Regulation, regulation, regulation

Yesterday (17 March) saw the launch of the interim findings from Peter Mandelson’s Low Carbon Construction Innovation and Growth Team, who have been tasked with conducting a review of the construction industry to ensure it is fit for purpose for delivering a low carbon economy.

The report identifies big opportunities for the industry in building the low carbon homes of the future, upgrading the existing housing stock and providing new infrastructure for low-carbon energy and transport systems. It also identifies a host of barriers that need to be overcome before the industry can fully benefit from these low-carbon options.

The LCCIGT have a clear message for government, which is that in order for the industry to transform its products to low-carbon models, it must be confident that the market is also transforming. They go on to suggest that ‘the evidence is that the clearest signal of this will be taken from well-designed regulatory standards, underpinned by the presumption of a stable and realistic price of carbon.’

The three main political parties have all shied away from the use of regulatory standards to drive improvements to the existing housing stock (in the privately-owned sector at least), preferring instead to focus on the use of financial incentives to entice homeowners into ‘greening’ their homes. All three parties have announced plans to introduce loan schemes to pay for energy efficiency improvements as they vie to win green votes, but none have suggested that our homes ought to be required to meet minimum energy efficiency standards.

The Government’s recently published Strategy for Household Energy Management announced a consultation on regulations to make cavity wall and loft insulation compulsory in all privately-rented properties, but since there would be no compulsion to improve boiler efficiency, draughty windows and other causes of inefficiency, this falls a long way short of providing the kind of powerful signal the industry is seeking.

Similarly, while Europe has an emissions trading scheme, the price at which permits are trading has so far been too low to send a significant signal. Moreover, the uncertain conclusion to the global climate summit in Copenhagen last year and the likelihood that US climate laws will not be based on carbon trading make ‘…a stable and realistic price of carbon’ any time soon highly presumptive indeed.

Thus regulation is all the more important. ippr’s new report on fuel poverty calls for the introduction of minimum energy performance standards for all homes, including rental properties, in order to deliver on both poverty and climate change goals. Politicians have traditionally seen regulation as a last resort and in the run up to the election will fear frightening the business lobby with anything that might be perceived to be an unnecessary burden on industry. But today’s report shows that business may suffer without tougher regulation. Why not give them what they want?

Jenny Bird, research fellow, ippr