Energy Efficient Housing: Discussion

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No. 6 on our agenda is energy efficient housing. On behalf of the committee, I welcome to today's meeting Mr. Pat Barry and Ms Marion Jammet from the Irish Green Building Council, Mr. Paul Kenny and Ms Kate Ruddock from the Tipperary Energy Agency.

Before we begin I will read a quick note on privilege. I wish to draw witnesses' attention to the fact that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to this committee. If they are directed by the committee to cease giving evidence on a particular matter but they continue to do so, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given. They are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable.

Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable.

Mr. Pat Barry

I thank the committee for the invitation to present at today’s meeting. The Irish Green Building Council was founded by organisations operating in the construction and property sector to accelerate the transition to a sustainable built environment. We advocate and educate, but we also develop tools to facilitate this transition. For example, we have developed the home performance index certification system to improve the environmental quality of new homes and the environmental product declaration, EPD, Ireland programme to provide transparent information on the environmental impact of construction products.

In 2017, we worked in close co-operation with the Department of Communications, Climate Action and Environment to develop Ireland’s national renovation strategy. We are now working with our members on the implementation of this strategy. This includes working with all the construction institutes to upskill their members for renovation. We are also working on designing a building renovation passport to enable homeowners to plan cost-effective staged renovation over a number of years.

We must get all our homes, both new and existing, to zero carbon by 2050. For existing homes, we need a step change in both the level of activity and the depth of energy efficiency upgrades to transition every home to zero carbon. In the process we can eliminate fuel poverty and improve people’s health and well-being by giving them warm, mould-free homes. This will reduce health expenditure by alleviating illness related to damp and cold.

We can also create sustainable construction jobs for the next 30 years in every village and town across the country. We welcome the recent document from Department of Housing, Planning and Local Government entitled "Bringing Back Homes: Manual for the Reuse of Existing Buildings". By focusing on renovating empty homes and accommodation above shops and businesses in the centres of our villages and towns, we can revitalise existing communities while reducing carbon emissions from transport and making best use of the existing stock.

The national planning framework proposes to build 500,000 houses over the next 21 years, adding 25% to the existing stock. This represents a great opportunity to regenerate and densify existing towns and cities. The nearly-zero energy standard comes into force on 1 November this year for new homes through Part L of the building regulations, but we need to go further. We must move to fossil-free energy systems and must consider the wider unregulated carbon impacts of homes such as water usage and the materials used to build them. We must ensure that all new homes are well located with walkable access to amenities and public transport. By moving to energy positive homes, new homes can play a part in decarbonising our electricity.

Our home performance index certification gives developers and local authorities a framework for better built, better quality, healthy homes in connected, ecologically enhanced communities. It is not enough to have energy efficient homes, they must enable low-carbon lifestyles.

We believe that the following actions are needed to ensure all citizens can make low-carbon choices and live in truly sustainable homes and neighbourhoods. Government must provide long-term certainty that deep energy renovation is and will remain a top priority. This will allow everyone in the industry to invest with confidence in the skills and innovation needed. Government needs to support the rapid upskilling of the industry in order that homeowners can identify which building professionals and tradesmen have the expertise to do quality renovation. We must ramp up funding for local authorities to renovate all their housing stock.

We need to make finance available to everyone to renovate their homes, whether though low-interest loans or green mortgages. The Irish Green Building Council has just been provided funding by the European Commission to work on establishing a green mortgage programme in Ireland over the next two years. This will enable homeowners to access cheaper finance for renovation and allow home buyers to benefit from reduced interest rates if they buy the greenest new homes on the market. We already have commitments from home builders to provide greener new homes if the banks support them with such a programme. All banks, credit unions and other financial institutions should now be required to play their part and participate in financing the energy transition.

We thank the committee once again for the invitation to speak today.

Mr. Paul Kenny

I thank the Chair for asking us to present here today. Our statement covers many of the same points Mr. Barry has raised, so I will try not to cover the same topics more than is necessary. The Tipperary Energy Agency has spent the past 15 years renovating homes to a high energy standard with a lot of support from the State. With regard to the renovation challenge, each year somewhere between 500 and 1,000 homes are renovated to a very high standard including a transition to renewables and a phasing out of fossil fuel usage in the buildings. This needs to deepen. We are currently renovating approximately 30,000 homes a year. The national development plan says this figure needs to increase to 45,000.

It is only a shallow retrofit for those 33,000 homes. As such, while perhaps 1,000 homes are hitting the target, that needs to get to 45,000 homes a year between now and 2050. That is the scale of the challenge. It is important the committee understands that is what we have to do. We have to get to every building and spend €30,000 to €50,000 on each. That is huge. While it provides a huge opportunity for health, jobs, the environment, avoiding EU fines and meeting our moral obligations, the committee should know that is the scale of the challenge and one of the key parts of this.

