Sustainable Technologies And The Innovation Regulation Paradox

Futures 34 (2002) 823–840 www.elsevier.com/locate/futures

Sustainable technologies and the innovation– regulation paradox P. Dewick, M. Miozzo∗ Manchester School of Management, UMIST, P.O. Box 88, Manchester M60 1QD, UK

Abstract This article examines the paradox between innovation and regulation and its implication for the adoption of sustainable technologies in the domestic sector of the construction industry. The case of UK is examined, where progress towards the inclusion of social and environmental considerations has been slow. Recent change in attitude in the private sector, combined with government initiatives, has prompted a more sustainable agenda in construction. With significant reductions in greenhouse gas emissions required to meet climate change targets, the case for a particular energy-saving technology—natural thermal insulation materials for cavity wall insulation—suitable for widespread use in residential buildings, is assessed. In addition to the inherent conservatism in the construction industry, additional barriers inhibiting the uptake of new sustainable thermal insulation technologies include capital costs, the failure of the market to account for social and environmental costs and savings and their perceived cost-effectiveness and performance over a 50-year lifetime. Policy implications are drawn from the analysis.  2002 Elsevier Science Ltd. All rights reserved.

1. Introduction There has been substantial investment by government and firms across Europe in the development of technologies and products that support sustainable building and sustainable urban regeneration. Despite a general slow rate of progress, there remain marked differences between individual countries, which suggests that there are sets of factors and institutions that inhibit or facilitate the adoption of sustainable technologies. Any attempt to promote environmentally responsible house building and reno-

∗

Corresponding author. Tel.: +44-161-200-3423; fax: +44-161-200-3505. E-mail address: [email protected] (M. Miozzo).

0016-3287/02/$ - see front matter.  2002 Elsevier Science Ltd. All rights reserved. PII: S 0 0 1 6 - 3 2 8 7 ( 0 2 ) 0 0 0 2 9 - 0

824

P. Dewick, M. Miozzo / Futures 34 (2002) 823–840

vation must consider carefully the distribution of risk and decision-making power reinforced by the system of production, regulation, ownership and finance. This is important because the rate of adoption of new technology in construction determines not only the future competitiveness of the sector but also the strength of the economy’s productive structure and affects the general level of employment and future skill requirement. A more sustainable and energy efficient domestic sector is vital for addressing the problems of climate change. Compared to other European countries, progress in UK toward increased social and environmental considerations in the construction industry has been relatively slow. Despite many government initiatives, there remain important institutional barriers (such as the corporate governance structure, profit motivation and extent of shareholder ownership) particular to UK, which hinder the support of private sector firms.1 This article assesses the case of UK, which is of particular interest because a change in the attitude of the private sector combined with international, national and local government initiatives has recently prompted a more sustainable agenda in construction. The past decade has also seen many technological innovations in energy efficiency. Despite the paradox of innovation and regulation (since the former is concerned with re-writing the rules and replacing the incumbent products and processes specified by the latter), both innovation and regulation are required to move the industry toward a more sustainable future. Due to the fragmented structure and project-based nature of the construction industry, the effective adoption of innovation, and particularly of environmental innovation, requires the participation and collaboration of all the parties in the industry. Environmental innovation can be defined as the use of production equipment, techniques and procedures, and products and product delivery mechanisms that are sustainable (because they conserve energy and natural resources, minimise the environmental impact or footprint of human activity and protect the natural environment) [2]. They include both environmentally friendly products (for example, materials with low embodied energy—the total amount of energy used in the raw materials and manufacture of a certain quantity of material—or composed of natural resources) and processes (for example, waste management or recycling). In the construction industry, most sustainable product innovations stem from upstream product manufacturers and suppliers of the building materials, but all the parties in the building chain have certain responsibilities to promote their adoption and use. It is the responsibility of the client to specify the use of technologies that reduce the consumption of resources over the lifetime of a building and to consider life cycle costs in addition to the capital costs. It is the responsibility of the engineer and the architect to interpret the client’s requirements to include technologies that improve the design of the project. And it is the responsibility of the contractor to include technologies that improve the buildability of the project. For example, these improvements can be sustainable, involving a clean and efficient production process, use of low

1 For a discussion of corporate governance and innovation in UK and other European countries see Ref. [1].

P. Dewick, M. Miozzo / Futures 34 (2002) 823–840

825

embodied energy materials and waste minimisation. Implementation of sustainable technologies has been hindered in the past by a ‘vicious circle of blame’ whereby each actor in the industry blames each other for not building environmentally friendly buildings [3].2 Although most European countries have seen a move toward more sustainable building, UK provides a good example of public and private stakeholders working together to introduce wide-reaching reform in the way the construction industry operates. In addition to the government initiatives, important drivers behind this change have included pressure from non-governmental organisations (for example, Forum for the Future) and the changing attitude of leading firms and the City to environmental performance indicators. In recent years, contractors such as Carillion and Morrison have published environmental reports with their annual reports, reporting their ‘green’ credentials and comparing their environmental performances over the consecutive years [4]. The corporate governance structure of British industry, characterised by its emphasis on delivering profits and dividends to the shareholders, has hindered prioritisation of environmental concerns because of the apparent trade-off between economic and environmental bottom lines. The mid-1990s, however, saw evidence to suggest that the relationship between environmental and financial performances (competitiveness) need not be in conflict. In the building materials and merchants sector, green building firms performed better than non-green firms between 1992 and 1996 [5].3 During late 1990s, two important drivers have emerged to redress this economic imbalance further. First and foremost, the City and shareholders began to express interest in sustainable issues (for example, three-quarters of the City investors say that the City is taking ethical and green issues more seriously).4 Second, firms felt the need to be (seen to be) environmentally conscientious to secure future contracts (for example, in the near future it is likely that firms may be required to demonstrate their environmental credentials in order to secure a place in public sector tender lists from government departments and agencies). The state, both at the national and local authority level, is the single most influential party in supporting the achievement of sustainability targets through its position as the largest client of the construction industry, its capacity to offer fiscal incentives and ability to ‘move the goalposts’ by undertaking a review of building regulations. Also, it has an important role to play as a principal educator and disseminator of information to the industry or as market leader, with the ability to prototype innovative solutions through demonstration projects. The construction industry is 2 Contractors argue that they could provide environmentally efficient buildings, but complain that the developers do not specify them. Developers argue that they would like to specify more environmentally efficient buildings, but investors will not pay for them. Investors argue that they will not pay for these because there is no demand from client occupiers to justify them. 3 Edwards analysed all sectors of the Financial Times All-Share listing comparing the performance of green and ‘non-green’ competitors. Green building materials and merchants firms performed slightly better (but not statistically significantly better) than their non-green competitors. 4 Ethical investments in UK have increased throughout the 1990s and are currently valued at over £3.3bn. Although this only represents 1% of the market, the figure is likely to rise with recent UK legislation on pension fund disclosure (see Refs. [6,7]).

