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JOINT COMMITTEE ON ENVIRONMENT AND LOCAL GOVERNMENT debate -
Wednesday, 6 Apr 2005

Energy Performance in the Construction Industry: Presentation.

I apologise for the technical hitch. I hope we get it sorted out as soon as possible. I welcome representatives of Century Homes Limited and Construct Ireland magazine to this meeting. Today’s discussion will deal with issues relating to energy performance in construction in Ireland, in particular regarding timber-framed housing.

Before the presentations commence, I draw witnesses' attention to the fact that members of this committee have absolute privilege, but that this same privilege does not apply to witnesses appearing before the committee. Members are also reminded of the long-standing parliamentary practice to the effect that members should not comment on, criticise or make charges against a person outside the House or an official by name or in such a way as to make him or her identifiable.

If no one has any objections, we will take Construct Ireland first.

Mr. Gerry McCaughey

It might work better if I start, since there is a dovetail at the end.

I am sorry for the difficulties we are experiencing. I welcome Mr. Gerry McCaughey and Mr. Jack Murray from Century Homes and Mr. Jeff Colley, Mr. Bill Quigley and Mr. Gerard O'Neill of Construct Ireland. I will call on Century Homes to make its presentation first.

Mr. McCaughey

I am chief executive of Ireland's largest timber-framed house-building and manufacturing company, Century Homes. This morning I will talk to the committee about what I believe is one of the most serious scandals facing house purchasers in Ireland. In particular, I will talk about CO2 pollution, energy efficiency standards in housing, the anti-competitive actions of the Department of the Environment, Heritage and Local Government, and one of the greatest political and environmental scandals lurking in the long grass waiting to ambush hundreds of thousands of Irish homeowners.

Last year, timber frame reached the milestone of approximately one in four of all houses in Ireland being built in timber frame. According to my predictions, it will reach 50% of all houses by 2010. In recent years, the timber-framed industry has worked very hard to build up the business. When we opened our doors in 1990, timber frame accounted for less than 1% of the total number of houses built in Ireland. Today that figure is 27% and is eating into the masonry sector at approximately 5% per year. Members might ask themselves why people are switching to timber frame. It is quite simple. It is a much more comfortable, energy-efficient house to live in. It is warmer in the winter and cooler in the summer. It allows most builders to complete twice as many houses to a higher standard in the same period as that required for a masonry house.

When it comes to minimising the external pollution of air, water and soil, timber frame far surpasses other methods of construction. A masonry house produces approximately six tonnes of CO2 per annum, while the equivalent timber-framed house produces approximately three tonnes or four tonnes. Using timber-framed construction results in lower greenhouse gas emissions, lower air pollution, lower water pollution, and lower quantities of solid waste by-products.

Future generations will be puzzled why Ireland has failed to grasp the urgency of its CO2 situation and the resulting problems for climate change. They will be furious at the environmental calamity we have bequeathed to them. They will reasonably feel we had been given plenty of time and warning signs about the stress that our lifestyles were having on the ecosystem.

Part of the reason such alarm bells do not seem to provoke a serious response from the Government is a widespread belief that the effects of climate change and CO2 pollution are a gradual, incremental process that leaves us loads of time to get around to dealing with it. That could turn out to be a tragic delusion. The United States National Academy of Sciences has warned that climate change may turn out to be gradual in the same way that slowly pressing one's finger on a switch is — when it turns, it does so suddenly and quickly. In the case of Ireland, the switch that may be turned is the Gulf Stream, which delivers as much heat to our land in winter as the sun. Its disappearance would leave us with the same climate as Hudson Bay, with which we share the same latitude.

Earlier this year the British Government's chief scientific adviser, Sir David King, was forced to retreat from his observation that CO2 pollution and the resulting climate change was a bigger threat than terrorism. Good scientist that he was, however, he had the facts on his side. Last year 20,000 more people died in a record heat wave than in all the acts of terrorism around the globe. Increased flood and drought, which are the twin extremes of climate change, are the most lethal weapons of mass destruction of our time. Even the CIA has warned that climate change will stimulate an increase in conflicts over diminishing water and food supplies.

If we Irish do not radically reduce the amount of greenhouse gases we generate by 2012 the State faces a potential EU fine of up to €5 billion. It is a very hefty burden that will fall on the shoulders of every Irish taxpayer. Last August the Environmental Protection Agency announced that our emission levels are now 25% above what they were in 1990, equal worst with Portugal. This is very disappointing considering our national target under the Kyoto Protocol is to be just 13% above 1990 levels in the period of measurement, 2008-2012. When Deputy Cullen, the then Minister for the Environment, Heritage and Local Government announced these figures, he shouted from the rooftops about a paltry drop of a few percentage points in the emissions target. He did not give the real reason for the drop, which was primarily due to the shutdown of fertiliser plants in Arklow and Cork. There was no major change to the way the economy was operating. This Government is content to put its head in the sand and hope the outside world will bail it out. In Ireland 30% of all CO2 generated is for the purpose of heating buildings. In fact, 50% of all CO2 generated in Ireland is from the construction and heating of all buildings. The construction industry, de facto, is one of the single largest contributors to CO2 emissions in the country.

