ºÃÉ«ÏÈÉúTV

In my last column in January, I set the scene for some of the big-picture challenges facing the economy and construction in 2022: the pandemic, domestic political turmoil, rising inflation and interest rates, public procurement reforms, building safety legislation, resource scarcity and an ever more urgent need to decarbonise. Six months on – and this week in particular – it is fair to say that the storm clouds have gathered.

Although the pandemic is hopefully behind us, we now have the conflict in Ukraine to contend with as well as an impending threat of recession. And that is before we even attempt to consider the consequences of the current domestic political turmoil. 

The seriousness of the issues above is hard to ignore. We are facing one of the most volatile markets of recent times. However, I want to deviate from the understandable focus on the current market, which is already securing lots of column inches. I would like instead to debate whether longer-term trends on decarbonisation risk wrong-footing an industry preoccupied with current issues.

There are contradictory signs that embodied carbon reduction is at least a partial reason for a series of notable decisions that are starting to make waves in development and construction markets

The need to slow climate change risks becoming a casualty of shorter-term political and economic pressure to ease some of the immediate problems facing our world. However, there are contradictory signs that embodied carbon reduction is at least a partial reason for a series of notable decisions that are starting to make waves in development and construction markets.

In January, I referenced the Tulip viewing tower and the Marks & Spencer Oxford Street projects and the debate starting to rage spanning building conservation, heritage, architectural style and embodied carbon considerations. Fast forward a few months and we have now seen the M&S project called in by the secretary of state as well as his use of Article 31 powers to halt demolition of the former ITV South Bank HQ.

Now Landsec’s proposals to redevelop the O2 Centre in Finchley, north London, have started to appear in the crosshairs of the same debate, and there is a queue of other potential developments that no doubt will get the same treatment.

The question is, should the sector see this as a short-term hiatus driven by posturing or stylistic questions, or is this the beginning of a wholesale move away from the world of a profligate build-occupy-demolish-rebuild cycle with a trend towards much more detailed consideration of repurposing and remodelling existing property assets as a means of generating the best value?

Regulatory reforms dealing with carbon in buildings have focused on operational performance, as evidenced by the Future Homes Standard, Future ºÃÉ«ÏÈÉúTVs Strategy and Heat and ºÃÉ«ÏÈÉúTVs Strategy. However, when you look at recommendations from the climate change committee, C40 Cities, the World Green ºÃÉ«ÏÈÉúTV Council and more recently the House of Commons environmental audit committee, they all call for the need to urgently step up consideration and adoption of whole-life carbon (WLC) assessments for the built environment, spanning embodied and operational emissions.

A draft Carbon Emissions (ºÃÉ«ÏÈÉúTVs) Bill has just had a second private members bill hearing in Parliament indicating the growing political awareness of the issue.

WLC thinking is being picked up in local planning guidance in places including London and the West Midlands, but is still absent from national planning policy and is notably not explicitly dealt with in the Levelling Up and Regeneration Bill. The Part Z campaign has been pushing even further and argues that WLC assessments should be enshrined into ºÃÉ«ÏÈÉúTV Regulations. We also continue to have VAT rules which actively disincentivise built asset retention and reuse.

Another debate is whether an increasingly ESG-driven property investment community is  going to start making decisions driven not just by location and occupancy but by carbon and, in turn, drive a brave new world of property yields, comparables and valuation. Some analysts are starting to ask whether certain high-profile, recently completed developments will be exposed by future valuations reflecting a cruel combination of post-covid occupancy level reductions and poor WLC credentials.

At the heart of a move towards more holistic consideration of whether we build, what we build and how we build is a big shift in mindset, education, competency and the supporting underwriting markets 

It is likely that we will see more permitted development conversions, but we probably already have numerous stranded assets where there is actually no viable exit solution and these will have dire implications for placemaking, community and local economies.

At the heart of a move towards more holistic consideration of whether we build, what we build and how we build is a big shift in mindset, education, competency and the supporting underwriting markets. We firstly need industry-wide and government-supported uniformity in how we are going to measure and value carbon – something that we currently do not have.

I am also highly sceptical as to whether we will end up with a measurement framework that reflects reality, especially in terms of the true carbon footprint of the industry’s huge levels of site process waste and rework.

If we move to a world of more building retention, the design, valuation and costing, project management and construction delivery complexity of remodelling or reusing existing buildings is invariably greater than simply defaulting to a new-build equivalent. We need to urgently retrain industry professionals in a whole new world of carbon-led decision making that fundamentally challenges their core technical and professional skills sets. The funding, insurance and warranty markets also need to be able to deal at scale with risk allocation and liability for more existing building interventions.

On the basis that we will always need new buildings, there will be even more focus on designers to maximise material efficiency and engineering performance and a growing search for new materials and manufacturing innovation that decarbonises construction. That begs the question as to how the industry can get comfortable with new, innovative designs or low and zero carbon materials that do not necessarily have 60 years-plus of proven design life and test data?

We are already seeing caution in the use of MMC systems that use traditionally understood materials in innovative ways. When you add in the extra dimension of new factors of safety, reduced spatial design parameters, new materials as well as new methods, then who will take the risk?

I pose the questions above intentionally as much of the carbon discourse is currently about energy source and fabric performance. Many will say that is because embodied carbon is a lower contributor to global carbon emissions (11%) than operational carbon (28%). That may be true now but, unless we change the quantum of new-build construction and practices of delivery, the United Nations has predicted that by 2050 they will be equal contributors. So they deserve equal attention now.

This may all feel a bit distant and remote when seen against the seemingly more urgent issues in front of us, but I sense this is a challenge that is looming large and one that will still be with us many years from now, long after the dust has settled on current political and economic volatility. It will, I am afraid, be a much more painful transition if the government, regardless of who is leading it, and industry just store it up and treat it as tomorrow’s problem. 

Mark Farmer is CEO of Cast Consultancy, MHCLG champion for MMC in homebuilding and a member of the CLC senior advisors group