As the UK sets its sights on achieving net-zero carbon emissions by 2050, the focus on retrofitting existing buildings has never been more crucial. With a substantial portion of the nation’s building stock dating before 2000, this approach offers a viable solution to reducing carbon footprints without the need for complete demolition and reconstruction. To underline this statistic, the UK Green Building Council says that 80% of the buildings we will use in 2050 will have already have been built, and recommends that the built environment must address the state of existing housing stock in the UK.
To drive this focus towards sustainable outcomes in line with climate targets, innovative and incentivised schemes have the potential to help support the agenda and reward retrofit champions.
What are Retrofit Credits?
One such innovative scheme presents the UK’s social housing sector with an opportunity to fund further works via the Retrofit Credits programme from improvement projects. The carbon credit offsetting scheme has been designed to support and accelerate the sector’s contribution to the UK’s net zero carbon by 2050 target, and is described as a world-first for originating carbon credits from the decarbonisation of existing housing stock.
Monetised credits can be earned from retrofit projects that housing associations are already planning, or would like to carry out, and can be calculated pre-works to inform the investment case for the project.
Retrofit Credits have been developed by social housing charity HACT and PNZ Carbon and have been trialled on retrofit schemes since 2022. HACT argues that the scheme offers a win-win prospect for housing associations, who can access carbon credit funding from projects that can be effectively recycled into further retrofit improvement works (which in turn will be able to earn credits), as well as measuring the positive impact through the social value uplift of residents’ lives.
HACT is now promoting the carbon credits scheme as something that should be attractive to the whole of the UK social housing sector.
Antoine Pellet, Head of Retrofit Credits at HACT, points out that studies of the estimated cost to the sector of realising its contribution to net zero through retrofit have put the figure at well over £100 billion, which is unlikely to be made available by the government or any centrally-funded programme any time soon. In the absence of national funding, Retrofit Credits could help to accelerate the sector’s decarbonisation effort.
Carbon credits have faced criticism in recent years from some environmentalists who argue that low-value credits have not been delivering true additionality in carbon reduction and are being purchased by organisations to offset carbon emissions when they should really be focussed on reducing their carbon footprint. Credits also tend to disappear into schemes such as reforestation projects on the other side of the world.
Antoine argues that Retrofit Credits bring back verifiable, credit-backed decarbonisation projects to this country. They can even be hyper local. An organisation could choose to purchase credits for a housing retrofit scheme on its doorstep to benefit the local community.
What are the potential benefits of Retrofit Credits?
Retrofit Credits are registered with the Verified Carbon Standard (VCS), the world’s most widely-recognised greenhouse gas (GHG) crediting program, and is only the second accredited VCS accredited programme in the UK, says Antoine, and a world first for the built environment.
The Credits can also include an element, and possibly a very substantial element, of social value, explains Antoine.
HACT has been one of the pioneers of social value measurement, chiefly through its work with housing associations, and was instrumental in developing the UK Social Value Bank. The Bank’s methodology comprises 88 measurable value outcomes, all based on established evaluation methods, allowing clients to measure social and environmental impacts through improvements to health and wellbeing.
Retrofit Credits use the Bank’s methodology to calculate and monetise social value in the form of tradable credits, an approach which is fully compliant with the Treasury’s Green Book guidance on appraising programmes and projects.
With the Procurement Act 2023 coming into force next week (24 February 2025), public sector clients will be required to consider the public benefit of their projects as part of the procurement process. RIBAJ has recently covered why social value is key to public procurement frameworks and how architects can bring social value to projects. Social value measurement was therefore set to become a feature of housing association procurement irrespective of HACT’s credits scheme. The credit scheme can provide a ready-made mechanism to achieve social value for projects.
Architects can play a part by alerting their housing association clients to the benefits of Retrofit Credits, says Antoine, and they will be able to factor projected credits into project budgets. They will not have to calculate credits themselves.
PNZ Carbon will calculate the project’s potential carbon emissions reductions using the Verified Carbon Standard and HACT will calculate its social value using the UK Social Value Bank. The client will then be advised on projected funding available through the credits scheme.
Antoine argues that the social value aspect may make Retrofit Credits more attractive to some purchaser organisations, particularly at the local level, because they will be able to see the benefits realised in their local community.
During trials of the scheme, HACT attracted credit buyers and support from organisations such as National Grid, The Economist, Berkeley Group, Trowers & Hamlins solicitors and the ethical Unity Trust Bank among others.
One of the Retrofit Credits case studies presented by HACT explains how Believe Housing, one of the biggest housing associations in the North East of England, used credits from one project to re-invest in additional properties, extending the reach of its retrofit programme. Additional work then attracted additional credits. It is this potential for circularity that HACT wants to see housing associations wake up to.
How does the scheme work with the UK Net Zero Carbon Buildings Standard?
Antoine says that the scheme works alongside other innovative frameworks – like the recently launched cross-built environment UK Net Zero Carbon Buildings Standard (UKNZCBS).
“While Retrofit Credits and the UKNZCBS both aim to facilitate the decarbonisation of buildings in the UK, they operate through different mechanisms,” he says. “Retrofit Credits provide financial incentives for retrofit projects by monetising verified emission reductions and social value impacts, offering a funding stream for social housing providers to undertake energy efficiency improvements. In contrast, the UKNZCBS offers a comprehensive framework for assessing and verifying the net-zero carbon status of buildings, applicable to both new constructions and retrofits.”
With all that being said, integrating Retrofit Credits within projects adhering to the UKNZCBS can enhance the financial viability of achieving the Standard’s energy and carbon performance targets.
“By participating in the Retrofit Credits programme, housing providers can secure additional funding to support retrofit initiatives that comply with the UKNZCBS, thereby accelerating the transition to a net-zero carbon built environment,” Antoine concludes.
Thanks to Antoine Pellet, Head of Retrofit Credits, HACT.
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