I will prove to the committee that this Government and the Department of the Environment, Heritage and Local Government in particular is protecting vested interests in the construction industry by delaying the introduction of energy efficient building regulations that would affect the way houses are constructed in Ireland. Over several years the Department has made decisions that are not in the best interests of the future environment, the economy, Ireland's reputation and most importantly, home owners. In 1998 Century Homes participated in a study commissioned by a British Government's Department of Economic Development and carried out by the University of Ulster. It found that timber frame houses had a 7.5 tonnes net reduction of CO2 gases per annum compared with equivalent dwellings built in concrete.

I sent a copy of the report to the Department of the Environment, Heritage and Local Government in the expectation that it would be very interested in the findings. Instead all I received was a flippant reply. My company had participated in significant research by a reputable university that I thought the Department would be interested in. I could not understand why it was not and my curiosity got the better of me. I requested a copy of the file through the Freedom of Information Act, which had just recently come into force at the time. The correspondence I received back included a confidential memo to the Minister from Mr. Michael McCarthy, principal officer in the Department's construction section, in which it was stated that the Government would probably have to review or revise part of the building regulations "sooner (1998-99) than they had planned (2002-03) due to the CO2 emission targets set by the Kyoto Convention (November 1997)". I ask the committee to note those dates. On 22 May 1998 here was the first official acknowledgement, directly from the Department of the Environment and Local Government, that the building regulations were out of date and were a negative factor in meeting our commitments under the Kyoto Protocol.

I must ask Mr. McCaughey to refrain from mentioning names.

Mr. McCaughey

I mention them only where they are in the document, but I take the Chairman's point.

I knew it and the Department knew it, and was signalling that something should to be done about it, but it was too good to be true. The memo continued:

However, we don't want to signal this to the outside world just yet because the next leap in building standard insulation will probably involve making it difficult for hollow block construction, used widely in the Dublin area, to survive. This has implications for manufacturers of hollow blocks (who also generally make solid blocks), for builders (who will take longer to build double — inner and outer — leaf solid block walls; and there is currently an acute shortage of block layers in Dublin); and for the cost of new houses (due to increased cost of skilled labour/materials for solid block construction).

There it is in black and white. The Department did not want to make any change in the building regulations because it would make it difficult for hollow block construction to survive. Is this not blatant Government interference in competition within the construction industry? It did not make changes to benefit home owners, because they would negatively affect hollow block construction. Before the Department eventually changed the building regulations it commissioned another report by the Energy Research Group, ERG, of UCD in October 2000, to examine the effect any changes would have. It is stated in the executive summary of this report that the proposed changes on improved energy efficiency standards were to be relaxed, made less onerous, at the 11th hour, to "facilitate the build ability of certain methods of construction".

It is important to note that there are only three types of commonly used construction methods in Ireland, nine inch hollow block, used mainly in Dublin which is concrete, cavity wall construction, which is concrete, and timber frame. The relaxation of the recommended regulations by the ERG at the last minute were not to facilitate the "build ability" of timber frame, because it has no problem exceeding the improved standard of energy efficiency by up to 50%. The only conclusion to be drawn is that the change was made to protect the dominant market position of the nine inch hollow block and cavity wall methods of construction. This again is the Department of the Environment, Heritage and Local Government interfering in a competition issue, damaging home owners and reducing Ireland's ability to meet our commitments under the Kyoto Protocol.

Although I sent my original letter to the then Minister, Deputy Dempsey, informing him of the British Government Departments' research on 4 February 1998, nothing was done about it until 1 January 2003. During those five years, a staggering 250,000 houses were built to a standard of energy efficiency that was 35% below what it should have been, and that is the Department's own figure. This means these house owners have been paying extra money to heat their homes and the houses are producing 35% more CO2 emissions than is necessary. It is truly astonishing when one considers the Department knew about it in 1998, but decided not to act because it would have a negative effect on hollow block construction.

It is interesting to note that local authorities will not allow their houses to be built with hollow blocks and the same applies in the UK. The only place it is allowed to continue as a method of construction is in the greater Dublin area, Dublin, Meath and Kildare. Ask most builders about hollow block construction and they will laugh. Everyone knows it should no longer be used for private residential construction. If anybody believes this is about protecting jobs, it is not. It is about protecting an industry. Jobs in the timber frame industry are just as valuable as jobs in the concrete industry. To add insult to injury when the Government finally introduced the new improved energy performance regulations on 1 January 2003, it also passed an amendment that allowed builders who had merely applied for planning permission prior to 31 December 2002 to continue to build houses to the 1997 regulations until 31 December 2005. As we sit here today, there are tens of thousands of houses being built in Ireland to the standard of the 1997 regulations and will continue to be built to 31 December 2005. This is another example of the interference of the Department of the Environment, Heritage and Local Government in a market place to benefit masonry construction, but at a cost to home owners and damaging to the environment. The major casualties of this protectionism are the environment and innocent house buyers, who will experience the full brunt of the rip-off when a new EU energy performance in buildings directive comes into force. This directive will oblige house sellers to provide a certificate for the purchaser detailing how much it will cost to heat the house per annum. Rather than implementing this directive from January 2006, the Government is clearly indicating in the background that it intends to seek a three year derogation in spite of the implications for house owners, the economy, the environment and the national reputation to which my colleague, Mr. Jeff Colley, will refer later, of meeting our commitments under the Kyoto Protocol.

In the Irish housing market, the energy performance of a house is often the least important factor when purchasing a house, because one cannot find out that information. This contrasts with the information on the performance of a car and the number of miles per gallon it does.

