Let’s talk about large-scale retrofit — why we need Integral District Renewal
What’s the problem?
Buildings are responsible for almost 40% of global GHG emissions, of which 72% are related to energy for building operation, and 28% to energy embodied in construction materials. There are approximately 250 million buildings in Europe, according to the EU Buildings Database, and we are on a mission to enable every single one to reach carbon neutrality by 2050, in line with the European Commission’s draft regulation and the EU Green Deal.
Districts are ‘place-based’ systems, they are local, physical structures that need concrete actions to achieve transformational change. Buildings can reach carbon neutrality in two steps: by replacing the use of fossil fuels for operational energy generation with renewable energy sources, and offsetting carbon embodied in materials and processes with tree planting or other forms of carbon sequestration. This process is relatively straightforward in new buildings, but in our work in cities, we are primarily dealing with a large set of existing constructions.
Existing buildings consume 3 to 4 times the energy required by an energy-efficient new construction, so generating the amount of operational energy required by existing buildings through renewable sources would be rather inefficient. Retrofit rates in Europe are hovering around 1.5%, about half the rate targeted by the EU Energy Efficiency Directive, we therefore need to target both energy efficiency measures in the built environment, while at the same time shifting energy generation for the whole system, at city or larger scale, towards renewable sources. Reaching carbon neutrality with current technologies is possible, but requires a coordinated effort.
In the paragraphs below, I explore how to link technologies, financing systems, data, policy, and citizen engagement within a portfolio approach to District Renewal as an entry point to co-create a prosperous, inclusive, climate-resilient society founded on a circular, zero-carbon economy.
What are the solutions?
Technology
Integral building energy efficiency measures include envelope and energy systems approaches. The building envelope can be insulated, while renewably-powered heat pumps, eventually combined with geothermal installations for increased efficiency, can turn any building into an energy-neutral one. Vertical and horizontal building surfaces can be used for renewable energy generation. EIT Climate-KICs start-up 2ndSKIN, for example, develops this type of integral approaches.
To start exploring a more systemic approach to decarbonising the built environment, we can link this starting point energy communities, like the GECO project in Italy. Users can own a share of a decentral renewable energy network, not necessarily located in a geographically close area, but still reaping the environmental and economic benefits. We can then expand further by connecting power networks to the use of home or electric vehicle batteries for grid stabilization, a direction explored by EIT Climate-KIC’s Circular Cars initiative.
Beyond operational energy, we need to explore how to reduce and offset Greenhouse Gas (GHG) emissions related to embodied energy. Alternatives to products with a high life cycle Global Warming Potential — like cellulose-based materials replacing petrol-based materials — need to be made more attractive to investors. The new generation of high-tech timber construction methodologies explored by Timber Innovation Centre at ETH Zurich and TU Munich’s leanWOOD, for example, has the potential to revolutionize manufacturing, structural design and engineering processes. These approaches are especially relevant when considering the long innovation cycles of the construction sector, which leads to long-term ‘lock-in’ of sub-optimal solutions.
A supporting regulatory framework, targeting not only carbon footprints but other socioeconomic indicators, for example Indoor Air Quality, could quickly influence the market. Contrary to plastic-based materials, organic materials don’t release Volatile Organic Compounds (VOCs), thus lowering the incidence of respiratory diseases and, in turn, making people less susceptible to viral infections, e.g. COVID-19. Organic materials are not only low-carbon and circularity enablers, they are also provably beneficial for physical and mental health. Such a policy would not have a marginal effect: in developing countries, people spend up to 90% of their time indoors.
Finally, we can explore how to link carbon offsetting strategies through nature-based solutions, high-tech materials like CO2-absorbing concrete, and Carbon Capture and Storage. Bill Gates has named carbon-capturing start-up Climeworks one of the 2019 Breakthrough Technologies.
Zero-waste societies and revamped economies: Circularity Enabling Systems
Addressing carbon neutrality from a life cycle point of view means reimagining supply chains towards circular construction, in order to close both material and energy loops.
The organisation I am part of has gathered broad expertise in circularity through its work in the Circular Cities initiative. This has been an important input to the OECD’s work on transitioning cities and regions towards a circular economy. From this engagement, we learnt that ensuring accountability over environmental and socioeconomic externalities throughout the process will be key to lowering embodied carbon emissions.
A portfolio approach to regulation, finance and data is key to enabling circular systems.
The Façade Leasing project, for example, develops a business model to offset initial capital investment with the aim of accelerating renovation projects, while extending producer liability to the operative and End-Of-Life stages of materials and components.
Circularity-enabling systems translate into the creation of completely new professions and skillsets in a wide set of industries along the whole supply chain — from people who can repair, replace, maintain and remanufacture items, to innovators and orchestrators who can rethink how we live, play, and thrive in cities.
Policy & Governance Systems
Public policy will be essential to create the institutional conditions for District Renewal experiments. A portfolio of policies including performance standards, economic signals, support for R&D and enabling policies tailored to each sector is the most effective, lowest-cost way to drive down greenhouse gas emissions, and gain related co-benefits. Economic signalling such as fully pricing negative externalities can be used to pay for performance standards and other measures aimed at reducing inequality (which is exacerbated by climate change impacts).