New NZEB building regulations are due to be published in the next couple of weeks. While they are very good from an energy efficiency point of view, they will still allow developers to install fossil-fuel boilers, the removal of which the State will have to fund at a later stage. When we looked at it two or three years ago and the sums were done, it was said that performance of buildings with gas boilers would be so energy efficient that it would be similar to a heat pump. However, our electricity grid has got more renewable and the 70% target has been accepted widely, including by the Minister and the Joint Committee on Climate Action. That means those numbers will be very different in time. The regulations have taken the last two years to come into force but they will be almost out of date when they do. In 2016, the European Commission published guidance for NZEB for which the definition is a very energy efficient building with a very significant portion of the energy coming from renewables. We have defined that in Ireland as 20%, which is a significant portion. The European Commission's guidance is that it should be 55%. We are missing an opportunity because there is no cost to the State. We should therefore revise urgently the regulations to be published next week. We are going backwards on the number of homes with fossil-fuel boilers. Even with the retrofitting of houses with fossil-fuel boilers, we are being overtaken by new builds. That is one of the points on new build but the major challenge is retrofitting. We have renovated a number of homes for people with severe respiratory illnesses and the State has a similar scheme. We see huge savings and huge health benefits in having done so. We should certainly think about a specific scheme to subsidise heavily people in fuel poverty with solid fuel heated homes, in particular in the midlands and peat burning areas where the environmental emissions from one home could be 20 to 30 tonnes of CO2. That could be reduced to 800 kg or less. That would obviously have a major impact on the energy transition as well as on the environment and job creation in the midlands.

To entice people to renovate non-State-owned and non-low income homes, we must ensure they want to do so and that they get a good renovation and sound, impartial advice. The State must ramp up its involvement in market development significantly. While we provide grants currently, we do not really force the training through the marketplace. In upper Austria, which is a region the size of Munster, CO2 from buildings has been cut by 45% in a decade. That sort of impact is possible. Austria will say the impact comes from a combination of carbon taxes to push people to ask what they need to do to avoid them and grants to subsidise and assist them. The major specific difference between Austria and Ireland is market development. Austria has extensive training courses. If one is a plumber, one must become a plumber who can install renewables. One cannot just choose that. One must be able to do what is required. Homeowners need to be able to afford to renovate and in that regard, Mr. Barry has discussed the potential of green finance. The allocation in the national development plan of €4 billion will support perhaps 6% to 8% of the houses we need to renovate. It is too small and the State is carrying too much of the burden of the deep retrofit programme. We need to have blended finance with grants and advice. There are several models across Europe and at conference after conference, people talk about what the solutions are. We know that the solutions include a blend of very low-cost loans, grants and advice from qualified professionals. The most important thing to move to now is market development with blended finance and grants. Other key points include that the Joint Committee on Climate Action has suggested the establishment of a one stop shop for renovation to provide advice, retrofit design and procurement, which is what the energy agency does. Whether it is that model or another one, one needs to involve a professional in renovation. One cannot simply leave that up to the contractor who turns up at the door. One needs to have someone who is advising the homeowner. It is therefore very important that we build that capacity in Ireland.

I make one comment on planning permission. Within the planning and development regulations, the exemptions for renewables published in 2007 and 2008 are very out of date and are restricting the development of solar PV. One needs to get planning permission to put any solar PV on the roof of a school whereas one does not need planning permission to install a fossil-fuel boiler. One needs planning permission as a homeowner, business owner or industrial unit to go over a very small amount of solar PV, namely 50 sq. m or 7 kW. We need to change that. It could be done at the stroke of a pen by way of a single line in a statutory instrument. While we will be told later today that it is going to be included in the whole-of-Government plan and that it is going to be done, it is a matter of urgency. We have been calling for years for these things to be changed yet it is a small matter of the single stroke of a pen. It is a single line of a statutory instrument. I ask, therefore, that we can take some of those costs out of the supply chain and move on.

We need to raise awareness of energy efficient stock. It is so important. I ask about grants. I want to find out about some of the grants that are out there. I do not know whether the public is really aware of them. It is so important. Can Mr. Kenny set out the figures and say how much funding is drawn down to service these grants? Is there a lot of cash left over? Mr. Kenny spoke about new builds. How can we make our existing stock more efficient from a cost perspective? Whether it is local authority housing or older houses which are being bought, there is an issue. Can Mr. Kenny provides the figures and say whether all of the funding is being used up? Local authorities must put more emphasis on telling people about their entitlements. People who come to my clinics are sometimes unaware of these grants. While the local authority will always have the grants and be working on its own stock, we have older houses which people bought out over the years and it is very hard to get the grant for them. It is about awareness. I want to know about the funding and the stock and whether we can conduct a larger campaign.

