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Peter Ainsworth: We need to put a clear and realistic price on carbon across the economy

Speaking at the Ecobuild Conference, Shadow Environment Secretary, Peter Ainsworth, said:

"It is a real pleasure to be here. The first Ecobuild event was held in an east end Brewery. Just 4 years later, and we are in Earls Court - the home of the Motor Show.

If there is proof that green is going mainstream - whatever Jeremy Clarkson says - this is certainly it.

I believe that 2006 was an environmental tipping point for all of us - government, business and consumers.

Industry giants such as B&Q and Currys promoted microgeneration.

Even the supermarkets are catching on. Tesco has pledged to spend £100 million on renewable energy and also wants to cut its energy use by 50% by 2010.

Tesco know the way the wind is blowing.

Political parties of all colours raced to out green each other.

And 2006 was the year that consumers spent more on ethical goods than on beer and cigarettes - £29 billion on consumer goods alone.

So business, consumers and government appear, for the first time, to be getting serious about sustainability.

Hands up who has seen Al Gore's film 'An Inconvenient Truth'? He didn't win an Oscar for the acting.

We are genuinely at a tipping point.

However, with the building industry, we must make sure that this is not a case of too little - and almost too late.

After all, even Al Gore's Nashville mansion was revealed this week to be grossly energy inefficient - costing him £15,000 a year in energy bills. Slightly inconvenient in itself, as many commentators were quick to point out.

UK buildings are responsible for 50 per cent of UK carbon emissions - 60 per cent if you consider the construction and manufacturing materials as well.

If we are serious about climate change, we have got to green the building industry; systematically and comprehensively.

And emissions are only one part of the sustainability story.

Access to water is already a major issue in the South East and will become ever more so as climate change starts to hit.

We also need to take to heart what Prince Charles calls 'liveability' - That is building in a way which make the most of green space; which ensures good transport links and which results in beautiful, inspiring places where people can enjoy living, and have a sense of pride in place.

We all know that we need to build more affordable housing. The problem with the Kate Barker approach is that if you treat homes as instruments of economic policy rather than as places where people and their families will live you inevitably get a distorted outcome.

We must ensure that the towns we build today are not the slums of the future.

We have the technology and expertise to turn todays challenges into opportunities, creating economies of scale for a host of green technologies.

However, there are a number of home truths that I fear we have to face first.

Truth number one: ecobuilders are not representative of British building as a whole.

As the Royal Institute of Chartered Surveyors has argued, green building at present amounts to 'little more than pockets of excellence.'

Developments such as Poundbury and Bedzed are referenced so often precisely because they are so rare

Despite the fact that energy efficiency is relatively cheap and easy to install, a third of UK homes don't meet existing standards - and these standards are pretty pitiful in comparison with other European countries.

And emissions are the sexy part of the story - the part everyone is supposedly now concerned with.

Other issues of sustainability, such as water efficiency; green spaces and creating walkable neighbourhoods, are too often ignored.

I get the impression that, for a lot of Britain's builders, sustainability is, at worst, a boring government imposition which can usually be circumvented if you hire the right consultants or, at best, a marketing device.

We have silos of green activity when what we need is a far more integrated approach -

And I'm delighted that Ecobuild is on the case. And it is also good that this week has seen the establishment of the new Green Building Council. Representing companies with a combined turnover of £30 billion, this is indeed a force to be reckoned with.

However, home truth number two is that public conception of property value is still based on the upfront cost of the building, not on its running costs.

This means that energy efficiency, for example, barely gets a look in when new homes are being built - John Prescott's £70,000 affordable home made no mention of energy efficiency at all.

Of even more concern, however, is the fact that the social cost of building is all too often steamrollered by a crude and old fashioned conception of what constitutes value.

A badly built block of flats in a grey neighbourhood with no green space may be cheap to build: but what price the quality of life of its inhabitants?

We know that bad, cheap, buildings have a high long term cost to society.

In other words, and this is home truth number three, there is serious market failure when it comes to the environment. The social, environmental and longer-term economic costs of our buildings are simply not reflected in the price displayed in the show room window.

And this is where the Government has a role.

Above all, the Government should be creating a policy framework which gives the market long-term certainty about the value of the environment.

At a macro level, this is why a climate change bill is so important. We need a binding legal framework to guarantee emission reductions, whichever party is in power.

The consensus at the moment is that we need to cut UK wide emissions by at least 60% by 2050. Given the contribution which buildings are making to climate change emissions, it is likely that this sector will have to do better than that. This contribution should be reflected not just in building standards for new building but in a serious programme of retrofitting. This is an even great challenge.