The reasons being given by the Department for not implementing the directive on time are seriously questionable. In particular it is indicative that there will not be sufficient trained inspectors on 1 January 2006 to implement the energy rating certificate scheme. This seems totally ridiculous when one considers that the Minister proposed in the 2000 national climate change strategy document to introduce such a certificate by 2003. It is my belief that the real reason the Department does not want to introduce a home energy rating certificate is the legal ramification that it would have for the construction industry. For the first time, home owners would have a legally binding document stating the theoretical energy performance of the building.

It is clear from a report published by the British Department of Environment, Transport and Regions by the Building Research Establishment — one of the most prestigious bodies in the world — that it is almost impossible for masonry construction to achieve in reality its theoretical energy performance standard, while timber frame building has been proven in the report to meet its theoretical energy performance standard and oftentimes exceed it. The implications for the building industry are that if it provides a certificate that states the house performs to a particular energy standard, when in reality it does not, the home owner has legal recourse to the issuer of the certificate. This has severe implications for the masonry house building industry, but furthermore has severe implications for the property values of home owners once the energy performance in buildings directive is in place.

In reality the Department of the Environment, Heritage and Local Government is like King Canute in trying to hold back the inevitable by protecting building practices developed decades ago rather than adapting to a world facing the serious implications of global warming. Just imagine the plight of a young couple who have been saving for years to get on the property ladder. They are delighted when they buy a semi-detached house made of hollow blocks, but unbeknown to them it is built to the standard of the 1997 regulations and is completely energy inefficient compared to modern building standards and can cost up to €1,000 per annum to heat which could be up to €600 per year more than is necessary or €15,000 over the lifetime of a 25 year mortgage. This is equivalent to 50 tonnes of CO2 over the lifetime of the mortgage, which we will all end up paying for under the Kyoto Protocol.

Oil prices will continue to reach record levels and when the couple decide to sell their energy inefficient house, they will discover they are obliged by law to produce a home energy rating certificate that tells potential buyers of their house how much it costs to heat and as a result they will not get full market value because the house across the road is built to the newer standards. If this is not a scandal, I do not know what is.

More than 70% of the housing starts in the western world are timber frame. Last quarter 64% of all the houses in Scotland, our nearest neighbour, were timber frame houses. Timber frame is the most tried and tested method of construction in the western world, yet the Government wants to delay the progress of the industry with study groups and consultation. On the policy front, the delays and dithering are shocking. In December 2003, the then Minister, Deputy Cullen, published a report for public consultation into timber frame housing. It was open to public consultation until 19 March 2004. More than one year later, nothing has happened to that document, in spite of Deputy Cullen telling me on RTE radio that he would sit down with the industry in September 2004 to discuss it. I never heard from him and I have not heard from the current Minister. Deputy Cullen's report acknowledges that there is an unfair regulatory bias in Ireland in favour of concrete construction. The recommendations propose to remove the regulatory restriction which has prevented timber frame in Ireland from reaching the predominant place in the market that it occupies in North America and Scotland. In spite of this, nothing has happened since last year. If it was another sector of the construction industry, perhaps we would see some progress.

As of now, every Irish citizen must start to pay because of the failure of the Department of the Environment, Heritage and Local Government to introduce cost-free initiatives to reduce CO2. In January an emissions trading system which involves more than 100 Irish companies took effect. The allocation of very generous carbon dioxide quotas by the Government continue to allow each of the large producers to continue producing CO2 at their current levels free of charge, even though it attracted stiff criticism from the European Commission. To put it in context, one tonne of concrete produces one tonne of CO2 which is its equivalent, notwithstanding the fact that there are other methods of producing concrete in this country with a virtually zero level of CO2 but the Department is dragging its heels in encouraging the use of that concrete.

Rather than face up to this problem the Government decided to abandon its plans for a carbon tax, even though the then Minister was out shouting that he would introduce it at the next budget, but miraculously at the last minute it was removed. Who will shoulder that burden? It is the taxpayer and not industry who will pay. Already the Government has been forced to stump up €185 million of taxpayers' money to purchase carbon dioxide credits under this scheme for the period from 2008 to 2012 to compensate for its failure to reduce the levels of CO2 pollution.

If the Government held its nerve, instead of buckling like a cheap deck chair under the pressure of interest groups, a carbon tax that would benefit the environment would have been introduced and consumers would also benefit, instead the Government caved in and is funding big business to continue polluting under the emission trading scheme. This €185 million cast may only be the tip of the iceberg and the eventual cost to the taxpayer, if we do not meet our target, could be up to €5 billion.

It is blatantly obvious the Department of the Environment, Heritage and Local Government is interfering in competition issues in the construction industry. The Department does not have a role in determining what specific methods of construction should be used. It has a role in laying down standards which must be adhered to. Those standards should be set to the best international practice and ensure that we meet our internationally legally binding commitments and enhance our international reputation. Standards should not be altered or relaxed to facilitate the continuing dominant position of one method of construction over another. It is up to industry to use research and development and innovation and adaptation to develop new and better products on a continuing basis to ensure we meet the standards required in the modern world. It is up to industry to provide the products and it is not up to the Department to change the standards in order that industry need not innovate.

I thank Mr. McCaughey for his contribution. I now call Mr. Jeff Colley from Construct Ireland magazine.

