Heritage and a Low Carbon Economy

Economic growth via a Low Carbon Economy

• The UK government predicts that the low carbon economy could grow by 11% per year up to 2030, which is substantially higher than the projected growth rate of the economy as a whole – estimated at 1 to 2% per year (OBR, 2020)
• While the COVID-19 pandemic and global macroeconomic shocks including the cost-of-living crisis will have impacted these pre-COVID forecasts, evidence shows that the low carbon economy is growing
  • The UK Low Carbon Renewable Energy Economy (UK LCREE) generated £69.4 billion in turnover in 2022, which was a 28% increase since 2021 (ONS, 2024)
  • There were over 272,400 LCREE employees in 2022, which was an 8% increase since 2021 (ONS, 2024)
• In the medium term, forecasts suggest between 135,000 and 725,000 net new jobs will be created in low-carbon sectors such as building retrofit, renewable energy generation and electric vehicles by 2030 (CCC, 2023)

Green investments can be more economically advantageous compared to traditional fiscal stimuli

• According to the IMF, green expenditures are found to generate larger multiplier effects compared to non-eco-friendly expenditures. GDP Multipliers of green spending can be around 2 to 2.5 times larger than those of fossil fuel-led investments (IMF, 2021). The authors conclude that investing in clean energy, like solar, wind or nuclear ends up producing more GDP than it initially demands. By contrast, spending on non-eco-friendly energy generation is found to crowd out other forms of domestic spending to a larger extent. Compared with fossil fuel technologies, which are typically mechanised and capital-intensive, the renewable energy industry is more labour-intensive (IMF, 2021)

• Adaptation investments can consistently deliver high returns, between 2 and 10 times the cost (Foreign and Commonwealth Office, 2020)

• Measures such as peatland restoration, tree planting and improving the condition of green spaces have high benefit-cost ratios, with multiple co-benefits for health and the natural environment as well as the economy (CCC, 2020)

There are vast economic opportunities within the heritage sector as we shift towards a low carbon economy

Heritage constituent industries, specifically heritage construction enterprises, must be at the forefront of the green transition. Because buildings, including the historic buildings which make up 1/5 of the UK's total building stock, are the UK's second highest carbon-emitting sector (CCC, 2023b). Reducing emissions from buildings is critical to the UK's low carbon future.

• The UK construction sector directly contributed £141 billion to the economy in 2023, equivalent to 6.3% of economic output (UK Parliament, 2024)
• The construction industry remains the largest constituent heritage sub-sector of the overall heritage sector, with heritage-led construction generating £7.42 billion GVA in 2022 (CEBR, 2024)
• The construction sector has large multiplier effects in the UK economy. According to the UK Input-Output Analytical tables, an increase in final demand by £1 has an overall impact in Gross Value Added (GVA) and employment generation for the overall UK economy worth £2.1 (ONS, 2024b)
• Domestic construction projects (for example, insulation retrofits or building wind turbines) are less susceptible to offshoring, meaning the money invested is more likely to stay within the country (CCC, 2020)

A transition to a low carbon economy promises a large increase in specialist construction jobs in the coming years. The industry will need to undergo significant upskilling of workforce and technological innovation-led interventions to successfully transition towards a green economy.

• The construction sector plays a crucial role in the UK's Low Carbon and Renewable Energy Economy (LCREE). The construction industry had the largest number of 'green jobs' in 2022, with 99,100 FTEs, equivalent to 36.4% of the total LCREE employment in the UK (ONS, 2024)
• According to the Construction Industry Training Board, around 350,000 new jobs will be created by 2028 in the construction sector. These consist of 86,000 construction project managers, 33,000 building envelope specialists and 59,000 plumbers and HVAC specialists (CITB, 2021)

Retrofitting traditional buildings will benefit the wider economy by stimulating firms in the supply chain and generating revenues for businesses in the construction and other associated sectors.

• It is estimated that retrofitting traditional buildings (pre-1919 buildings) will create an average of 105,000 jobs in the construction sector every year up to 2050 (Capital Economics, 2022)
• An additional £35 billion of economic output would be supported annually through retrofit works to historic properties in the UK (Capital Economics, 2022)
  • This includes an estimated direct output of the construction sector valued at £14.2 billion; ca £15.1 billion associated with spending by the firms in the supply chain; and £5.4 billion worth of output supported across the economy through construction sector's workers spending on goods and services (Capital Economics, 2022)

Maintaining and repairing historic buildings is crucial to long term, sustainable growth

Repairing, maintaining and reusing traditional buildings sets a sustainable pathway to long-term growth, achievable without sacrificing short-term employment growth.

• Repairing and reusing old buildings is more labour-intensive than constructing new ones and results in the creation of more jobs. It has been estimated that for every €1 million invested in energy renovation of buildings, an average of 18 jobs are created in the EU. This is roughly equivalent to the number of new jobs created per £1 million of UK Government grant funding invested in innovation sectors such as biotechnology, medical equipment engineering, and high-tech manufacturing (Wade, 2020)
• 'Maintenance and repair' works in the UK are largely carried out by micro and small enterprise builders and tradespeople. For example, 77.1% (1.7 million) of the construction sector workers are self-employed or work in businesses employing fewer than 50 people. 39.9% (926,000) of the tradespeople are sole operators. These SMEs are the main source of information for householders yet are neglected in policy development and in the programme of incentives to shift the UK's buildings to a net zero pathway (Murtagh et al, 2021)
• There is currently a bias towards constructing new. In recent years (2014 to 2019), home repair and maintenance work have increased by just 7% compared to the output of new housing and new infrastructure, which rose by 40% and 41%, respectively (Capital Economics, 2022)
• Maintenance and repair works on homes accounted for 17% of work completed in 2021, and another 17% accounted for R&M on other (non-homes) buildings and infrastructure. These sectors are expected to grow significantly in the short to medium term, contributing a greater share to the national economy (Capital Economics, 2022)
• Preventative maintenance can lead to monetary benefits. The extended life span of assets, enhanced aesthetic value, and compliance with updated regulations and standards all translate to long-term cost savings and increased or sustained market value of properties (Ritson, 2020)
• Even members of the public are more inclined to prioritise maintaining and repairing existing infrastructure in Britain before spending on new infrastructure. A recent Ipsos MORI poll has shown that 56% of respondents supported maintenance and repair compared to new build, which is more than three times those tending towards the opposite view (16%) (Marshall, 2020)
• Findings from a survey demonstrated that most of the respondents (82%) identified repair activities as being a part of the circular economy. The authors suggest this indicates a level of association between repair and environmental impact or eco-friendly behaviour (Rogers, 2021)

