Decarbonising Real Estate: The Evolving Relationship Between Energy Efficiency and Housing in Europe
- Publisher:
- Emerald
- Publication Type:
- Journal Article
- Citation:
- Journal of European Real Estate Research, 2020, (Special Issue Decarbonization and Real Estate Investment)
- Issue Date:
- 2020-02-28
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Decarbonisation is a global issue affecting all classes of real estate. 27% of total UK carbon emissions is attributed to housing; however great potential to decarbonise this sector rests with the adoption of energy efficiency technologies (Nejat et al, 2015) as the energy savings realised will lower greenhouse gas (GHG) emissions. Three main approaches exist to achieve this. The first is to take a mandatory approach in which minimum high level energy efficiency standards are set, enforced and applied to both new and existing buildings by enforcing compliance through retrofits of substandard stock (Wilkinson et al, 2015; Patrick et al, 2014). Option two is a voluntary approach, using mechanisms such as Energy Performance Certificates (EPCs) or other rating tools that classify performance to stimulate awareness and action. Third, financial measures, both incentives and taxes, can be applied to ‘nudge’ behaviours. With most westernised countries wedded to neo-liberal governance paradigms, the voluntary fiscal approaches have prevailed over the last 30 or so years. The argument is the market will value more energy efficient properties through increased prices (RICS, 2011. Warren-Myers, 2016). It follows that a premium for energy efficient properties should be apparent (Fuerst et al, 2015. Ferlan et al, 2017). As the time available to take effective climate action diminishes, evaluation of the effectiveness of this approach is imperative. Given the implementation of measures, both voluntary and mandatory over the last three decades, this paper reviews academic literature and case studies of a selection of large-scale consortia projects conducted in Europe. Most of the research reviewed is based on hedonic pricing analyses which have sought a relationship between Energy Performance Certificates and either capital, or rental residential values across Europe. The research sought to gain a deeper understanding of the relationship between energy efficiency and the value of residential property over time. Secondly, this study sought to determine whether more action is required to realise decarbonisation in new and existing residential property in Europe. Finally, the research sought to identify whether other approaches need to be considered to accelerate the rate of change.
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