Mr. Jeff Colley

Mr. McCaughey has explained how we arrived at the position where we currently are. I will highlight the changes to legislation that are necessary because of the implications of global warming and oil prices. Last year it was estimated that between 75,000 and 83,000 new dwellings were added to our national housing stock, a figure which reflects growing construction industry output year upon year. It is reasonable to expect a similar rate of output in the coming years, given the strength of the economy. There is a desire in the industry to meet a seemingly insatiable demand in a market where consumers are paying more and more to get hold of a property. This has not met with the development of higher building standards, in particular where energy performance is concerned. Energy performance has not been a priority for much of the industry and for consumers alike, for a number of reasons. Awareness is one such reason. It was only in 1976, in the aftermath of the oil crises, that specific regulations dealing with energy efficiency in housing came into effect in Ireland. In relative terms, Ireland has enjoyed cheap energy prices as our economy has grown. However, the age of cheap energy is coming rapidly to an end, as indicated by last week's warning of a possible oil price rise to $105 a barrel.

In light of warning signs like this, the introduction of energy labels for buildings is a welcome development. Energy labels will have a more positive effect on building standards than Part L of the building regulations. This part of the regulation relates to insulation standards, glazing and so on. There has not been a single prosecution of a builder or architect for failure to comply with Part L. What is the point in having this legislation if it is not enforced? On the other hand, energy labels on a scale of A to G will be easy for consumers to understand. Where energy labels have been introduced in other areas, consumers become savvy and look for a high energy label, which in turn creates the incentive for the industry to deliver energy efficient homes.

The EU is developing this with an energy performance in buildings directive. This is being done as it recognises that the building sector is responsible for approximately half of all energy use. Better energy performance in buildings is a key means of reducing carbon dioxide emissions to comply with the Kyoto Protocol and the more stringent emissions reduction schemes that will inevitably follow. It is not surprising that our neighbours in Europe are treating the energy performance in buildings directive as a matter of urgency. From our research at Construct Ireland magazine, the UK Government is committed to complying with the directive in full, a fact reiterated last week by a spokesperson for the office of the Deputy Prime Minister. In Northern Ireland, the department responsible for housing policy has proposed that dwellings that received their building regulations approval prior to 4 January 2006 but were completed after that date will also be included. The UK Government’s commitment to embrace these changes has led to the introduction of measures that go beyond the requirements of the directive. Last Friday, a scheme called SEDBUK, which means seasonal efficiency of domestic boilers in the UK, came into effect in England and Wales. It introduced A-G energy labels for domestic boilers. Under SEDBUK, virtually all new domestic boilers installed will have to have either an A or B label.

There are close trade links between Ireland and the UK, yet the Irish Government is imposing no such restrictions. Experts in the industry have therefore expressed real fears that Ireland might become a dumping ground for redundant technology that manufacturers can no longer get away with selling in the UK. That fear is already becoming a reality. There is a real sense of cynicism amongst those looking to innovate in the industry that the same reluctance to act on bringing in energy labels for buildings will mean that Ireland will become a dumping ground for building materials and technologies that consumers in other countries will no longer accept. Should Irish people, who are already paying a premium to get their hands on a property, be expected to get so little for their money?

If we insisted on much higher energy standards in the houses we are planning, it would not cost their purchasers a single euro extra. When the developer works out how much he can afford to bid for the land on which to build his next estate, he multiplies the number of units he will be able to erect on the land by the price he expects to be able to get for each one when he sells them. Then he deducts the cost of construction, which includes his own profit margin. The amount left is the maximum he should pay for the site. What happens if we demand higher energy standards which cost the developer €5,000 per unit to meet the new requirement? He just deducts €5,000 for every house he plans to build from the price he is prepared to pay to the owner of the site. This means the only people who lose from the imposition of higher energy standards are those selling development land. Since such people usually make great gains, they would not even notice the difference. Therefore, we can demand much higher energy standards without anyone having to suffer because of it. The occupiers of the houses would benefit for years to come and the mortgage lenders would have better security. The argument I have just made is standard mainstream economic teaching. If the members of the committee doubt it, they should ask Dr. Peter Bacon.

However, when the Government has answered questions on the energy performance in buildings directive, it has been happy to stress that it has the option of delaying the introduction of energy labels until 2009, which is a year after we must start delivering results on the Kyoto Protocol. What kind of message does this send out to the construction industry and to anyone buying, building or renovating a property? It suggests that we keep building and we keep buying. What kind of message does it send out to our European counterparts? It suggests that we have a Government that is not taking the Kyoto Protocol seriously and is not concerned with helping our construction industry to innovate. Nor is it interested in protecting house buyers investing in properties at the mercy of rising energy prices. This directive will protect the interests of house buyers. Mortgage rates are at an historic low and are bound to rise. Fossil fuel prices will also rise irreversibly by significant amounts. Buyers of new homes could be hit with a double whammy.

When questioned about the directive in February, the Minister, Deputy Roche, stated that nobody had lobbied him on this issue and that there had been no general lobbying of which he was aware, yet Business and Finance magazine reported the Construction Industry Federation in December stating that the “Government must avail of the option of a three year time extension before the key elements of the provision have to be applied.” Does this not count as lobbying?