826

P. Dewick, M. Miozzo / Futures 34 (2002) 823–840

influenced by technical regulations, governing products and processes, planning and environmental regulations, governing the finished product, and labour market regulations, governing the welfare of workers during the construction process [8]. It has been argued that more building regulations means that houses are built uniformly and firms compete on price alone, leading to increased risk in the use of new products and processes [9–11]. Private firms will naturally oppose increased environmental regulation since the direct costs are clear whilst the potential future savings are unknown [12]. However, regulations are in place to protect the interests of the public and the environment, to maintain minimum quality standards, to provide a level playing field for firms to compete and to provide a buffer for innovative firms until new technologies are proven and economies of learning reduce their costs [13]. Whilst conventional wisdom tells us that environmental regulations impose significant costs, are responsible for slow productivity growth and hinder firm performance, recent revised opinion has supported a net positive impact of environmental regulation [14].5 Although, in general, there is no empirical analysis that offers convincing evidence to support the assertion that environmental regulation stimulates innovation across the board, the building industry offers good examples of increased resource productivity and lower finished-product total cost, in the presence of the stricter environmental regulation [14,15]. For example, in Sweden, the Netherlands and Germany, where there is considerably stricter environmental regulation, total building costs are below those in UK, despite higher material and labour costs. In these countries, construction processes have been improved to out-weigh the component costs of building. Nevertheless, regardless of whether environmental regulations help or hinder innovation in industry, they affect the competitive behaviour of firms and the competitive dynamics of the industry, imposing new costs, investment demands and opportunities to increase production and energy efficiency [2]. This article examines the importance of regulation and innovation in reducing the energy consumption of domestic buildings. The case of an energy-saving technology—natural thermal insulation materials for cavity wall insulation—suitable for widespread use in the residential buildings is assessed. This technology was selected since it may be expected to make a significant contribution to sustainable building and regeneration on its own account and because it has the potential to demonstrate at a more general level the underlying obstacles and facilitative factors, which influence the innovation process. Where appropriate, international benchmarks and the experience of other European countries will be considered. The article is organised as follows. Section 2 describes the problems of climate change, the role of domestic building in these problems and a description of the UK action at the national and local authority level. Section 3 assesses changing UK regulation. Section 4 explores innovation in the thermal insulation industry. The concluding section looks at the 5 Porter and van der Linde [13] argue that “properly designed” environmental regulation can stimulate innovation, lowering product cost or improving product value, allowing firms to be more productive (e.g. in terms of raw materials, labour and energy) offsetting the costs of reducing the environmental impact. Though this does not equate to technology-forcing, it is technology-facilitating.

P. Dewick, M. Miozzo / Futures 34 (2002) 823–840

827

factors inhibiting and facilitating the use of new sustainable thermal insulation and draws policy implications from the analysis.

2. Climate change and the UK domestic sector There has never been a more important time to understand the innovation process of sustainable technologies and encourage the implementation of energy-efficient technologies in housing. The world is undergoing significant climate change and global warming, owing to the increased levels of greenhouse gases in the atmosphere that have raised the temperature of the earth above its natural equilibrium level. In November 2000, the international community met at the latest UN summit in the Hague to discuss details for implementing the measures and provisions agreed in Kyoto in 1997 to hit carbon emission reduction targets. Carbon dioxide (CO2) is the single largest contributor to greenhouse gases; other important greenhouse gases are methane, nitrous oxide, hydroflourocarbons, perfluorocarbons and sulphur hexaflouride. Although emission levels of these gases are significantly lower than CO2, they exert a much larger contribution per unit gas. At the Kyoto conference in 1997, the UK government agreed to cut greenhouse gas emissions by 12.5% by 2010. The government also agreed to a specific 20% cut in CO2 emissions over the same period. Current estimations suggest that by 2010 UK emissions of the six greenhouse gases will be 13.4% below 1990 levels. However, CO2 emissions are forecast to fall by only 7%, with levels rising after 2000 with the closure of nuclear power plants and increasing economic growth. By 2010, CO2 emissions will account for 85% of greenhouse gas emissions, in comparison with 80% in 1990. During March 2000, the draft UK Climate Change Programme outlined a series of policy measures, with an emphasis on the reduction of CO2 emission (including regulation, economic instruments, education and expenditure) to cut greenhouse emissions by 21.5% by 2010 [16]. According to the Building Research Institute, in 1996, the energy use of buildings (for heating, lighting and cooling) accounted for 50% of the UK’s primary energy consumption, equating to 45% of total UK CO2 emissions, around 25% of sulphur dioxide and nitrous oxide emissions and 10% of methane emissions [17]. The UK domestic sector is responsible for approximately one quarter of total CO2 emissions (see Fig. 1). The use of direct economic instruments to increase fuel bills is deemed to be politically unacceptable and the UK government is using a two-prong policy of education and stick-and-carrot fiscal measures. First, through programmes such as the Energy Efficiency Best Practice Programme and public information campaigns such as the ‘Are you doing your bit?’ campaign, firms, organisations and households can be educated and informed about the costs and benefits of energy-efficient alternatives. Second, by promoting the installation of energy-efficient measures using financial incentives and, where necessary, regulation, energy use can be decreased. Following the Earth Summit in 1992, UK local authorities responded to the Agenda 21 sustainable development commitment by implementing sustainable energy strategies

