to create market demand. Support from energy companies and UK Government programmes in addition to the Scottish Government's own incentives will also be important in optimising uptake, particularly in the current economic climate. Other drivers and incentives include:

  • UK Green Deal (domestic and non domestic), whereby the initial capital outlay may be funded by a mix of third-party finance, public subsidy and savings on future energy bills. The Scottish Government is engaging with the UK Government to try and ensure these schemes are appropriate for Scottish conditions and levels of need. It is anticipated that the market will need to adapt to provide energy assessors, businesses that can deliver the installations of the measures funded by Green Deal, and financial institutions that can provide the finance.
  • energy-related incentives such as feed-in tariffs or the renewable heat incentive that encourage owners and developers to invest;
  • effective public information campaigns to encourage uptake;
  • The need to adapt new and existing building stock to the impacts of climate change through decreasing reliance on energy and water, as well as increased thermal insulation reducing the future need for cooling.

The Scottish Government is also considering its position in respect of the powers available to enforce energy efficiency standards in private sector housing and existing non-domestic buildings contained in the Climate Change (Scotland) Act. We will also consider whether appropriate standards should be developed for the social rented sector.

Objective 8: Exploiting and integrating low carbon building technologies into the design and construction process.Helping to develop, commercialise, test, demonstrate and market innovative new building technologies and materials and integrate these into the design process alongside passive technologies.

It is clear that continued joint working across the public sector is needed to address the market barriers that currently exist in relation to low carbon building technologies. This will help close the gap between the development and market exploitation of new technologies and products, together with their mainstream adoption across the construction industry.

The Scottish Government's Construction Works Procurement Guidance 78 contains best practice, policy and procedures for public works procurement. For example, Section 3 contains advice on complying with EU procurement regulations in selection and award procedures and Section 7 acts as a signpost to policy and best practice endorsed by the Scottish Government to help embed sustainability into public works procurement.

The Planning Application Notification on Renewable Energy Technologies is being updated and will be web-based, allowing for further more regular updates than in the past. It will seek to maximise opportunities for renewables, whilst managing environmental impacts, through the new planning processes. Scottish Government has also commissioned research on the use of quantitative greenhouse gas impact assessment to inform future strategic planning policy development.

Planning authorities are encouraged to prepare heat maps to inform spatial plans and policies for renewable heat with development plans. Such heat maps are based on a range of data, such as sources of raw materials, areas of high heat load, grid availability, fuel poverty hotspots, and designated sites and can be used to identify opportunities and areas of greatest benefit.

The Scottish Government is funding a heat mapping pilot project in the Highland Council area, with the results to be disseminated to Councils across Scotland. The Scottish Government is currently undertaking a Waste Heat Study that will investigate the potential for the provision through waste heat and its economic impacts. This applies to low carbon district heating and renewable heat.

Scottish Government has commissioned research, which is currently underway, to assess overall financial capacity of the social rented sector, to establish potential for significant new investment in quality measures as well as provision of new housing. Where financial capacity exists it is dependent on circumstances of individual local authorities and housing association and may not match investment requirements in housing stock.

Once the most cost-effective product and process solutions are validated there are likely to be considerable benefits as scale increases. This will be facilitated by the effective sharing of best practice solutions as they emerge.

The use of off-site production and other modern construction methods is growing, often offering advantages in terms of energy efficiency and improved product quality.

Objective 9: Promoting low carbon building design at all scales from neighbourhood upwards. -Encouraging the development of walkable, well-connected places.

We need to encourage wider understanding of the critical importance of the design of units larger than the individual building to the development of an effective low carbon economy and sustainable places and communities. Examples of these larger scale approaches include the layout of neighbourhoods and larger urban units, including design approaches which encourage easy pedestrian and cycle access (as advocated by Designing Streets: A Policy Statement for Scotland.) We also need to take account of the fact that some low carbon technologies (such as district heating or combined heat and power) will often operate most successfully and efficiently at the scale of community rather than at the level of individual buildings.

The Scottish Government is already working with a range of other public and private sector organisations to promote projects which demonstrate integrated approaches to low carbon design. There is scope for the wider promotion, evaluation and dissemination of the achievements of these projects and for the consideration of how the scope of other projects may be developed to demonstrate important aspects of low carbon design. An example of the later is the recent design ideas competition for architect and developer teams at the Scottish Sustainable Communities Initiative ( SSCI) project at Whitecross near Linlithgow.