We can argue that the Government has been so preoccupied with keeping its friends in the construction industry happy that it has tried to fight the directive all the way, as I discovered when researching an article for Construct Ireland. A reliable source within the Commission informed me that commentators from other governments have noted throughout negotiations on the directive that the Irish Government representative had sought to weaken the directive and apply for latitude in how it could be interpreted. The Commission has made it very clear that any member state that demands more time to bring in energy labelling will have to give demonstrable proof that it did everything it could to train up energy auditors to carry out the labelling by 2006. In other words, we will have to prove that we could not do it on time. However, the view from organisations such as NICER, the National Irish Centre for Energy Ratings, is that we still have enough time to train enough auditors to bring in energy labelling by January 2006. This view is based on its knowledge of the market, experience in energy auditing and developing energy auditing methodology, and in representing Ireland in an EU-wide study of energy auditing. However, neither NICER, nor any of the many experts in this field to whom I have spoken about the directive, have been consulted at all by the Government in helping to implement this. Who is the Government consulting?

Ultimately, energy labels are about transparency for consumers. Given how high the stakes are becoming, people buying homes or any other property need to know what they are getting themselves into. If the Government delays the introduction of energy labels until 2009, 200,000 new homes could be built without consumers knowing what they are getting for their money and the construction industry being incentivised to innovate. Given that existing homes must be awarded energy labels when resold or let, there is an urgent need and moral obligation for the Government to inform everybody looking to build, buy or renovate that their home may one day be labelled and that investing in energy performance will save them money and help secure the value of their home in a rapidly changing market.

This is an issue in which I have had an interest for some time and have pursued by way of parliamentary questions to the Minister for the Environment, Heritage and Local Government both with regard to the energy performance in buildings directive and the future of the nine inch hollow block. It is not the business of this committee to ascertain whether timber frame or concrete construction is better. That is a matter for the consumer and house buyer to decide and we should not get into that debate.

A European directive requiring the energy labelling of buildings is due to come into effect on 1 January 2006. The responses I received to parliamentary questions indicate that the Minister believes the Government will get a three-year derogation until 2009. However, the replies which my colleague, Proinsias De Rossa, MEP, received from the Commission indicate we will not get a derogation. One will only be given if a country can show that it does not have the necessary skilled personnel to monitor and operate the system and that it has made sufficient effort to put these skilled personnel in place. It appears there may not be a derogation until 2009 and that the European Commission will expect us to have the energy labelling of buildings in place by 1 January 2006.

People buying houses today, those who bought houses last year and those looking at plans for houses do not know that there will be a European law from 1 January next that will put an A or B label, or in many cases an F or G label, on the building they are buying. When they resell the house in five or ten years' time, the value of the property will be affected by the type of label it has. People buying homes today are living in a fools' paradise because they are buying something with a doubtful resale value. They have been left in that fools' paradise by the Government. This is on the same scale as the nursing homes issue. The Government has known since 1998 that the game was up with regard to the nine inch hollow block. Houses which they have allowed to be built since 1998 using the nine inch block will, at the very least, have difficulty meeting the energy labelling requirements.

This is a serious issue from the point of view of the country meeting the required CO2 emissions. We are building an unprecedented number of houses without regard to the energy requirements that must apply after 1 January next. Given the current scale of construction, much could be done in terms of reducing our CO2 emissions.

People buying these houses have been doing so without the benefit of information known to the Government with regard to energy requirements. This committee must send an urgent message to the Minister stating these regulations must be brought in with effect from 1 January 2006, as required. We should also ask him to come before the committee with proposals for those regulations which can be examined by the committee. In doing so, it is to be hoped that we will draw the wider attention of the public to what is coming down the track with regard to the energy performance of buildings.

I appreciate the significance of what the Deputy has said, but does he have any specific questions at this time?

Mr. Colley

According to the Commission, it appears unlikely that we will be able to get a derogation. The Government may be working very hard to fudge the results to prove we could not train the necessary amount of auditors in time. I do not know if this is one of the reasons that we have been waiting since before Christmas for a promised consultation document which has been consistently delayed. Given his experience in energy auditing, Mr. Quigley will show how we can be fully compliant if the political will is there in the next few weeks and months. All new buildings and existing buildings on the market could be labelled from 1 January 2006.

Mr. Bill Quigley

I am a consulting engineer and have been working on the building and monitoring of houses in the past 20 years. I know how to build low-energy and high-energy houses. The vast majority of houses today are high-energy and that is not how it should be.

As Mr. McCaughey mentioned, there was a major relaxation, according to the UCD energy research group's report, by 34% from the values it put forward. I was very annoyed about this and commented on the matter to the Department of the Environment, Heritage and Local Government. What I want to see, as a practitioner in designing and building low-energy houses, is backing by Government. A UK survey, released by the office of the Deputy Prime Minister, John Prescott, MP, pointed out that 84% of people will pay more for an eco-house than an ordinary house. People simply do not know. We have a huge message to relay to people and are well aware of that.

As a director of the national Irish centre for energy rating, I know we can quickly train auditors. If a part-time auditor can complete two houses per day, that amounts to 400 audits per year. If one takes account of the 70,000 or 80,000 new houses together with second-hand homes and lettings, one gets a figure of 160,000 houses. That figure divided by 400 equals 400 auditors. We could train architects and engineers at a rate of 30 per week without any problem whatsoever. Auditors are not a problem. The method of training them has already been set out in European norms, namely, ENA 32. There are no technical problems but the will to push head is required. We need to introduce this and to make people aware of what they are buying. As Deputy Gilmore said, people are not aware of what they are buying. That is a shame. We are building houses at present that have 10% the usage of energy that houses now being built to modern building regulations have. We are not saying all houses should be built to those levels. With the help of Sustainable Energy Ireland and the European Commission, we have done the relevant work. The technology and methods are available. There are methods of testing these houses. All we need is the will to ensure they are tested and regulated in order that they can and will be built.

