A panel of industry experts came together, including our Head of Climate Change, James Close, to discuss how embracing decarbonisation could help lower operational costs, mitigate risks, and enhance competitive advantage.

James said: “We're very interested in supporting the transition to net zero in the built environment. We think it's going to reduce emissions, which is a good thing.

“More importantly, if we can get this right, it's going to make homes and buildings warmer and cheaper to run with more predictable prices for energy.”

• Regulatory compliance and future proofing
• Carbon pricing
• Investor pressure and ESG integration
• Lower operational costs of buildings
• Avoiding stranded assets
• A changing consumer market
• Risk mitigation and climate adaptation
• Reputational risks
• Access to capital
• Competitive advantage 

Alongside these, there is the community impact. If older housing stock is generally in a poorer condition with higher levels of damp and cold, for example, then it could be energy inefficient, pushing residents into fuel poverty coupled with high energy costs.

This puts additional pressure on public spending as well as the higher levels of carbon associated with that.

A joint effort between public and private sectors is crucial for advancing retrofitting in both social and public housing, says James, ensuring communities benefit from improved energy efficiency and reduced utility bills.

There’s a significant focus on social housing right now, highlighted by a new partnership with the National Wealth Fund, which will allocate £500m in capital to social housing organisations for retrofitting initiatives.

The National Wealth Fund guarantees 80% of this amount, providing a £400m facility. This arrangement is based on the premise that social housing organisations have a capability in procuring the necessary elements for effective retrofitting, which in turn strengthens the supply chain and improves long-term contracting processes.

In parallel, the 'able to pay' market is actively engaging in retrofitting projects, as homeowners recognise the benefits of enhancing their living conditions, often supported by the capacity to finance these improvements through mortgages or savings. However, there remains a segment of the market that cannot afford such upgrades, which means government intervention.

The key objective is to enable retrofitting on a street-by-street basis, facilitating the integration of advanced technologies such as ground-source heat pumps. While the technology is ready, public awareness and a structured approach to implementation are essential for success.

There is also potential for improving public buildings, particularly as Private Finance Initiative (PFI) contracts from the 1990s approach refinancing. Incorporating energy efficiency improvements as a condition of this refinancing could lead to better energy outcomes and cost predictability for public assets.

Economic shifts: James noted that the economics of retrofitting are shifting, primarily influenced by EPC (Energy Performance Certificate) ratings.

These ratings are becoming indicators of property value and viability in the lending market. Higher-quality properties, which are either already retrofitted or have plans for improvement, pose less risk for lenders. This shift encourages investment in properties that are more likely to maintain occupancy and generate decent yields.

Regulatory influences: The conversation also touched on key regulations, such as the Minimum Energy Efficiency Standards (MEES) and the upcoming Net Zero Carbon Building Standard (NZCBS). These regulations set essential benchmarks for energy efficiency and carbon emissions, influencing property values and lending decisions.

Renewable energy adoption: The discussion emphasised the increasing viability of on-site renewable energy solutions, which are achieving shorter payback periods and providing more predictable energy costs. This trend further supports the economic case for retrofitting.

Challenges and opportunities: James points out that despite significant financial commitments, such as the £1billion Bristol City Leap heat project, the process can be lengthy and costly. In this case, it took three years and £10 million for the local authority to execute. More standardised procedures could accelerate project implementation.

Innovative heating solutions: Creating net-zero neighbourhoods could help speed up local decarbonisation efforts. Additionally, looking into alternative heating sources, like rivers or water bodies for heat exchange, along with traditional methods such as air and ground source heat pumps, is also an exciting development.

To assess your carbon footprint and explore solutions and support to reduce it and get Future Fit , visit our Sustainable Solutions page.

If you’re a contractor, developer, asset owner, or part of the built environment supply chain, find out more about our Retrofit Programme with the School.