828

P. Dewick, M. Miozzo / Futures 34 (2002) 823–840

Fig. 1.

CO2 emissions by Sector 1990 and 2010.Source: Ref. [16].

within their region. Further evidence of a sustainable agenda came with the Home Energy Conservation Act (HECA) and the introduction of the Building Regulations for the Conservation of Fuel and Power, requiring new and renovated houses to achieve minimum standard assessment procedure (SAP) rating. Financial incentives are being offered, for example, through Home Improvement Agencies and the Home Energy Efficiency Scheme (HEES). Further, in April 2000, the UK government announced a strategy for more sustainable construction (a collaborative framework between government and industry, which identified action areas and suggested performance indicators) that will complement the policies outlined in the Climate Change Programme [18].6

3. Regulation governing thermal insulation In 1995, the market for European insulation materials was 100 Mm3, dominated by mineral fibre and polystyrene. However, the demand for particular materials differs across the countries. For example, mineral fibre accounts for nearly 80% of the total market in UK, but only 53% in Germany where the market for expanded polystyrene (EPS) is considerably larger [19].7 Clearly, regulations applicable to thermal 6

These include proposals for fiscal measures (e.g. the landfill tax), changes to public sector procurement, development of the construction industry’s image, waste minimisation and resource conservation. The industry is to add another key performance indicator (KPI) on project sustainability, measuring waste, energy, water, ecology, transport and recycling. 7 These differences between the two markets can be attributed not only to the large indigenous polystyrene industry in Germany but also to the differing climate between the two countries, and different construction methods and different cultural attitudes to materials. The different climate in Germany and UK, despite being on the similar lines of latitude, occur because of the gulf stream that makes UK considerably warmer than Germany.

P. Dewick, M. Miozzo / Futures 34 (2002) 823–840

829

insulation also significantly affect the market for insulation materials and Fig. 2 shows the difference in insulation standards across Europe. In UK, the regulations governing thermal insulation standards are included in Part L of the Building Regulations devoted to the conservation of fuel and power in buildings. Planning policy guidance and building regulations are being overhauled to reflect the aims of the Climate Change Programme. Building regulations requiring energy conservation in domestic regulations were introduced in 1965 and amended in 1976, 1982 and 1990. A 1998 consultation paper for the DETR suggested higher

Fig. 2. Comparative European regulations governing thermal insulation standards of exposed elements. Notes: 1. UK∗ shows the standard elemental U-values in 2003 at the end of Stage 1 following the introduction of the proposed new regulations. The figures are based on a SEDBUK boiler being present in the dwelling. By 2008, the suggested insulation values are 0.25, 0.22 and 0.16 W/m2 K for walls, floors and roofs, respectively. 2. Figures for 1995 for Denmark, the Netherlands and Sweden. The 1997 figures for France and Germany. 3. In Sweden, a formula is used to calculate the maximum thermal resistance: 0.18 ⫹ 0.95Af / Aom represents the maximum average thermal resistance where Af is the aggregate area of the windows, doors etc, and Aom is the aggregate area of the enclosing elements of the structure in contact with the heated indoor air. If we assume the following dimensions of a detached house: Af ⫽ 30 and Aom ⫽ 180 then the maximum average U-value across the building would be 0.34. 4. In France, another formula is used to calculate the thermal insulation levels. Depending on the type of heating (electricity or otherwise) and climatic zones (H1, H2 and H3), the area of roof, floor, walls, doors and windows are multiplied by constants varying between 0.25 and 3.5. For example, the surface area of the walls is multiplied by a constant 0.6 if the house is heated by electricity, which varies between 0.65 and 0.8 if heated by other sources according to the climatic zone. 5. UK figures assume a SAP rating of over 60. Sources: Data for all the countries are from the Institute of Building Control, Review of European Building Regulations and Technical Provisions, Institute of Building Control: Surrey (1996–1998) [37–42] and proposed 2003 UK data from Ref. [22].