I thank Century Homes and Construct Ireland for a very strong presentation. As an architect and planner in a previous life, I am disturbed by what I have heard. As a Deputy, I believe heads should roll and that changes should be made now rather than later. It is incredible that 250,000 new homes have been built in the period in question. That is an indictment of Government policy. This can also be seen in the climate change strategy where we still await revisions. Strong targets set in the climate change strategy have fallen by the wayside, including the 2003 energy rating on new commercial leases and other issues that have been referred to. It seems the Government is ignoring the writing on the wall in Europe and the reality of climate change.

I was at an exhibition the other week and met representatives of Grant Engineering Limited who are making condensing boilers in Ireland. They do not have a market here. Almost all their exports go to the UK because the UK, as has been stated, is insisting from this week on the use of condensing boilers not only in new dwellings but in upgrading existing dwellings. Here, however, one sees a condensing boiler once in a blue moon. We are the poor man of Europe in this regard and we are becoming a dumping ground for inefficient poor technology compared with what is happening elsewhere. We are lagging behind the North, Britain and other countries and we need to get our act together.

From what the deputation has said, there are concerns that should perhaps go to the Competition Authority. I propose making Mr. McCaughey's document available to the authority because from what I have seen on that internal memorandum, it seems that the mandarins within the Department of the Environment, Heritage and Local Government did not want to rock the boat and are unduly disposed towards the existing industry rather than facing up to new demands for new types of construction. The Competition Authority should investigate. Has Mr. McCaughey done anything regarding that?

Should we not also request the Department of the Environment, Heritage and Local Government to come here and explain its actions? We have here a devastating extract from what the Department has said. We have all seen reports of this up to now but Mr. McCaughey has put in black and white what was said and what is going on.

We have a briefing note from the Department. I do not know whether the deputation has been furnished with it. As it is dated 1 April, I am not sure whether we should take it with a pinch of salt. It seems to argue that we are doing well compared with everywhere else. We should certainly invite the Department to a future meeting.

One can walk into Discount Electrical to buy a fridge and it will have an A, B, or C rating. I do not understand why we do not have the same kind of rating on houses, particularly new homes, because the calculations must be done by whoever draws up the plans to ensure they comply. There is no real obstacle to providing that here and now. I am appalled that the Minister for the Environment, Heritage and Local Government wants to seek a derogation until 2009. I understand we can obtain a derogation only if there are no competent people within the State to carry out that energy rating. I do not believe we can put this on the long finger.

Neither can we put the Kyoto Protocol on the long finger. As a member of the Green Party, I believe this is one of the most important issues of our time. Mr. McCaughey has outdone the Green Party in putting the concerns regarding climate change in perspective and describing it as a weapon of mass destruction. We are already seeing environmental refugees. Many more of the concerns regarding climate change will come home to roost over the next while.

We should think globally and act locally. We should ensure that Irish building regulations are the best in Europe. I do not see much evidence of that. I formally suggest that we invite the Department of the Environment, Heritage and Local Government to the committee and that we request the Competition Authority to examine the paper trail on this to see whether there are grounds for investigation.

I agree with the two previous speakers. When the EU directive comes into effect on 1 January 2006, as we must now assume it will, what will be the position regarding existing housing stock? Will existing housing stock have to be labelled? If that is the case, it will be much more difficult than labelling houses that are under construction or that have been recently constructed. Will the directive have any bearing on radon gas protection measures in houses or is that a separate and unconnected issue?

Mr. McCaughey

I agree with Deputy Gilmore. This is not a matter of timber frame versus masonry. It is a matter of setting standards to meet our requirements. I merely highlighted that the Department had stated that the reason it had not done this was that it wanted to protect a particular industry. I am not looking for protection. I only want a level playing field.

Regarding whether the directive will have any bearing on radon gas protection measures, my understanding is that it will not. It relates specifically to energy efficiency. However, Deputy Gilmore made a valid point when he said this issue was on the same scale as the nursing homes scandal. When the directive is in place, all houses which are sold must have a certificate, whether they are old or new houses. As they are being sold for the first time, it is most important in the case of new homes. However, this becomes a complete scandal in that as we sit here today in April 2005, there are houses still being built in Dublin to the 1997 regulations which, according to the Department's press release, are 35% below the 2002 regulations. Through no fault of their own, people buying those houses will be absolutely screwed when the EU directive on the energy performance of buildings is in place.

I have not seen the report issued by the Department of the Environment, Heritage and Local Government. However, I have a fair idea, without seeing it, what is in it. It is one of the greatest attempts at smoke and mirrors by the Department but Europe has seen through it. It attempts to imply that we are great environmentalists. If the report states that what are called the elemental U-values for walls, roofs and windows in our houses are among the highest in Europe, there are two points I want to make. One is that there is another method of calculation which the Department continually glosses over and to which Mr. Quigley can refer, called the overall heat loss method, and one could drive a horse and cart through it. It is almost as bad as the 1997 regulations. The Department does not want to focus on that. However, all the hollow-block houses being built in Dublin are using the overall heat loss method of calculation because it is so lax.

