Energy: Ireland’s Climate Action Plan 2019

We examine the measures proposed by Ireland’s Climate Action Plan that cater for the built environment and the sector’s role in successful energy transition.

Built environment: measures to deliver targets

Mobilising the acceleration of work to make our buildings climate resilient will require new approaches that go well beyond the existing approaches. The key initiatives which will be developed under the plan are:

• Scaling up the present approach of individual grants to develop a model that aggregates up into large area based packages where economies can be achieved in delivering professional advice, tendering the work and developing smart finance, and easy pay back methods (e.g. through your electricity bill)

• Ensuring that every significant new build or refurbishment takes the opportunity to maximise the adoption of climate resilient measures

• Promoting the widespread adoption of heat pump or other renewable heating options

These will take significant innovation in the approach adopted by DCCAE and its agencies but will also require collaborative approaches across Government, Local Authorities, Enterprise, Finance and Communities to deliver. A Task Force will be immediately established to develop the model.

In many cases policy measures can be leveraged to greater effect through smart design and the introduction of interim measures. For instance, with smart metering, in the interim period to full roll-out in 2024, new products and services could be introduced that enable customers to avail of cheaper electricity by managing their energy demand through the use of night rates or other behavioural signals. Notwithstanding this, our 2030 decarbonisation ambition will require a further step-up in activity. A combination of new funding options, a grouped approach to housing retrofits, and signalling advanced performance requirements to phase out fossil-fuel use will all play a key role.

For the built environment, the following measures will be critical for success:

1. New delivery structure for retrofitting

Project Ireland 2040 has provided significant additional resources to carry out retrofitting. We will develop and put in place a new retrofitting delivery model, which will group retrofits together to achieve economies of scale, leverage private finance, and ensure easy pay-back methods. The savings on your electricity bill from using less energy can help fund this, while the home will be warmer and produce fewer emissions.

Various approaches to aggregation exist across a number of countries, but they generally exhibit similar characteristics. An area based retrofit programme would seek to capitalise on critical mass, leveraging economies of scale that would benefit both householders and the supply chain. This type of programme would focus on designated areas in both rural and urban environments and could be designed and delivered to include local authorities, approved housing bodies or other strategic delivery partners. It would also take account of the priorities in Project Ireland 2040 for the depth of retrofit and the targeted replacement of oil boilers with renewable alternatives.

Defined areas could include a mix of residential stock in public ownership and other social housing to provide a ‘core project’, and also address energy poor homes. The blending in of more private householders for energy retrofits would then balance and scale an overall ‘project’ and make greater use of non-Exchequer funds. Appropriate methods of procurement, and high performance standards would be employed with due regard for location, scale and ownership mix.

Area-based scaled approaches can make it easier to inform and engage the targeted homeowners by building on existing community structures and programmes. They can also build the confidence of supply chains, which will need to invest in both competency and capacity as we fulfil our national ambition on the decarbonisation of our built environment.

The Department of Communications, Climate Action and Environment and SEAI will identify a delivery structure and funding options for an area based residential retrofit programme in early 2020 as part of this Plan.

Case Study – Netherlands Retrofit Project

In the Netherlands, the Government funded an innovative project called ‘Energiesprong’, which aggregated demand for retrofits before deploying builders to complete the work at pace. Builders were incentivised to improve efficiency and speed, and got the turnaround time to retrofit a house down to three days. The initiative used social housing as a launch pad before rolling out the approach across the private sector, and was financed by housing companies, which achieved savings on energy costs, repairs and maintenance. The tenants paid for energy like a phone plan: they got an allowance for a guaranteed indoor temperature, plus an allowance for hot water per day, and a power bundle for light and appliances. Energiesprong has since been rolled out in the UK, Italy, France and Germany.

2. Building standards, retrofitting and energy efficiency

• We committed to 45,000 energy efficiency retrofits per annum from 2021, including Sustainable Energy Communities. This Plan has stepped that target up to 50,000 and we have committed to design a new delivery model for retrofitting, which will examine grouping large numbers of houses together to achieve economies of scale, leveraging smart finance, and ensuring easy pay-back methods

• Local Authorities will upgrade their housing stock under Phase 2 of the social housing retrofit programme to bring dwellings more than 40 years old (30% of the social housing stock) to a B2 equivalent BER

• We committed to a deep energy retrofit programme for pre-2008 schools. 17 schools nationwide were selected for energy efficiency works in 2019, which includes installation of renewables. The detail of this plan will now be developed

• The Public Sector Energy Efficiency Programme supports public bodies in achieving a 33% energy efficiency target by 2020, this will be increased to 50% for 2030, but there are also a number of other initiatives in key areas such as in the health sector and enterprise. We will develop a new public sector decarbonisation strategy, including new initiatives to improve the energy efficiency of public buildings, such as hospitals. This is addressed in Chapter 13

• The Excellence in Energy Efficient Design (EXEED) programme was established to embed energy efficiency design and structured energy management in the commercial and public sectors. The EXEED programme will be expanded to further help commercial buildings and businesses embed energy efficiency measures in the design of their projects, processes, and assets

• Scale-up and improve the Sustainable Energy Communities and Better Energy Communities programme and enlist a wider range of organisations to anchor its collective approach. This will be done through developing new partners, creating more visibility within communities, and attracting matching finance