830

P. Dewick, M. Miozzo / Futures 34 (2002) 823–840

thermal insulation standards for new properties and in the refurbishment and operation of existing buildings [20]. Recommendations for new buildings included significantly lower K-values (the reciprocal of the thermal resistance) for walls and windows (a good insulator has a low K-value), minimum efficiency standards for ventilation systems and a minimum number of compact fluorescent light bulbs. Recommendations for existing buildings included new building standards that could be applied during any major refurbishment or change of owner/tenant. Further suggestions have included periodic (every 7–10 years) energy surveys of homes that belong to the same owners for longer periods of time and ‘MOT tests’ for existing buildings, to check if the building fabric and internal systems operate as intended [20,21]. These checks would be implemented in conjunction with a system of sanctions for inefficient operators. In July 2000, two consultation papers on the conservation of fuel and power in the English and Welsh and Scottish building regulations were published [22,23]. Regulatory changes are being considered for phased implementation in UK beginning in late 2001. Alongside the replacement of the SAP by the Carbon Performance index (for domestic buildings), the most significant proposals include increases in elemental and target U-values and efficiency and control improvements in heating and lighting.8 The requirements also extend the definition of material alteration to include more retro-fit work within the scope of the regulations. Under a two-stage programme, the building regulations governing U-values will tighten: for example, exposed wall U-values will be tightened from 0.45 to 0.3 W/m2 K by 2004.9 Similar changes apply to the ground floor, roof, exposed floor, windows, doors and rooflights. Trade-offs between efficient boilers and fabric insulation are also being considered: for example, exposed wall U-values of just 0.30 W/m2 K will be required if a SEDBUK (seasonal efficiency of a domestic boiler database) boiler is used. This is part of a trade-off package, where the poorest acceptable U-values will fall to 0.7 W/m2 K if compensated by the performance of other elements. These proposed regulation changes to domestic dwellings are estimated to reduce carbon emissions by 1.32 MtC by 2010, over half of which will stem from alterations to existing dwellings.10 8 The carbon index would replace the SAP energy rating method and gives designers and builders more flexibility in meeting annual carbon targets. The SAP rating will still have to be calculated though no minimum standard will be required. 9 The UK government has also hinted at further reduction post 2005, tightening U-values for exposed walls, for example, to 0.25 W/m2 K. 10 Although the principal benefits are regarded in terms of meeting the Government’s carbon emission targets, more direct benefits will be available to the household through reduced energy bills. A 25% saving in energy equates to £125 per year for a typical domestic dwelling, representing a carbon saving of 0.15 t per year, depending on people’s choice between lower fuel bills and increased warmth. A reduction in carbon emission by new build housing by 2010 has been estimated at 0.25 MtC per year in England and Wales and 0.065 MtC per year in Scotland. As for the cost impact of the proposed changes, following the two-stage introduction of the regulations, it is estimated that the price of a new detached and semi-detached house will rise by between £900 and £1400, smaller types of houses increasing in price by between £600 and £1100. It must be noted though that any predictions of future costs are inherently inflated since they fail to account for improved technology [22,23].

P. Dewick, M. Miozzo / Futures 34 (2002) 823–840

831

4. Sustainable thermal insulation technologies

There are a number of barriers that prevent the uptake of new technologies, some of which are particularly pertinent when considering environmental technologies. In addition to the increased risk and the lack of information and public awareness of new technologies, the costs involved in using a new technology are the single most important barrier. The real cost of the insulation will include the price of the material, the rate of energy loss, the cost of that energy and the payback period over which the insulation is amortised. Deregulation of the UK gas and electricity industries may have sent out a wrong signal about energy conservation, removing the financial constraint on wasting energy. Arguably, a bigger problem is that promoters or those financing building projects give more consideration to the capital cost of thermal insulation as opposed to its life-cycle cost or environmental cost. To calculate the life cycle cost of a material, capital costs must be considered alongside the maintenance costs, the materials’ availability, installation costs and forecast life span. One can also calculate the cost of the material in terms of its triple bottom line, ensuring that environmental and social considerations are taken into account in conjunction with the pure economic cost (including the externalities generated in both the production and use of the materials and considering the liability and risk issues involved with the safety of those who build, use or occupy the building). A brief analysis of a number of conventional and sustainable technologies currently available, including an examination of their performance, cost and energy efficiency potential considering the environmental impact of their production, installation and use follows. The performance of insulation materials depends primarily upon their ability to trap still air and although cavities and surface resistances are important, the thermal resistance of construction materials is the most significant factor in construction. Thermal conductivity, or K-value, measures heat flow through a given amount of material. However, an insulation material’s weight, strength to weight ratio, convective heat loss, settling and loss of insulating capacity, thermal and vapour resistivity, water absorption properties and resistance to moisture transmission and fire credentials are also important.11 There are three different forms of insulation used in the

11

For example, the weight of an insulation material is important since sagging can occur in the ceilings. Convective heat loss in insulation caused by air currents is rare but can occur when different temperature air currents below and above the insulation cause small ‘convection loops’ within the insulation. Standardisation of fire regulations is presently being undertaken and the differences that currently exist between incumbent regulations influence the choice of insulation materials. The core insulating material can affect its fire performance; so too can the choice of blowing agent. Additional fire retardants may be necessary and these will add to the cost of the insulation. For further details see Refs. [19,24].