Restore, repair and retrofit historic buildings to reduce costs of lower carbon emissions in the long run

When a typical historic building is refurbished and retrofitted, it not only creates jobs but also emits less carbon by 2050 than a new building.

Evidence to support this includes:

• The adaptive reuse of traditional buildings diminishes waste from demolition, captures the energy consumed in the original construction avoiding new energy use and conserves building materials thus avoiding the extraction of new material (Foster and Kreinin, 2019)
• The marginal abatement cost (MAC) measures the cost of reducing 1 additional unit of pollution. Evidence shows that the MAC of a retrofitted building, including a historic building, is generally lower than that of a new replacement building of standard construction. A new building includes demolition and construction processes, which release embodied carbon back into the atmosphere. Therefore, the cost of achieving the lower emissions associated with a new build is much higher than the costs associated with the refurbishments and retrofit

• The study also demonstrates that one-off projects which do not target energy efficiency improvements and involve significant repair, conservation and conversion works, as was the case with the Chapel, will require a high capital investment. Hence, they will struggle to compete with alternatives from a MAC perspective (Duffy et al, 2020)

The historic environment is key to a successful transition to a low carbon UK economy

A green transition presents an opportunity to secure new, high-skilled jobs and a higher growth path with lower carbon emissions.

A lot depends on how individual sectors respond to this challenge. The construction sector provides one of the biggest opportunities to address emissions in buildings, which are the second highest emitting sector in the UK according to the Climate Change Committee.

The built historic environment, almost 1/5 of the total UK building stock, is thus an integral part of the transition challenge towards a low carbon economy. Refurbishing and retrofitting historic buildings as well as incentivising repair and maintenance of historic buildings will reduce emissions and provide new skills, create new jobs and secure sustainable incomes in a growing, low carbon economy. A heritage-led approach that focuses on repairing and restoring our existing infrastructure first, will enable a smoother, more effective transition to a low carbon economy.

References

1. Capital Economics (2022). 'Retrofitting traditional buildings helping progress to net zero: An analysis of the current skills gap and economic impacts of implementing a full retrofit programme for traditional buildings'. (Accessed: 01.08.2024)
2. Climate Change Committee (CCC) (2023). 'A Net Zero workforce'. (Accessed: 01.08.2024)
3. Climate Change Committee (CCC) (2020). 'Reducing UK emissions: 2020 Progress Report to Parliament'. (Accessed: 01.08.2024)
4. Construction Industry Training Board (CITB) (2021). 'Building Skills for Net Zero'. (Accessed: 01.08.2024)
5. Duffy, A., Nerguti, A., & Purcell, C., Cox, P. (2020). 'Understanding carbon in the historic environment case study extension. Historic England'. (Accessed: 10.08.2024)
6. Foreign and Commonwealth Development Office (FCDO) (2020). 'Building a greener, more resilient global economy'. (Accessed: 05.08.2024)
7. International Monetary Fund (IMF) (2021). 'Building Back Better: How Big Are Green Spending Multipliers?' (Accessed: 01.08.2024)
8. Marshall, B. IPSOS (2020). 'Public unsure of 'Project speed' in infrastructure if it means they have no voice'. (Accessed: 05.08.2024)
9. Murtagh, N., Owen, A. M., & Simpson, K. (2021). 'What motivates building repair-maintenance practitioners to include or avoid energy efficiency measures? Evidence from three studies in the United Kingdom'. Energy Research & Social Science, 73, 101943. (Accessed: 01.08.2024)
10. Foster, G., & Kreinin, H. (2020). 'A critical review of environmental assessment tools for sustainable urban design'. Environmental Research Letters, 15(4), 043003. (Accessed 02.08.2024)
11. Office for Budgetary Responsibility (OBR) (2020). 'Economic and fiscal outlook – March 2020'. (Accessed: 02.08.2024)
12. ONS (2024). 'Low carbon and renewable energy economy, UK - Office for National Statistics'. (Accessed 01.08.2024)
13. ONS (2024b). 'UK input‐output analytical tables: industry by industry'. (Accessed 08.2024)
14. Ritson, J. (2020). 'Maintenance and benign changes as a sustainable strategy for the refurbishment of historic suburban dwellings [Doctoral thesis, Kingston University]. Kingston University Research Repository'. (Accessed: 04.08.2024)
15. Rogers, H. A., Deutz, P., & Ramos, T. B. (2021). 'Repairing the circular economy: Public perception and participant profile of the repair economy in Hull, UK'. Resources, Conservation and Recycling, 168, 105447. (Accessed 03.08.2024)
16. UK Parliament. (2024). 'Industries in the UK'. (Accessed: 01.08.2024)
17. Wade, F. (2020). 'Retrofitting buildings to support the recovery. Building and Cities. Retrofitting Buildings to Support the Recovery – Commentaries'. (Accessed: 04.08.2024)