The other point is that unlike the UK, we have a system of building control here but we do not have building control regulators. In the United Kingdom if one wants to build a house, it is not merely a question of sending a plan to the planners and getting permission to build a house. One must also send a second set of the plans to the building control authorities who look at the building from an engineering point of view and a thermal performance point of view. If they see problems, they point them out. In addition, a separate group of building control inspectors go on site and they will stop sites that do not conform to the set standards. I could show members of the joint committee photograph after photograh of some of the masonry construction work ongoing in Dublin. What I am showing them is not a house being built on a massive housing estate but a 3,500 sq. ft. one-off house built in recent months. The arrow in the photograph points to the insulation. This is the fallacy of building regulations as we have them in Ireland. There is a requirement that a wall should meet a particular standard — that the insulation should be in 100% contact with the wall. The insulation in the photograph is easily 20 millimetres from the wall. That is the normal standard of insulation installation in Ireland.

In her report Professor Jean Lecomte of the University of Louvain shows that for every ten millimetres of air gap between the insulation and the wall the U value doubles; in other words, the house is twice as bad as the predicted level. That is where the problem will arise for the poor people concerned who have bought houses that have not had the proper standards applied to them by the Department of the Environment, Heritage and Local Government and which have been built to old standards. Not only can they not meet the old standards but they have no chance of meeting the new standards. Hence, there will be legal recourse against the building industry because when the certificate is in place, one has to ensure one's house meets the standard. That is the real reason the construction industry is lobbying the Department of the Environment, Heritage and Local Government to prevent its introduction.

Let us be clear about this. The Government is being lobbied by the construction industry from which a large number of documents have come stating it does not want the energy performance directive implemented. The real reason it does not want the energy rating certificate put in place is that it cannot guarantee that houses will be built in such a way that the insulation will be in 100% contact with the wall. It will make those who issue the certificate liable. That is a reflection on standards set; we should not hold back on our commitments under the Kyoto Protocol. These are the standards to which we have to adhere and it is up to the industry to adapt.

May we furnish the delegation with a copy of the briefing note from the Department of the Environment, Heritage and Local Government?

It is up to the joint committee to decide whether it wishes to circulate it. There should be no problem in doing so.

I agree with the sensible observation made by Deputy Gilmore. I see little point in arguing against the facts presented to us. I agree with the suggestion that we invite officials from the Department of the Environment, Heritage and Local Government.Clearly, some of the issues raised today are new to me and I would like an opportunity to go through them publicly. What has been said about the new standards will certainly create alarm, particularly as they will apply to those who are not aware of them. I am sure the Minister would have no difficulty in coming back to the joint committee. There is no point in my rehearsing what has been said. Clearly, the points raised are fundamental and a cause for concern. I am not in a position to argue them and agree with Deputy Gilmore's suggestion.

I welcome the presentation by the delegation. Reference has been made to lobbying. Representatives of Timberframe Construction met the Minister in January. Can the delegation comment on what was said at that meeting?

Mr. McCaughey

I was not at that meeting.

It was mentioned by one of the delegates that lobbying had taken place. The timber manufacturers also engaged in lobbying.

Mr. McCaughey

Absolutely. We have been lobbying for the introduction of the energy performance in buildings directive because we have no issue with it.

I agree with previous speakers in regard to the improvement in standards. At the meeting mentioned there was a recommendation in regard to specific building regulations for timber frame housing. Would the delegation welcome such regulations?

Mr. McCaughey

I would. Absolutely.

Has there been an increase in the number of employees in the timber frame industry during the past five years?

Mr. McCaughey

In 1998 my company employed approximately 120 people; today we employ just under 500. I cannot speak for the industry as a whole but when we started our business in 1990, there were four or five companies; today there are 45. This is not just a matter of jobs. Jobs are created in the economy one way or another. It is a matter of in which industry they are created.

There is demand which is recognised. I am reading the figures. From a figure of 5% in the early 1990s to 25% growth in 2004 with a projected growth figure of 50% by 2010, it is clear consumers recognise the value offered.

Mr. McCaughey

Some 70% of houses in the western world are timber frame. The figure for Scotland is 64%. For many years the fallacy has been that it does not suit conditions in Ireland but this has been proven to be well and truly wrong. Those who tried to put fear into people have been beaten. The reality is that it is a method of construction used in every type of climate. Given the problems in Ireland in regard to the Kyoto Protocol, it offers serious benefits as the consumer is recognising.

Mr. Quigley

I wish to answer Deputy McCormack's question. Existing housing at the point of sale or rent has to be energy audited.

Radon is not covered by the brief on the energy rating part of the directive. The main reason the European Union is bringing forward this directive is to reduce carbon dioxide emissions. That is what we are trying to do. There is no point providing an A, B or C label to point out how good we are. That is how good we are if one uses the elemental method in respect of Part L of the building regulations but as Mr. McCaughey mentioned, if one uses the heat-loss method, the figure is worse than that — by 34%. As a consultant, I am ashamed to say that if a builder wants to slip through the net, I can help him. That is not an advertisement but the reality.

If one buys a fridge with an A, B or C rating, one knows it has been tested by a reputable body and that it will probably perform to that rating. Similarly, in the case of a car, if it has a specific mpg number, it will probably perform to that level. The trouble with a house that is energy rated with an A, B, C, F or G label is that a calculation method has been used and as Mr. McCaughey has shown, calculation and actuality can be entirely different. It has been pointed out by the office of the Deputy Prime Minister that it wants to have houses tested on a random basis to ensure what one pays for and what one gets is what is stated on the tin. That is vitally important.

