Retrofit: saving energy and creating jobs

Constructing new buildings is a carbon-intensive process, even before the emissions produced during a building operation and maintenance are taken into account. Perhaps the focus, then, should be retrofitting existing stock to make it more energy-efficient.  

Retrofitting has the greatest scope and potential for decarbonising the building stock in addition to achieving relatively quick results. In an RICS report published in May 2020, the organisation’s policy manager Dr Patrice Cairns commented on the opportunity retrofitting offers to save carbon, but highlighted the lack of clear policy to support this in the UK.  

The government has since established the Green Homes Grant scheme (GHG) to promote economic recovery following the devastating impact of the COVID-19 pandemic, and to improve the energy efficiency of existing buildings.  

Building stock across the UK is relatively old, with 50% of residential and 39% of non-residential buildings having been built before 1970. Furthermore, only 29% of residential and 30% of non-residential buildings have been built since 2000.

Around 29m residential and 1m non-residential buildings in particular present a significant opportunity for retrofits, requiring renovation to achieve modern thermal and energy efficiency standards.

BCIS Consultancy recently completed a 3-year service contract to improve the EU Building Stock Observatory (BSO) for the European Commission’s Directorate-General for Energy. The BSO could be used to provide a better understanding of European building stock, guiding building renovations and designing effective policies and support mechanisms. The following analysis is based on BSO data.

The second assumption related to construction employment. Some estimates suggest that between 10 and 21 jobs could be created per £1m investment, while other sources have set this figure around 13 jobs. Taking a conservative approach, 10 and 13 jobs per £1m investment were chosen as the lower and upper bounds for the study respectively.

To demonstrate the potential for renovation incentives to create jobs and save energy, 3 different scenarios were devised. Both scenarios 1 and 2 used the quantum of building stock in 2017, less the buildings that had already been renovated, resulting in the total amount that can still benefit from improvement. All the data concerning the cost of renovation and related energy savings was extracted from the BSO. The key distinction between scenarios 1 and 2 was the potential for energy savings they assumed, with 1 being the more conservative, as detailed below.  

Scenario 3 differed due to the staggered nature of the analysis. Although the identification of quantum of the stock requiring renovation was the same, the total surface area (in terms of internal floor space) of the buildings was also calculated and broken down into age groups. By separating the buildings in this way, scenario 3 allowed a more detailed picture of the renovation potential, with each group attributed a different renovation cost and energy potential depending on age.  

The proportions of building stock in each age group were calculated from data extracted from the BSO. This analysis assumes that all buildings have the same average surface area, regardless of the date of construction.

Furthermore, the energy savings estimated from retrofitting existing building stock could lie somewhere between 51m and 182m kWh per annum, again considering both residential and non-residential buildings.  

Renovating non-residential buildings would offer the best return on investment. As we can see from both scenarios 1 and 2 in Table 3, this would have almost twice the energy-saving potential of renovating residential stock, and would cost a fraction as much. This is because non-residential buildings are on average 5 times the size of residential buildings, presenting significant economies of scale.

The study suggests that there is a huge potential market for renovations, though, to reduce energy consumption and associated emissions, and create jobs. Focusing on renovations and retrofitting should therefore be central to green economic recovery from the COVID-19 pandemic.

With the estimated potential to reduce total operational energy consumption of UK building stock by between 51TWh and 182TWh a year – in scenarios 1 and 3 respectively – we recommend that the government consider using the GHG as a pilot for rolling out renovation measures and incentives, to push for greater efficiencies from buildings.  

However, although non-residential renovations present the greatest opportunity in terms of investment and energy efficiency, as Table 1 shows, residential buildings represent a larger proportion of the building stock. Furthermore, since the pandemic began, our homes are now in greater use now than ever before.  

Directing investment to the residential sector would therefore lead to more tangible effects, not only in terms of reduced energy use and emissions but also job creation. Although it would come at a larger economic cost, the positive social impact from renovating residential buildings could be significant.  

As buildings are central to our daily lives, they should be considered as part of the wider effort to tackle climate change. Renovations to existing buildings would help the UK in achieving its emissions reduction targets, creating new jobs and supporting the economic recovery from COVID-19.

Related competencies include: Sustainability