832

P. Dewick, M. Miozzo / Futures 34 (2002) 823–840

control of heat flow: reflective, resistive and capacitive insulation.12 Resistive insulation materials are the most common and are produced in two types, fibrous materials and foams. Fibrous materials include mineral wool, glass fibre batts and quilts, and organic fibres such as cellulose. Foams include EPS, extruded polystyrene (XPS), polyurethane and urea formaldehyde. Foams are available as rigid or semirigid slabs and can be formed in situ (that is, injected into cavities). In 1992, a study conducted by BSRIA and BRE found that the materials principally used in cavity wall insulation in non-timber houses were glass mineral wool slab, rock mineral wool slabs and XPS slab, accounting for 85% of market share; for external wall insulation, EPS foam and mineral fibre account for 85% of the total market share [26]. The thermal conductivity of these products, relative to other materials, is shown in Table 1. The widespread use of these materials can largely be explained by their low K-values, efficiency and relatively low cost, encouraged by the construction industry’s preference for tried and tested materials, the performance of which has been monitored and proven over many years. However, as Table 1 highlights, these materials fit uncomfortably alongside the concept of sustainability, producing a significant environmental impact during their production and use. For example, rock wool and glass wool are produced by a similar process involving the combination of raw materials through intense heat. Glass wool is a composite material of sand, limestone, refined borax, sodium carbonate and sodium sulphate, combined by melting at high temperatures (1350 °C) and spun to form thin fibres. Volcanic rock (such as diabase) and dolomite are heated up with coke to form rock wool. The environmental impact of the production of these two materials is significant, both in terms of their production and use. Mining is required to extract the raw materials and the production process is energy intensive, creating emissions of fluorides, chlorides and particulates and releases solvents and volatile organic compounds such as phenol and formaldehyde. In addition, sulphur oxides and nitrogen oxides are produced contributing to acid rain and causing photochemical oxidants. In terms of its use, fibreglass has been measured above some landfill sites and there is concern that it may be an atmospheric pollutant because of its non-biodegradable properties. There is also inconclusive evidence surrounding the carcinogenic properties of fibreglass since it contains small amounts of harmful small-sized fibres found in asbestos in addition to oil and resin binders, which limit their harmful release [27––29]. Plastic foams are even more environmentally damaging than their fibrous alternatives, particularly in terms of their global warming potential (GWP), partly because of the high embodied energy raw materials and partly because of the use of blowing agents. The raw materials, oil and natural gas, are non-renewable resources and their 12 Reflective insulation can be used when the dominant heat transfer is by radiation. Radiant barrier installations have been used since 1930s in US as an inexpensive way of protecting buildings from undesirable heat gain (see Ref. [25]). Radiant barriers use reflective foil, for example aluminium foil, (which has low absorption and low emittance) to block radiant heat transfer. Capacitive insulation is distinguished from the resistive insulation because rather than providing an instantaneous effect, it affects the timing of heat flow.

P. Dewick, M. Miozzo / Futures 34 (2002) 823–840

833

Table 1 Thermal conductivity of insulation materials Product

Phenolic foam Rigid polyurethane foam XPS foam PVC foam Glass mineral wool Rock mineral wool EPS Vital∗ CR flax∗ CR wool∗ Wool Cellulose fibres Cork Homatherm∗ Isoflac∗ Gutex thermosafe∗ Gutex thermowall∗ EMFA coconut fibre boards∗ Foamed glass Gutex happy step∗ Exfoliated vermiculite Wood–wool slabs Compressed straw slabs

Thermal conductivity Density (kg/m3) Environmental impact (W/m2 K) at 10 °C Production

Use

Total

0.022 0.023

60 35–50

5 5

3/4 3/4

5 3/4 5 3/4

0.026 0.029–0.048 0.031–0.037 0.033–0.037 0.033–0.038 0.034 0.037 0.037 0.037 0.037 0.038 0.04 0.04 0.04 0.04 0.045

28–45 40–300 16–80 23–80 15–30 40 30 16 – – 112 85 40–70 160 160 124

5 5 3 1/2 3 1/2 5 1/4 1/4 1/4 1/4 1/4 1/4 1/4 1/4 1/4 1/4 1/4

1/4 1 1 1 1/4 0 1/4 1/4 0 0 1/4 0 0 0 0 0

5 1/4 6 4 1/2 4 1/2 5 1/4 1/4 1/2 1/2 1/4 1/4 1/2 1/4 1/4 1/4 1/4 1/4

0.05–0.052 0.05 0.066 0.08–0.11 0.101

– 260 109 400–600 –

3 1/4 1 3/4 2 3/4 1/2

0 0 0 1/4 1/4

3 1/4 1 3/4 3 3/4

Notes: 1. A star∗ indicates a natural insulation material product. 2. Environmental impact, both in terms of production and use, ranked 1–5 where 5 represents the most environmentally damaging impact. Source: Thermal Insulation Manufacturers and Suppliers Association (TIMSA). Insulation industry handbook 1999/2000. TIMSA; 2000. Also see Refs. [29,31].

use, associated with emissions of oils, phenols, heavy metals and scrubber effluents, account for over half of all toxic emissions into the environment [29]. For example, EPS is created by fusing polystyrene with pentane and XPS, by combining polystyrene with blowing agents. Blowing agents are used to increase the energy efficiency of the material, expanding the polymer matrix and adding to the thermal

834

P. Dewick, M. Miozzo / Futures 34 (2002) 823–840

conductivity through the blowing agent’s inherent K-value but impose a heavy cost on the environment.13 If we contrast these materials with an organic fibre such as cellulose then the environmental impact becomes clear. One hundred thousand million tonnes of cellulose polymer are produced annually and the market for ‘warmcel’ is increasing. Cellulose fibre insulation is made from processed waste paper and treated with borax (sodium tetraborate) to guard against fire and insects. The insulation can be placed by hand or sprayed and is commonly used in ‘breathing wall’ timber frame construction and in lofts. The production of cellulose fibre insulation does not cause any pollution and has a relatively low embodied energy. In fact, the only negative environmental impact stems from the energy used in the production of the materials. These properties are discussed in Refs. [27,29,30]. Thermal insulation products, more sustainable in terms of imposing a lower environmental impact through their production and use, are shown in Table 1. In terms of K-value, it is clear that they rank below the fibrous and foam resistive insulation materials. Natural insulation materials are now available in most forms (flax, wool, cellulose fibre—loose fill and batts—and wood-fibre board) and can be used in place of the conventional materials. All natural insulation materials are produced from renewable plant or animal resources, have low embodied energy, use only natural additives such as potato starch or borax (which means that there are no toxic by-products during their manufacture and no health problems during installation), and are fully biodegradable (that is, they contain no toxic or synthetic chemicals) [31]. For example, ‘vital’ is cellulose insulation in batt form made from oxygen bleached wood pulp and viscose fibres. It is bound with a food-grade cellulose-based binder and treated with a pH neutral boron liquid to protect against fire and decay. The material is able to absorb up to 20% of its weight in moisture and is non-toxic and free of emissions. The production process of vital produces 40% more energy than it consumes and can be recycled or biodegraded at the end of its life. In addition, the installation is health free, the insulation can be handled, does not scratch or itch and does not require a dust mask to be worn.