• Develop the necessary supply chain, including working with Regional Skills Fora to train skilled workers

• Extend sectoral networks to new areas, to raise information and awareness and mainstream the adoption of low-carbon technologies, processes and techniques

3. Market signals

• A carbon price has been in place since 2010. Carbon pricing can encourage energy efficiency improvements by households and businesses. We are committed to implement a carbon price of at least €80 per tonne by 2030, accompanied by a trajectory of increases over successive annual Budgets. This will improve the payback period for investments and increase the up-take of energy efficiency measures by factoring the cost of carbon into decision-making. How revenue from carbon pricing could be usefully deployed will be based on the principle that measures we design should incentivise involvement in the transition. Carbon pricing is further described in Chapter 6

• We have Accelerated Capital Allowances (ACAs) for energy efficient equipment, which is supporting the reduction of energy use in the workplace and the awareness of energy efficiency standards in appliances and products. We also introduced a new ACA scheme in 2018 for gas-powered vehicles and refuelling equipment, to assist in achieving national targets of transitioning to a low carbon economy. We will continue to review these schemes in the future and examine potential amendments to enhance their effectiveness

• Mechanical electricity meters will be replaced in every house by 2024 under the Smart Metering Programme. This will facilitate consumers in improving energy efficiency, reducing costs, and support the increased uptake of renewables

4. Regulation of new buildings and renovations

• Increase the number of homes, businesses and rental properties with BERs and DECs as a precursor to regulating for a minimum level of BER upgrade. Appropriate requirements and enforcement mechanisms will be developed that take into account appropriate triggers, such as Government-funded schemes, and potential negative impacts to the supply of rented properties to the market

• More stringent building regulations will apply from the second half of 2019, with all new buildings to be NZEB and existing dwellings undergoing major renovations to meet cost optimal performance equivalent to a BER of B2. These will be progressively extended to improve energy efficiency performance, including to phase out the installation of oil boilers

• Examine ways in which audits for commercial buildings can be further progressed through the use of existing policy levers

• We committed to the full roll out of the SSRH, which will support the adoption of renewable heating systems by commercial, industrial, agricultural, district heating and other nondomestic heat users in sectors not covered by the ETS (Project Ireland 2040 allocation of €300 million to support heat pumps, biomass and anaerobic digestion heating systems)

• At least 40% of all new homes nationally will be delivered within the built-up footprint of existing settlements under our commitment to promote compact and sustainable growth of our cities, towns, and villages. Better spatial planning will reduce the carbon emissions of new developments, and deliver a better quality of life, including shorter commute times, better connections between our places of work and homes, and more vibrant, people-focused environments. Concrete actions to make this a reality include the Land Development Agency aggregating sites, pre-planning of transport, and ensuring that our education and health needs are met

5. Sustainable energy communities

The establishment of 256 Sustainable Energy Communities has been a significant success in encouraging local actors to work together. It is underpinned by SEAI mentors and grants for a Local Energy Plan. They have been able to undertake quite ambitious changes across multiple locations in cooperation with the Energy Obligated Companies.

There is a huge opportunity to build on this model and to work with the new Climate Officers in Local Authorities to mobilise more such networks with a target to reach 1500.

• We aim to develop a concerted effort to make local communities more conscious of poor carbon technologies and how they can be rectified. A wider use of BER ratings by auctioneers, Local Authorities and other influencers, the wider promotion of audits can underpin community mobilisation

6. Smart finance

There is a growing realisation that financial institutions, when they are funding the acquisition of assets, must pay far greater attention to the climate resilience of assets where they risk locking into high-carbon technologies, or other climate vulnerabilities, and in turn, show a greater willingness to fund investment in changes which can make those assets more climate resilient.

• Develop a smart finance initiative to provide a competitive funding offer with State support. A guarantee-based product will offer both a degree of risk-sharing to lenders, and an additional leverage effect, which means that the funding is used in a more efficient way. A scheme, such as the EIB Smart Finance for Smart Buildings programme, could include a package of lower cost loans that are deployed in conjunction with a grant element and advisory services to both the SME and residential sectors

• Expand salary incentive schemes within existing SEAI programmes, including setting up public and private sector pioneer programmes for these models and consider other ‘easy pay’ methods, such as optional addition to LPT bills

• We have developed a gateway approach from the Fuel Allowance Scheme to accessing Warmer Homes

• Examine opportunities associated with green mortgages as part of a portfolio approach to financing energy efficiency improvements, including their application to retrofit a property upon purchase and as a top-up when retrofitting a property already owned

7. District heating

District heating offers the supply of low-carbon heat to homes, businesses and public buildings from a central source. To realise the potential of district heating we will take a number of actions.

• Develop a national policy framework for district heating, which covers the key areas of regulation, planning, financing and research

• Use the two district heating pilot schemes to develop experience and knowledge that can promote and inform further schemes nationwide to facilitate greater uptake of district heating through self-financed heat networks

• Ensure the potential of district heating is considered in all new developments and in particular in SDZs

• Identify a set of potential early mover projects beyond the first two pilot schemes

Conclusion

To discuss the impact of the Plan’s measures and their likely impact on the future of the built environment sector in Ireland, contact a member of our Energy & Utilities team.

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The content of this article is provided for information purposes only and does not constitute legal or other advice.