UK Leasing

Carbon targets have been set – the hard work begins now | Comment

It’s amazing how quickly the climate change agenda has accelerated national awareness, capturing the imaginations of the general public and now politicians who realize that this is perhaps the biggest challenge. society we face, not only in the UK but around the world. Glasgow, as the venue for COP26 this year, has only added to the interest of identifying how the UK economy can act as an international pioneer.

On the back of Theresa May’s net zero carbon commitment for 2050 made in 2019, we now have Boris Johnson’s commitment to an interim target of a 78% reduction in emissions by 2035 (compared to 1990 ) in accordance with the recommendations of the Climate Change Committee. This in reality is not far from the 2050 pledge and will focus minds on what we are doing and how we are going to measure it, especially as it relates to compensation.

So where does that leave the built environment and the role of construction? There are many initiatives in the sector aimed at decarbonization and many companies’ commitments to join the ‘race to zero’. This is all good news – as is the Construction Leadership Council which is launching a collective industry effort, Co2nstruct Zero – as well as the housing industry at large behind the Unlock Net Zero program which will hopefully create a critical mass and serve as a backbone for businesses of all shapes and sizes. and sizes to understand how they have a significant impact. The question is, to what extent is the industry realizing how it will need to change what it does, and what are the opportunities and challenges that present themselves?

The circular economy of construction and demolition must be broken with the capacity to maximize reuse and adaptation. This will test the thinking of designers and manufacturers and set a different mandate for materials scientists.

We know that modernization remains one of the most enduring and perhaps the least attractive parts of the equation. The prospect of massive interventions in the existing building stock, especially domestic properties, scares most policy makers in terms of the complexity and the need for the right government incentives and a funding framework to promote action. We have already seen the demise of several programs aimed at reviving this and are waiting for the next steps on what will appropriately catalyze change in a market where there is no value arbitrage yet to have a “green home”. “.

In institutional-backed commercial and residential real estate, this position is changing rapidly and is perhaps an indicator of how the private residential market might act. There is growing evidence that corporate investment and leasing policies focused on the environment, society and corporate governance are starting to discriminate against assets with poor carbon performance, regardless of regulatory compliance. This is the start of a trend where yields and valuations will be driven by more than the location and the old ‘arms race’ of the specification level, especially if that specification does not provide assets to the specification level. test of time.

> On-demand webinar: CLC explains its net zero strategy

This brings the breathtaking prospect of some recently completed commercial and residential buildings that cannot be leased or invested in the near future without major renovations. There is concrete evidence from internationally renowned investors who are now demanding that new assets achieve decarbonization levels beyond recently announced legislation. They will also increasingly assess this as part of portfolio transactions. The Future Homes Standard has set the government’s expectations for operational carbon for new homes, with new building regulations expected this year ahead of a new technical standard in 2025. Regardless, some residential investors are now setting targets online. with the most aggressive. London Energy Transformation Initiative (LETI) definition of net zero operational carbon.

The reason this is important for the construction industry is that – as with anything to do with the broader changes in the industry – the role of the customer is essential, a fact that I have continued to work on during of the five years since Modernize or Die. Once developers, investors, and occupants of businesses or government agencies begin to define carbon differently – and as a true indicator of value – then this will lead to different specifications and methodologies.

Minimizing the energy used and complying with regulated operational carbon has long been the main objective of designers and the supply chain in the broad sense tends more and more to influence its own scope 1 and scope 2 emissions as defined by the Greenhouse Gas Protocol. Focusing on green energy tariffs for its own business premises and switching to electric vehicle fleets is, however, much easier than attacking indirect scope 3 emissions in an industry so heavily dependent on long value chains, subcontracting and high carbon intensity materials and work processes.

This challenge comes at the right time with the publication of the value toolbox of the innovation hub under construction. Carbon weighting by public and private customers in this framework will be an acid test of how sourcing models hopefully move away from the cheapest price and take these broader results into account before perhaps. be the legislation, although they could be at a higher capex.

There are big problems at the heart of this situation which are closely related to the conundrum of the productivity of our industry. All waste has some form of carbon footprint, so it’s just as important to shift to more efficient DfMA-led site assembly methods and eliminate waste as it is to decarbonize the manufacture of concrete and fuel. steel.

The MMC industry needs to get a lot smarter about how it correlates both lower intrinsic and operational carbon with high levels of pre-engineered value. Making a disposable marketing statement is not enough anymore, it needs to be measured and proven.

Conversely, the widespread accusation of “shipping boxes of air” or simply moving low productivity off-site is often leveled at MMC. Until we systematically measure the properly calculated embedded and operational comparators in the complete value chain for MMC and traditional construction covering equivalent raw materials, waste, transportation, labor and productivity of the site, preliminary site activities, building defects and performance, how do we know if we are creating a benefit or perpetuating a problem?

We also have to get a lot more used to end-of-life conception. The circular economy of construction, construction and demolition must be broken with the ability to maximize reuse and adaptation. Much of this will test the thinking of designers and manufacturers and set a different mission for materials scientists to ensure that the raw ingredients entering our buildings can be recycled and that focus on a low rate of waste. incorporated or operational carbon will not come at the expense of future problems inherited from the past.

All of this also underlines the overarching problem we have as an industry, namely the need to re-qualify and upgrade the skills of the workforce – buyers, designers, surveyors, builders, all to be able to specify, measure and deliver safe low and zero carbon building solutions.

We are already facing a dramatic human resources challenge. If we don’t plan now, we’ll have an additional skill and capability filter that further erodes our delivery base. There is a lot to be done, awareness and interest in the industry has been increased, but I suspect the real hard work is ahead of us as we turn words into action.

Mark Farmer is CEO of Cast Consultancy, MHCLG Champion for MMC in Home Construction and a member of the CLC Senior Advisors Group

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