13

Clorofluorocarbons (CFCs), constituting various gaseous compounds of carbon, hydrogen, chlorine and fluorine, have been used as the preferred refrigerant since the 1930s and, in more recent years, is the preferred blowing agent. CFC-11 has a thermal conductivity of 0.017 at 10% and can improve the thermal performance of XPS. The significant ozone depleting properties and GWP of CFCs were highlighted in 1980s and, following the Montreal Protocol in 1987, CFCs were phased out to be replaced by hydrofluorocarbons (HFCs). CFCs have a GWP 4000 times that of CO2. HFCs, such as HFC-245fa, have a GWP 820 times greater than CO2 and HCFC-141b has a GWP 630 times greater. In addition, HCFCs also have significantly lower ozone depleting potential, 0.11 compared to 1 of CFC-11. Also, there are particular hazards in the use of polystyrene foams in terms of the emissions of carbon monoxide, CO2, smoke and water vapour if the material is exposed to fire. For a more in-depth examination of the principal thermal insulation materials used in UK see Ref. [26]. A more detailed life-cycle analysis of mineral wool (rock wool and glass wool) EPS foam and cellulose fibre is provided. Market share figures for each material are supplied and more information is also given regarding the materials properties (e.g. available form, thickness, adherence to international standards etc.). For more information on the use of blowing agents see Ref. [19].

P. Dewick, M. Miozzo / Futures 34 (2002) 823–840

835

5. Implications The use of technology is an important step toward more sustainable building. The use of natural insulation materials alleviates many of the environmental problems caused by the production and use of more conventional insulation materials. In this sense, the use of natural insulation materials would contribute toward meeting the UK climate change targets. However, in meeting the desired climate change reductions, there are two contrasting issues. The first, and most important, is the need to reduce the energy consumption of buildings. The over-riding benefit of thermal insulation is that the energy consumed and pollution emitted during its production is vastly outweighed by the energy savings and pollution reductions attained through its use.14 Thermal insulation is one of the number of options that could be employed to increase domestic energy efficiency (others include improving the performance of the heating and hot water systems or the efficiency of boilers and lighting), though it certainly is the most cost-effective way of reducing energy consumption and CO2 emissions. Through reducing energy consumption by increasing the level of insulation in existing buildings and installing higher thermal values of insulation in new build, non-renewable fuel supplies can be conserved, reducing the amount of pollutants created in the burning of fossil fuels (for example, CO2, nitrogen oxides and sulphur dioxide). Increased thermal insulation is a positive measure to decrease energy use but the choice of insulation material determines the true degree of sustainability—no insulation material is completely sustainable, but some are more sustainable than the others are. Thus, the second issue concerns the direct environmental impact of the production and use of thermal insulation materials. The above analysis has shown that many conventional materials have high embodied energy and have properties that affect health and prevent the materials from biodegrading or being re-used. There is a significant environmental damage imposed by the production (for example, mining of raw materials, energy intensive production processes in fibrous insulation, use of HFCs and HCFCs in foam insulation) and use (for instance, materials that are non-biodegradable or have carcinogenic properties) of these materials. Some natural insulation materials offer a credible alternative with significantly fewer negative externalities (for example, no mining of raw materials, no consumption of limited resources, no health problems during or following installation and no synthetic ingredients preventing biodegradation). The range of the natural insulation products available today demonstrates that there is no lack of innovation in thermal insulation materials. Table 1 shows that some of the natural insulation materials (such as vital, CR flax, CR wool, all of which are made from cellulose fibres) have comparable thermal conductivity properties at similar thickness as some of the more conventional insulation materials (such as 14 At the Kyoto conference, 1997, a paper submitted to the conference by the international insulation associations including European Insulation Manufacturers Association (EURIMA) and North American Insulation Manufacturers Association (NAIMA) estimated that thermal insulation has a ratio of energy saving to energy investment of 12:1 per year.

836

P. Dewick, M. Miozzo / Futures 34 (2002) 823–840

mineral wool, rock wool and EPS). However, there are a number of barriers that inhibit the uptake of new technologies, the most significant of which is the high costs. Capital economic costs are considered in isolation because the market fails to take account of social and environmental costs/savings. Owing to the distribution of risk and ownership, the promoter knows the capital cost of using the technology, but is unsure of the potential future savings accruing to the occupier. Further, most of the natural insulation materials do not offer the necessary cost-effectiveness and performance, in terms of energy conservation, over a 50-year lifetime. The best property of the natural insulation is its low embodied energy, but unfortunately, energy savings in terms of a material’s embodied energy are far outweighed by energy savings over a lifetime’s performance. Empirical evidence has demonstrated that despite the higher embodied energy and higher capital cost of plastic foams, their far superior insulation performance results in positive net energy, and environmental and financial benefits when compared to their fibrous alternatives [32].15 Since the natural insulation materials have similar thermal conductivity properties at a particular level of thickness of the materials tested (for example, rock mineral fibre and EPS), one can assume the results are applicable to natural insulation’s future performance. New materials can be tested in the laboratory but it is difficult to simulate all the environmental conditions and to recreate the ageing process in the laboratory. The use of new materials also comes up against the inherent conservatism in the construction industry and reliance on the tried and tested materials. Conventional materials have been used for decades and have proved their reliability against the key factors affecting their field performance, for example, the settlement of loose-fills, ageing of gas-filled foams, effect of air on fibreglass and the effect of moisture on the thermal performance of all the insulations. Lack of information about the alternatives also hinders their consideration. In addition, because thermal insulation is placed in between walls and in roofs and floors, it has no aesthetic properties. It is a hidden innovation and architects, in particular, may wish to channel resources towards more visible technologies. Without regulation, therefore, the building industry would not consider using more thermal insulation than is needed because of the cost implications (unless it was

