How we cost buildings is set to change if carbon becomes a commercial commodity. Sean Lockie explains that engineers will have to understand how a low carbon economy of the future may change a building’s design now.
The UK now has some world leading policy and regulations in the area of climate change and next year pressure on the industry will increase as the Carbon Reduction Commitment and the 25% improvement to energy performance in building regulations (Part L) both become law.
Planners are also demanding on site generation and improvements on Part L and the environmental assessment criteria group BREEAM’s standards are mandatory for government estate.
Then there are the various zero carbon trajectories − such as 2016 for domestic, 2019 for non-domestic and 2018 for the government estate. Government departments are now also talking about a low carbon economy. But what fiscal influences play a part in the transformation?
The first area is a price for externalities. An externality is an attempt to assess the impact from a human activity. Economists for some time have been trying to put a price on these impacts. For example, if a material is quarried an externality would include a price for making good the site after the minerals have been exploited. The same is now true for carbon.
The Department for Environment Food and Rural Affairs (Defra) recommends a shadow cost of carbon to take into account its global warming impact, and so it conducted the Stern Review, which was published in 2006. So what are the impacts of adding this externality, or tax, on to a building project? Faithful+Gould has attempted to model the various economic impacts.
Once the Carbon Reduction Commitment begins to mature in 2011, a new market in carbon trading will emerge that could see increases in the costs per tonne. It predicts that carbon will become more of a commodity in construction projects with developers buying carbon budgets for projects under polluter pays principles.
As buildings get closer towards zero carbon design the proportion of carbon that goes into making and assembling the construction components becomes more significant. Unfortunately, there are some real issues in this area. All the recent government papers have been silent on embodied carbon − the consultation on Part L, the zero carbon definition, the Low Carbon Industrial Strategy and low carbon economy documents.
The challenge for industry in calculating embodied carbon is the lack of a consistent methodology, assessment boundary, and robust factors for various components. Then, when overall embodied carbon is calculated, what benchmark is it compared to and how are emissions mitigated?
Those that are offering to assess a building’s embodied carbon tend to use factors assembled by the University of Bath. Although a good start, these need a massive overhaul with UK specific data and analysis if they are to be relied upon.
If the industry is going to tackle embodied carbon it needs:
- More data from manufacturers
- Help on setting assessment boundaries
- Regulatory bodies to ask for it
- More reliable factors
- Carbon budgets (not just shadow)
- Rules of thumb
So where is the embedded carbon? Faithful+Gould and others have done some analysis in this area and conclude the emissions fall roughly in particular areas.
The analysis also found that 80% of carbon was in about 20% of the cost items. This has meant that in the short term designers know where to concentrate to get the biggest bang for buck. What about existing buildings? Roughly 50% of the UK’s greenhouse gas emissions come from existing buildings. Faithful+Gould and Atkins are developing a master list of solutions.
These are a very helpful way of sitting down with a client who wants to make emission reductions but does not know where to start − focus is likely to be in the easy low cost items first.
- Sean Lockie is sustainability director at project and cost management consultant Faithful+Gould
The evidence for increasing a property’s value by making sure it has an optimal energy performance is still being gathered at the moment and conclusions are hard to reach.
The Royal Institution of Chartered Surveyors, Communities and Local Government have been looking at the valuation process in energy lean domestic properties though and similar work is being done by the US Green Building Council.
It does strongly suggest that clients may already be commissioning engineers, architects and cost consultants to evaluate their carbon knowledge as at least a partial factor.
Longer term it could become a primary factor because of the cost implications of losing control of a carbon budget, so understanding the economics of the low carbon economy will become vital.