Why We Need to Stop Overlooking The Impact of Our Homes and Buildings on Climate Change

Last year the National Housing Federation revealed that the average household in England annually produces more carbon dioxide from their home than they do by driving.

More recently the ‘Confronting the EPC Challenge’ report by Shawbrook Bank which surveyed 1000 landlords, showed that almost a quarter said their properties are currently rated D or below for energy efficiency.

Shining a light on some of the benefits of decarbonising our homes and buildings right now is important – especially when you consider that heating and powering them currently accounts for 40% of the UK’s total energy use.

What does a decarbonised home look like?

There are many ways to decarbonise the built environment, such as having energy efficient appliances, better insulation, smart thermostats, through to sustainably sourced furniture.

However, generating renewable energy, converting it into electricity and storing it until it’s needed - or feeding it back into the grid, so others can use it - is the most effective way to make a difference.

Data from a 28-week trial with a leading property developer showed that it was able to provide just under half of all the building’s total energy needs. It did this by capturing the energy via solar panels, then storing and distributing it. This figure rose to over 90% during the summer months with the battery taking on average just five hours to charge each day.

What are the financial incentives for having energy efficient homes and buildings?

In short, there are many for both occupiers and owners – and thankfully this is now starting to come to light.

Research from Halifax showed that homes with high energy efficiency ratings are worth up to £40,000 more than less efficient properties, and buyers are increasingly willing to pay a ‘green premium’.

Lloyds bank’s own research pointed to a similar conclusion. When looking at all Local Authority Districts in England and Wales, it found that increasing a property’s EPC rating from E to A would, on average, increase its value by £21,300. There were even greater returns on improving highly energy-inefficient properties.

The news is good for landlords of more eco-friendly homes too. Historically, green certifications have seen a rent premium of six percent, according to data from Dalton and Fuerst. Research from JLL also found that buildings that don’t evolve to meet sustainability standards will suffer financially – resulting in a “brown discount.”

Although cheaper to buy, these brown discount buildings will become increasingly harder to sell and will inevitably need to be upgraded. In Europe, companies are turning to the Carbon Risk Real Estate Monitor (CRREM), a tool that helps property owners understand an asset’s GHG emissions and carbon footprint.

Early results suggests that European buyer pools are already diminishing if a seller shows less than-flattering data about where a building might be on its net-zero path.

Whilst it does cost money to upgrade homes to make them more sustainable, the data shows that these costs can be recouped in the future in the form of cheaper energy bills and an increase in the value of the asset.

Analysis from the Regulatory Assistance Project (RAP) has shown that energy efficiency measures have already saved the average British household about £1,000 a year in energy bills – and that with further insulation and home improvements, costs could halve future bills too.

Another advantage of having a greener home is the benefit of more favourable insurance rates and mortgage interest rates. This is something that these industries are starting to embrace as they seek greener properties to help balance their portfolios.

Cap Gemini’s recent Sustainable Insurance report showed that there is increasing pressure on institutions to strictly comply with “green” norms and failure to do so will likely result in a loss of profit. On the mortgage side, lenders like Barclays are rewarding borrowers that buy greener homes, with lower mortgage rates – and more lenders are now following suit which is great to see.  

So, what does the future look like?

As a nation we are starting to become more aware of the negative impacts of unsustainable buildings. Research from NatWest and IHS Markit reveals that over half of homeowners have plans for green home improvements over the next decade.

One shift in mindset that needs to be embraced is seeing battery storage as the future heart of all homes and buildings (instead of the current gas boiler-based heating systems most homes have). Battery storage has long been viewed as the power source for our mobile phones and people are now starting to accept it as the power source for our vehicles. Now we need to see it as playing the same role in our homes and workplaces.

Government regulations are in place to help us get there. From June this year, CO2 emissions from new build homes will need be around 30% lower than current standards. This will be an important step for industry ahead of Future Homes and Buildings Standard in 2025 – a further set of standards that will ensure new homes built from 2025 will produce 75-80% less carbon emissions.

Growing climate concerns and a shifting regulatory landscape will make us all more carbon conscious – we just need to make sure that this consciousness converts into action.

From renters to owners (in both the commercial and domestic sectors) - and from those upgrading existing buildings to those looking to buy their next one, let’s all start asking ourselves, “What we can I do to make a difference?”

Owen Sweetman is a Director at EQONIC Group - a British technology company creating and delivering transformative energy storage technologies to help the word transition towards a zero emissions future.

EQONIC’s smart business models and innovations deliver market leading products and energy storage applications for residential and commercial properties, electric vehicles, portable power, industrial and infrastructure sectors.