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.