Municipalities can unlock city levers around regulation and procurement by co-designing standards for large-scale experiments, focussing on monetarizing co-benefits and societal value as part of a portfolio approach to climate action. Mandatory requirements around value-chain GHG emissions disclosure and certification, combined with shadow carbon prices and communal, participatory climate budgets, could be a turning point.
Cities have the potential to become market-shapers, by setting ambitious targets and acquiring the confidence to become a first-mover with their significant buying power. Competition and tendering of engineering and design services are established instruments. For example, C40 created a competition called Reinventing Cities, which integrated several elements of a District Renewal experiment.
Data & Information Systems
Data is key to enable accountability and to implement more efficient processes. We need data to set baselines and benchmarks, form hypotheses, model scenarios, and track progress.
Information helps us connect the physical with the social impact landscape because it enables monitoring indicators of health and wellbeing, like air quality, but also employment, disposable income, and other parameters. Validating improvements to these indicators helps to raise widespread acceptance and investment in innovation. It also helps ensuring that transformational change will be fair and inclusive and that no one will be left behind in the process.
We need data to understand which type of action we should give the highest priority to during the testing phase, in order to maximize the replicability potential. For this, we need high-resolution building stock analysis at city scale. The City of Helsinki, for example, has recognized the relevance of this approach by setting up the Helsinki Region Infoshare, an open data platform.
Collecting data can be challenging: Energy providers, for example, can be reluctant to share user information, but citizens themselves could be motivated to do so, e.g. through gamification approaches.
Digital tools can then allow us to model interdependencies between multiple, sometimes contrasting criteria. The start-up CAALA, for example, has developed a software to analyze the trade-off between the financial and ecologic impact performance of building designs, which could be scaled up to district approaches.
Capital & Financial Systems
On the basis of the actions and technologies identified, there needs to be an investible business case. The challenge is too big for public funds alone, we need to develop a value proposition that can engage both private and public sources, leveraging municipal assets to access capital investment streams. Then, we need to develop the governance structures required to bring a blended fundraising approach to strategic experiments.
Examples of enabling governance structures are city funds, of which the work on Milano Zero Carbon Fund is a prime example. A city fund can seed experiments operated through different models, like Special Purpose Vehicles, Private-Public-Partnerships, One-Stop-Shops, Energy Service Companies, social enterprises, cooperatives, and more.
Each model can explore the most suitable financing mechanism, from tested and validated Energy Performance Contracts to more innovative Sustainability-as-a-Service (of which Mobility-as-a-Service is a fast growing example). La Pinada, a project within the Smart Sustainable District program, is exploring if Sustainability-as-a-Service can become an enabling economic model by shifting the idea of ‘home’ from ownership to a performance-based experience. CrowdHO is an example of crowdfunding for social housing in Bologna, while the city of Malmo is issuing its first green bond.
Setting up structures for accountability across multiple systems is the foundation for the success of an Integral District Renewal approach. A suite of interlocking contracts between funders, suppliers (including utility companies), and property owners will need to include long-term contracting and multi-stakeholder agreements, for example establishing consortium of suppliers working on the same terms, i.e. open book cost calculations, aligned performance indicators, and shared/collaborative guarantee mechanisms.
Energiesprong is possibly the most advanced approach to date, with its net-on the meter strategy for building retrofits, financed through building-linked loans repaid over 20–30 years at low rates with guaranteed energy savings.
Large-scale action through aggregation mechanisms can create market certainties, economies of scale, and a move beyond the mindset of ‘pilot first’, into real change. Moreover, large-scale action introduces the need to develop not only a common vision but also an approach that enables us to connect within shared structures of responsibility. For example, through large scale implementation we could explore the potential of ‘district renewal cooperatives’.
Citizen and democratic decision-making systems
Citizens, including minors, should be given a voice in setting target indicators, like carbon emission goals, but also in defining metrics for qualitative indicators, like wellbeing.
Existing frameworks, e.g. the EU’s framework of whole-life cycle sustainability indicators, Level(s), can be used as starting points. From there, a wide range of unusual indicators could also be tested, like self-assessed productivity, better sleep (for example thanks to improvements in façades), the incidence of asthma, and so on.
There are important lessons on citizen engagement from several of past and ongoing projects. For example, Poliedra achieved deep renovation of existing residential buildings in Milan in the Sharing cities project, by involving multiple owners in structured decision-making. Sustainable Historic Districts (SUSHI) looked at district renewal in historic places with a unique cultural ‘character’, while Green Light District in Amsterdam is exploring integral retrofitting of monument-preserved buildings as an important societal issue.
Trust building issues are relevant and can be explored by engaging with actors like tenants’ associations, by monitoring and validating building performance, by honouring tenure and rights of local citizens, and by protecting from gentrification.
What are the ‘non-negotiables’?
What are the ‘trade-offs’?
How can we balance individual choices and collective responsibility?
We’re just at the dawn of the age of the never-ending, real-time, worldwide conversation that is the web. We should now first and foremost be looking for the right questions.
This article has been co-authored with Sean Lockie and Svea Heinemann
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