Our Quality of Life Policy Group is looking at innovative ways to lever funds into improving existing housing stock in the most cost effective way.

However, the Government must liberate as well as legislate. If we are to take advantage of the price efficiencies and innovation that are so characteristic of the free market, we must ensure that the market is left to operate freely within these limits.

In other words, the Conservative Party believes in regulating outcomes, not inputs.

The present approach to building regulation costs business a great deal in compliance; it stymies innovation; and it also makes enforcement costly and - worse still - unlikely.

The Quality of Life Group has suggested instead removing most building regulations and replacing them with an overarching set of building standards.

For example, builders would need to reach high specific energy efficiency standards, and ones which would last, but how they did it would be up to them.

Failure would incur a hefty fine. However, the net effect should be to burden business less at the same time as helping the environment more.

By contrast, the building industry is presently suffering from 'initiative overload.'

Instead of a simple, holistic and predictable set of forward looking legislation, building regulations are consistently tweaked, replaced and fiddled with.

A survey by Building Design magazine last month found that two thirds of local authorities are not ready to implement the new Code for Sustainable Homes and a fifth are still struggling with implementing last year's rejig of Part L. The magazine concluded that 'Just six weeks before the introduction of key legislation, the findings show huge inconsistencies across the country, alarming gaps in knowledge and skills and a feeling of impotence among planners, many of whom called for stronger guidance from central government'.

The Government's job should be to keep things simple and straightforward and then let the market do its stuff.

The Government should also put its money where its mouth is.

The Carbon Trust estimates that the public sector emits 30.4m tonnes of carbon a year, around 11% of the UK total.

According to the DTI, 30% of the building sector's output by value is bought by the public sector

With public sector procurement, Government has the opportunity not just to create economies of scale for existing technology but to drive innovation across the industry.

Instead, public sector contracts tend to be based on the lowest price rather than on genuine best value.

RIBA President Jack Pringle has publicly derided existing public sector targets.

To take just one example, the Olympic village promises to source a measly 2% of its energy from renewable sources. And none of the Village buildings will meet the Government's 2016 target for 'zero carbon development.'

The Government's announcement of zero stamp duty for zero carbon is of course welcome. It would be a great deal more so if it was accompanied by practical steps to ensure this actually happened.

In fact, far from putting in place a roadmap to allow progress towards the 2016 target, the Government has actually killed off a Private Members Bill which would have enabled Local Authorities who wanted to take steps towards the target from next year.

It is no use Government producing ambitious targets without putting in place a structure which supports companies that go green.

That is Government by headline and we have all seen too much of it in recent years.

Beyond this, however, it is time for the building industry itself to be a little more customer focused and a little less unimaginative. You in this room are the people who are changing this culture.

We have been dealing with an industry which has tended to reach for the lowest common denominator whenever anyone mentioned the environment.

It is time to move on from the depressingly unambitious approach of recent years. Maybe the Green Building Council is a sign of significant change. I hope so.

After all, who will be grateful in 10 or 20 years if they have been coaxed into buying a house built on a flood plain which then gets flooded? The Environment Agency has argued that some 30 per cent of the new houses planned for the South East will be built on such flood plains.

Who will thank the company who built their home if energy bills keep on rising because of inadequate insulation? In 2006, nearly 3.7 million people lived in fuel poverty, spending 10 per cent or more of their income on energy. This figure has increased by 83 per cent in just two years.

You wouldn't buy a car which you knew had serious defects. Yet millions of people each year are invited to buy homes which contribute to the greatest danger we have ever faced.

European and US car manufacturers have learnt, rather late in the day - and to their cost - the Japanese concept of Kaizen, a whole systems approach which assesses and improves every single part of the product the customer buys.

We need a whole systems approach to housebuilding. Homes and businesses do not float in space: they exist in neighbourhoods; on high streets; in retail parks. If we are serious about going green, we have got to improve our transport links; our urban green spaces and our waste structures. This requires a fundamental rethink to the Government's existing approach - or rather non-approach - to planning.

In conclusion, we don't expect the building industry to do this on its own. We've got to send clear signals from the top. Which is why our plans for a climate change Act, a carbon levy and an enhanced market based European emissions trading scheme are, I would suggest, not only relevant but essential. We need to put a clear and realistic price on carbon across the economy. This in itself would be a major catalyst for change in the building sector.

In the meantime, I warmly applaud the efforts being made by progressive building companies to do the right thing despite the current failure of political leadership."

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