15

Heath compared the performance of phenolic insulation, rigid urethane insulation, XPS, EPS and rock mineral wool at constant U-values and constant thickness over a 50-year life span. The results confirmed that: energy savings over the life span of the building dwarfed embodied energy savings; environmental and financial motives were consistent and plastic foams performed far better than fibrous insulants. For example, at a constant thickness of 77 mm, over 50 years, the various insulants had net energy benefits ranging from 446,000 to 485,000 kW h, compared to embodied energies of the insulants that ranged between 2200 and 6100 kW h. In terms of their environmental impact, the difference in the materials performance over 50 years relates to benefits between 127 and 139 t of CO2 emissions, the difference in their embodied energies relate to 0.6–1.7 t of CO2 emissions. In financial terms, the savings produced over the 50 years by using the insulants ranged between £9321 and £10,394. In all the tests, phenolic foam was the best insulant and the rock mineral fibre the worst. Over 50 years, phenolic foam’s net energy benefit was 39,000 kWh better than the rock mineral fibre, saving more than 11 t of CO2 equivalent emissions with a financial saving of £1073.

P. Dewick, M. Miozzo / Futures 34 (2002) 823–840

837

specifically requested by a client willing to pay the increased capital cost). This article contends that despite its unquestionable importance, innovation will not succeed alone in countering the problems posed by climate change and the drive toward sustainability. Although there may be innovative alternatives to existing products and processes, without changes in the UK building regulations, emissions targets will not be met. For UK, it could be argued that the proposed regulatory changes do not go far enough and that the only way to meet sustainability and innovation targets is to account for the environmental cost of CO2 emissions through the building regulations, including increasing them towards their Scandinavian equivalents. The regulatory changes will help achieve the government’s CO2 target, improve housing energy efficiency and contribute towards sustainable construction and managing the effects of global warming. Emissions of 1.32 MtC can be saved by 2010 as a result of the new regulations and it is estimated that new housing built under the new standards will contribute between 25% and over 30% less carbon emissions [22,33,34]. However, because the number of new build homes increases the housing stock by only 1% each year, the reduction as a proportion of the total housing stock is in fact very small. Significant improvement in the energy efficiency of the housing stock will be needed since houses built as recently as the end of the 1980s need a decrease of over 50% heat loss to meet the new standards [34].16 Housing associations have been encouraged to conduct energy efficient and environmentally sound refurbishment of their existing stock but a more pro-active stance on behalf of home owners is needed and is likely to require substantial subsidies from government and local authorities or industry.17 The cumulative effect of more stringent regulations applied to new build housing and improvements to the existing housing stock will gain momentum up to 2010 and will accelerate thereafter. The more stringent U-values may also stimulate innovation in the construction process if more space is required to accommodate additional insulation. Innovation, in this case, will be encouraged in the design stage, the construction stage and/or in the control of the thermal insulation’s application.18 The use of natural insulations may further be discouraged by the more stringent regulations since, with lower Kvalues, a greater thickness is needed to achieve the prescribed U-values. Of course, this threat may encourage further research and development into improving the efficiency of the natural insulation products. And with the staggered introduction of

16

Harper estimates that 99% of homes will be under-insulated according to the new regulations at the end of 2000. 17 For example, the National Home Energy Rating (NHER) estimates that a detached house of 1930s without cavity wall insulation costs £1000 more per year to heat than houses built to current existing standards. Over a 2 year period, £10m of grants from the government, industry, regional electricity companies and local authorities provided assistance to the occupiers of properties with inadequately insulated cavity-filled walls [35]. 18 For example, Sterling and Anderson list the likely effects of increased U-values on walls. These include additional fire and rain penetration risk, reduced impact resistance and potential external frost damage. Design issues concern the lower internal space or larger building footprint and detailing around windows and doors [36].

838

P. Dewick, M. Miozzo / Futures 34 (2002) 823–840

the regulations, the manufacturers and suppliers of natural insulation products have time to respond without the industry having to resort to hasty short-term measures. Stringent prescriptive, as opposed to performance-based, regulation is needed to stimulate innovation and create demand for higher priced alternatives, before they become cost-effective with learning and experience economies. Our research does not provide support to the planned implementation of U-value trade-offs (available where efficient gas-fired central heating systems are installed). Although trade-offs give designers more flexibility, they impose another level of complexity into the equation and compromise the importance of U-values. The thermal performance of buildings provide a lifetime assurance of calculable heat-loss saving. The efficiency of boilers depends on the user and there remains the possibility that less efficient boilers will replace incumbents in 10 years time. If this particular facet of the regulations is implemented then continued energy efficiency could be monitored by an extension of the proposed ‘MOT test’, the DETR plan to conduct for larger buildings, or by requiring an energy assessment to be included in the information that sellers must provide when marketing their houses. Because of the energy bill saving implications of these proposals, government must work closely with industry, housing associations and housing authorities to ensure the efficient retro-fit (including the modification, renewal and extension) of existing buildings. This article has examined the paradox between innovation and regulation and its implication for the adoption of sustainable technologies in the domestic sector of the construction industry. Using thermal insulation as an example, the article has analysed the underlying innovation process of sustainable technologies and outlined the principal factors inhibiting and facilitating their adoption, highlighting the fact that both innovation and regulation are needed to promote a more sustainable future for the construction industry. Though UK is used as an example, the conclusions are applicable at a general level, particularly those concerning the levels and type of regulation, the need to evaluate the environmental costs of innovative materials more thoroughly and effectively and the need to engage all actors in the construction industry through education and the dissemination of good practice.

