The retrofit challenge... the emissions equation

Government guidance plays a vital role in meeting net zero targets but has to date been thin on detail.

What policy there is has focused entirely on operational emissions. By contrast, little emphasis has been put on embodied emissions (see box ‘Embodied v operational emissions). Current policy does not require these to be assessed or controlled, other than on a voluntary basis. 

We fully support the UKGBC’s efforts in urging government to demonstrate both greater ambition and increased robustness in policymaking. 

Buildings in London are responsible for 68% of the city’s carbon emissions, according to recent estimates. Many buildings in the capital and beyond need to be retrofitted to reduce their carbon footprint.

However, currently, retrofitting is not taking place at the pace or scale necessary to meet net zero milestones.

The sector, understandably, still questions the value of retrofit, and changing this mindset will require a robust methodology to assess viability. There remains a lack of clarity about the value in retrofit in comparison to new build.

The UKGBC earlier this year launched new guidance on retrofitting large office buildings. It found that significant opportunities are being missed by office investors, owners and occupiers, who do not have clear retrofit strategies.

"We welcome this guidance, which begins to fill the sector’s knowledge gap on how to approach a retrofit project by providing live data and insights as well as case studies with practical examples of retrofit strategies."

National and regional policy also have a part to play in ensuring the success of retrofit. The introduction of a mandatory requirement in national policy to undertake a whole life carbon (WLC) assessment, and to publish data on WLC assessments, as recommended by the London Assembly’s planning and regeneration committee, is just one example of the ways in which policy can become more retrofit-friendly.

With no regulatory requirement to monitor carbon emissions on embodied carbon, the challenge to incentivise landlords, investors and developers remains. Stakeholder pressure and market reputation have been key influencers of change. 

The often-large financial outlays required, including the cost of borrowing, mean that building owners have struggled to find the balance between financial and sustainability objectives.

More innovative financial products are urgently needed.

"Greater tax incentives are also lacking. Currently, our tax system charges more VAT on retrofitting than it does on new builds. Removing the VAT on retrofits could lower retrofit costs significantly."

Increasing statutory and regulatory changes add a further layer of complexity to retrofit projects.

These include:

• Building Safety Act 2022
• Environment Act 2021
• Minimum Energy Efficiency Standard (MEES) Regulations
• UK Sustainability Disclosure Standards (UK SRS)