Will the new EU directive apply to all new rented properties? What is the position on existing rented properties?

Mr. Quigley

It will apply whenever they change hands. It is right that it should be so. People renting properties such as an apartment should know what the energy performance rating is and what their heating bills will be.

It all depends on where the properties are located. Will the directive ensure all rented properties will have a certificate, or will it only apply to properties rented after it comes into force?

Mr. Colley

After it comes into force.

That is a different matter.

From the delegation's experience and what it knows of construction standards during the years can it make a stab at the expected rating of houses being built with nine inch cavity blocks? If we were to take a second-hand house built in the 1970s and offered for sale, where would Mr. Quigley expect it to find it on the scale?

Mr. Quigley

From my experience of monitoring houses, a house built in the 1970s with cavity walls will be using approximately twice as much energy as the calculated value. Similarly, with hollow blocks, one will end up with the same energy usage. This is partially due, first, to the lack of an insulation system or the fact that one has been badly put in place and, second, to what we call the air tightness of the building. The office of the Tánaiste is drawing up regulations which will have to be tested. We have been pushing for this for many years.

In 1983 we found out that the insulation system about which Mr. McCaughey was talking — cavity wall insulation — did not work in houses. We pointed out that heat loss through the wall was twice the calculated value. We spoke to various people about this and they told us we had to be wrong because 20,000 houses were being built that way. However, I told them I was certain I was not. We then met, seven years later, Jean Lecomte of the University of Louvain in Belgium who said they had made a similar discovery. By that stage Mr. McCaughey had moved back to Ireland. I sought support for this argument in my enthusiasm to have low or reasonably low energy buildings built in Ireland. In 2001 the BRE in the United Kingdom indicated that it had made the same discovery. Now everybody believes and is aware of it. Houses built during that period probably have much higher energy heat loss values than the calculated value.

Where would Mr. Quigley place them on the scale?

Mr. Quigley

I recently carried out a study as part of an energy save project within Europe and our typical house is coming in at "G" on the scale. If a house constructed in accordance with today's building regulations was calculated, it would probably come in at "C" on the scale but if it was measured, it would probably come in at "D" to "E", depending on its construction.

When we talk about hollow blocks, are we talking about cavity walls or the hollow block building constructed in the 1960s? The one being shown on the screen is a cavity wall building but a hollow block building is completely different. Are we being told houses are still being built with hollow blocks?

Mr. McCaughey

That is exactly what I am saying. I have no problem with that method of construction. The vast majority of private house purchasers in Dublin are buying houses built with blocks that we would use to build walls around a field in the country.

No. The hollow block was a nine inch block with two holes in the middle. A cavity wall——

Mr. McCaughey

That is what I am talking about.

Nobody builds houses with those blocks now.

Mr. McCaughey

Approximately 20,000 houses per year are being built in Dublin with such blocks.

That is unbelievable.

The highest priced houses in the country are being built with them.

Mr. McCaughey

Correct but one would not find a builder living in such a house. It would be easy to find a builder who lives in a cavity block or timber frame house but one will not find one who lives in a hollow block house.

What is the energy loss level in a hollow block house compared to a house constructed with cavity blocks?

Mr. Quigley

The energy loss level is approximately the same because for various reasons they are both equally poorly insulated.

Therefore, houses built with cavity blocks and hollow blocks can be badly constructed.

Mr. McCaughey

One of the benefits of a cavity block house, be it timber frame or masonry, is——

It can be corrected.

Mr. McCaughey

In one sense, it can be corrected but the real reason cavities were introduced was to stop the transmission of damp from the outside to the inside wall. By having a cavity wall a layer of protection is added against rain penetration inside the building. In hollow block houses there is single leaf construction. Therefore, a path of transmission is available.

The hollow block house cannot be corrected.

Mr. McCaughey

Correct.

Mr. Colley

In my own research into this matter I came across a Dáil debate from 1978 in which a Deputy, whose name escapes me, asked the then Minister his position on the 9 inch cavity block, given that it had been banned in the United Kingdom and was unsuitable from the point of view of insulation. That puts the issue in perspective. This problem has been known for some time, yet nothing has been done about it.

Where are hollow blocks being manufactured? I did not know they were still being manufactured.

Mr. McCaughey

Everywhere.

If the Government took the initiative now, the hollow block construction method could be made illegal.

Mr. McCaughey

It is not a matter of making any method illegal. That is the key point. It is a matter of setting down appropriate insulation standards to meet our commitments——

(Interruptions).

Mr. McCaughey

Correct but it is not a matter of targeting a particular method of construction.

Mr. McCaughey

The problem is that, despite this work of fiction from the Department, we have not set sufficiently high standards for what we should do morally to meet our commitments. As I indicate in the document, we have continuously withheld increased insulation standards or manipulated them in such a way that there is a back-door route to allow materials which cannot meet the proper standards to be used. We should not target any particular method. We should decide to put in place the highest standards in terms of best practice and let all methods of construction compete to ensure they come up with a product that achieves the standard.

Effectively, we should target all bad products.

Mr. McCaughey

"Innovate or die" is the expression used generally in business.

I thank the representatives for their presentations. We have had record levels of housing output in recent years and the representatives have raised serious issues, particularly for new home owners in the greater Dublin area. The joint committee will be pursuing the matter further.

Sitting suspended at 11.38 a.m. and resumed at 11.40 a.m.
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