Acknowledgements We gratefully acknowledge research support received from Scottish Homes as part of the CRISE (Competitive Renewable Initiatives in Sustainable Europe) Network Group.

References [1] Miozzo M, Dewick P. Building competitive advantage: innovation and corporate governance in European construction. Res Policy 2001;31(6):989–1008. [2] Shrivastava P. Environmental technologies and competitive advantage. Strat Manage J 1995;16:183–200.

P. Dewick, M. Miozzo / Futures 34 (2002) 823–840

839

[3] Cadman D. Environmental audits of the construction industry: what they show and how they can be broadened and acted upon. In: Birmingham. Proceedings of the Construction Confederation Conference: Constructing a Sustainable Environment. 1999. [4] Carillion. We are making choices. Carillion’s Environment, Community and Social report 1999– 2000, 2000. Available at http://www.carillionplc.com. [5] Edwards D. The link between company environmental and financial performance. London: Earthscan, 1998. [6] Cowe R, Williams S. Who are the ethical consumers? 2000. Available at http://www.co-operativebank.co.uk. [7] MacGillivray A. The fair share: the growing market share of green and ethical products, 2000. Available at http://www.co-operative bank.co.uk. [8] Gann D. Can regulations promote construction innovation? CRISP Comm, 1999. [9] Blackley DM, Shepard EM. The diffusion of innovation in home building. J Housing Econ 1995;5:303–22. [10] Pries F, Janszen F. Innovation in the construction industry: the dominant role of the environment. Construct Manage Econ 1995;13:43–51. [11] Tatum CB. Process of innovation in construction firm. J Construct Eng Manage 1987;113(4):648–63. [12] Wubben E. What’s in it for us? Or: The impact of environmental legislation on competitiveness. Bus Strat Environ 1999;8:95–107. [13] Porter M, van der Linde C. Green and competitive: ending the stalemate. Harvard Bus Rev 1995;120–34. [14] Jaffe AB, Peterson SR, Portney PR, Stavins RN. Environmental regulation and the competitiveness of US manufacturing: what does the evidence tell us? J Econ Lit 1995;33:132–63. [15] Welford R, Starkey R. The earthscan reader in business and the environment. London: Earthscan, 1996. [16] Department of Environment Transport and the Regions. UK climate change programme. London: DETR, 2000. [17] Building research establishment. Sustainable construction, BRE Client Report No. CR 258/99, 1999. Available on line at http://www.bre.co.uk. [18] Department of Environment Transport and the Regions. Building a better quality of life: a strategy for more sustainable construction. London: DETR, 2000. [19] Caleb Management Services. Thermal insulation and its role in carbon dioxide emission reduction. Caleb Manage Serv, 1997. [20] Faber O. A review of the energy efficiency requirements in building regulations—Interim Paper. Prepared for the Department of the Environment, Transport and the Regions. HMSO: London; 1998. [21] ENDS. CO2 target to drive change in buildings energy efficiency, ENDS Report 282; 1998. [22] Department of Environment Transport and the Regions. The Building Act 1984 Building regulations: proposals for amending the energy efficiency provisions. London: DETR, 2000. [23] Scottish Executive, Amendments to the building standards (Scotland) regulations; 1990. Part J (Conservation of Fuel and Power). Available at http://www.scotland.gov.uk/views/consult.asp, 2000. [24] EREC, Consumer energy information: loose fill insulation. Energy Efficiency and Renewable Energy Network, US Department of Energy; 1995. [25] EREC. Consumer energy information: EREC reference briefs-radiant barriers. Energy Efficiency and Renewable Energy Network, US Department of Energy; 1995. [26] Bell College of Technology. Petra Euromodule 1994 life cycle assessment example—thermal insulation. Hamilton: Bell College of Technology, 1994. [27] Curwell SR, Mach CG. Hazardous building materials. E&FN Spon, 1986. [28] Curwell SR, Mach CG, Venables D. Buildings and health—the Rosehaugh guide to the design, construction, use and management of buildings. RIBA Publications, 1990. [29] Woolley T, Kimmins S, Harrison P, Harrison R. Green building handbook. E&FN Spon, 1997. [30] Harland E. Eco-renovation: the ecological home improvement guide. Darlington: Green Books, 1993. [31] Construction Resources. Construction resources product data: natural insulation; 2000. Available at http://www.econconstruct.com/htmlpdf/insulation.htm. [32] Heath P. Energy in the balance. Local Authority Building and Maintenance 1999;15(2):13–4.

840

P. Dewick, M. Miozzo / Futures 34 (2002) 823–840

[33] Department of Environment Transport and the Regions. Building, war on waste. Building 2000;18–21. [34] Harper D. Emission impossible? Hous Assoc Build Maint 2000;8(5):32–3. [35] Adler G. Fill the cavity. Hous Assoc Build Maint 1999;8(2):15–6. [36] Sterling CM, Anderson BR. Review of Part L of the building regulations: technical implications of increased thermal insulation; 1999. Prepared for Oscar F., available at http://www.detr.gov.uk. [37] Institute of Building Control. Review of European building regulations and technical provisions: Denmark. Surrey: Institute of Building Control, 1996. [38] Institute of Building Control. Review of European building regulations and technical provisions: the Netherlands. Surrey: Institute of Building Control, 1996. [39] Institute of Building Control. Review of European building regulations and technical provisions: Sweden. Surrey: Institute of Building Control, 1996. [40] Institute of Building Control. Review of European building regulations and technical provisions: UK. Surrey: Institute of Building Control, 1997. [41] Institute of Building Control. Review of European building regulations and technical provisions: France. Surrey: Institute of Building Control, 1998. [42] Institute of Building Control. Review of European building regulations and technical provisions: Germany. Surrey: Institute of Building Control, 1998.