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How can buildings’ data support green growth and levelling up?

Author: ICAEW Insights

Published: 05 Jan 2022

It will take a great deal of effort to make the UK housing stock fit for purpose in a net-zero world. By combining developments and lessons learned from multiple sectors, we can enable innovative policymaking, says Craig Stirk, Chief Data Officer, Sprift.

Accelerating and expanding the uptake of Energy Performance Certificates (EPCs) recommendations is key to green growth and levelling up. However, it will require more than vaccine-style procurement strategies to succeed. What is needed is a significant growth in the number of skilled tradespeople to implement the recommendations, as well as an increased supply chain capacity to deliver the materials.

We can learn from smart electricity meter rollouts in the UK and abroad to make sure the EPC scheme is conducted effectively, efficiently and economically. In contrast to the UK – with its decentralised household and supplier decision-making – Italy mandated implementation and delivered a coordinated national programme. That made so much sense.

Policymakers could apply the lessons from the failure of the Green Deal, which did not work well because of complex application and repayment procedures. They can then work towards ensuring a suitable mix of incentives, mandates and funding – all informed by the extensive property data that then becomes available.

How EPC data can help with levelling up

Property values are, broadly speaking, significantly higher in south-east England than the rest of the UK. This means that the cost of implementing EPC recommendations in the less expensive areas is a higher percentage of the value of a home.

By using the integrated property data that is available, innovative policies could be designed to ensure the societal benefits of individual action are appropriately recognised. For example, one element could be incentivising homeowners by capping their contribution to implementing EPC recommendations at the lower of 2% of property value or £25,000.

By setting appropriate thresholds, the bulk of government investment could be in low-cost housing areas, helping to narrow the gap and creating a level playing field.

But first we need the data

We live in a data-driven society. It is imperative for us to start by using the data that is available to inform our actions and to make an impact. As an example, in the UK, residential property accounts for 20.8% of CO2 emissions. This is because of the use of natural gas for heating and cooking, in addition to the consumption of electricity.

Sprift is the most comprehensive source of data on UK property, with more than 28 million properties stored on the platform, each with more than 100 individual data points sourced from more than one billion trusted public and private records. This data supplies a wealth of insight into opportunities available to the UK for use by individuals, businesses, and policymakers.

There is so much going on, but data is key

We all know that the UK government is consulting on decarbonising the UK energy system. Meanwhile, ICAEW is developing a large body of thought leadership on sustainability and carbon accounting. What is more, UK property information is being integrated through Unique Property Reference Numbers (UPRNs – similar to barcodes for properties), led by data-rich prop-tech firms. 

These activities are discrete, but together could have a significant impact. If the decarbonisation of the UK energy system built on the ICAEW carbon accounting expertise and considered reductions in the use of energy, not just the system itself, then 2+2 could equal five – which, despite all our accounting training, could be a good thing for climate impact.

The rollout of UPRNs provides, for the first time, a reliable referencing system to integrate the many disparate sets of property data that exist, enabling new insights to be created and opportunities seized.

What role does property have to play?

Integrating and analysing property data through UPRNs has enabled us to create new insights and actionable opportunities. More than one-fifth of the UK’s CO2 emissions are caused by residential properties, making this a critical component towards reaching net zero.

For more than a decade, the UK has been collecting information about the energy efficiency of our housing stock through EPCs, including recommendations to reduce energy consumption and CO2 emissions. There are currently more than 20 million EPCs available and our analysis shows that implementing each recommendation would reduce CO2 emissions by 40 million tonnes per annum at a cost of approximately £250bn. 

This seems like a vast sum, but the underlying assumptions are key. Each recommendation has an estimated cost range based on it being a one-time purchase for a particular property, so no economies of scale are possible or achieved. The financial return on investment can seem less than compelling when ignoring externalities, such as the cost of climate change. For some recommendations, such as insulating a solid floor, it could take decades to recoup the initial investment.

How can we, individually and collectively, have an impact?

As individuals, are we doing all we reasonably can? If you have bought your home since 2008 there will be an EPC available. You can check to see what is recommended for your property. If there is not an EPC for your property, you can find out how to get one.

Many of the recommendations make sense for the climate, but not financially. Policy needs to address this. For example, there are 2,225 recommendations for ground and air-source heat pumps in the Glasgow G3 postcode alone, where the COP26 summit was held, yet government subsidies were recently announced for some 30,000 per year over the next three years. If the UK were to commit to buying all the heat pumps needed, this would give suppliers certainty of income and reduce their risk. This would also provide homeowners with economies of scale and reduce the time to net financial benefit.

What role does ICAEW and its members play in this?

ICAEW has developed a wealth of expertise in carbon accounting and sustainability, alongside its traditional audit and regulatory capabilities. It is in a superb position to support accelerated development of government policy and implementation frameworks to begin realising the value in the data held today by reducing our national CO2 output.

ICAEW members can deploy their ability in business case development, benefits management and governance to take advantage of the opportunities offered by these policies and frameworks to deliver an effective, economical and efficient decarbonisation of the UK property sector.

Key takeaways

  • The urgent societal need to address climate change is clear today.
  • The integrated property data is available today.
  • The ICAEW and its members’ expertise is available today.
  • Let’s act today to protect tomorrow.

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