There was reference to a greener homes mortgage and talking to banks and credit unions. That would be important even with local authority mortgages, which is a road a lot of people are taking now. If one does not qualify for a bank or building society loan, one goes to one's local authority. The local authorities could have a massive input here. It comes down to awareness but it is huge going forward. We must all play our part, including in government and through local authorities. I ask both groups of witnesses to come back to me on some of those figures.

Mr. Paul Kenny

I note that some SEAI officials are in the room and will make a presentation to the committee. It would be useful if the Senator asked them about the percentage of the money which has been drawn down and so on. The Senator is right that not everyone is aware of the grants and that there are programmes around free upgrades for people in receipt of fuel allowance. Certainly, we see that they are not very aware in the marketplace. If they were more aware and there was more demand, there might be a request for more funding. One of the major issues I see and hear about all the time is that people will have completed a renovation in their houses and, whether by way of grants or otherwise, installed another fossil-fuel boiler. Awareness of the requirements in the professions among architects and engineers is very poor. As an architect, I am sure Mr. Barry can confirm my view as an engineer that our professions are not at the stage they need to be at, which is a problem. That goes straight on down to the trades, officials in local authority housing and across the supply chain in Ireland.

Climate change has only got into the zeitgeist over the last 18 months.

We need really robust regulation, however, and I would call very strongly for a building regulation that bans fossil fuels in homes. We are in a climate emergency. We have adopted that and that means we need to change what we do. It is not simply a case of the State saying fossil fuels are not a very good thing. The State needs to step in and say that people are not allowed to buy them any more. That might mean challenges in terms of financing but unless we start to put out those market signals, we are going to have the same problems. The builders' providers would be quite happy to sell and people would be quite happy to make them, so we really need to start challenging that, and that is not going to happen unless politicians decide it is not okay. At present, new schools and public buildings are built with fossil fuel boilers across the board and while we need to make a statement, we also need the Government to make a statement because civil servants do not have the ability to decide to spend more money on capital that restricts them to something else. They need the statement to come from the elected Members of Dáil Éireann.

I thank Mr. Kenny. That is huge. It is up to us as a Government to make sure we do change legislation, and we need to do that going forward. We need to raise awareness, because it all boils down to awareness and people not having proper information. That is something all of us here need to target going forward, whether in the Joint Committee on Communications, Climate Action and Environment or through housing, which is our area. All of us need to work together on this because this is where we are definitely falling down. I really believe that.

Mr. Pat Barry

Does the Senator want me to respond on the mortgages?

Mr. Pat Barry

There is great opportunity in local authority mortgages to incentivise developers to build higher-quality homes. At the moment, one can borrow up to €250,000 in a rural area and I think €325,000 in an urban area. However, no criteria are set for what type of house for which one can borrow. One could buy an F-rated or an A1-rated house and there is no differential in the quality of home, so there is real opportunity to set criteria there. There are also opportunities in the construction of public housing, for example. The National Treasury Management Agency, NTMA, released a green bond last year, and they are oversubscribed. The way green bonds work is that Exchequer spending, typically investment in decarbonising the grid or in things like flood relief measures, is packaged as green. There is an opportunity there because if we went for really ambitious standards of social housing, that could then be rated as green and be packaged up as part of the green bond for sale internationally.

I thank the witnesses for their presentations. I will make a couple of opening comments and then ask a few questions. It is fair to say this committee has probably been behind the curve in terms of addressing and discussing the issues being raised today. That is partly, I suppose, because so much of our focus has been on the acute end of the housing crisis and therefore housing supply and all of that. It seems absolutely appropriate that we have this conversation now at a time when housing supply is increasing, albeit not fast enough for some of us, to ensure that all of the new builds, whether public or private, meet the kind of challenges that have been outlined by the witnesses.

I suggest to the Chairman that it would be good if members could agree on a short report for the Minister after this meeting, with some clear recommendations picking up on some of the points made, so it was not just a hearing but that something came out of it. This is in no way a criticism of the Sustainable Energy Authority of Ireland, SEAI, and I will discuss the point with its representatives later, but I have been concerned for a while because the way in which a lot of those grants are constructed makes them very difficult for many homeowners to access. However, those grants that are accessed are really good and have huge benefits. I welcome the argument on blended finance and loan finance because it seems that given the scale of the retrofit challenge in the private housing sector, that is the only way it will be addressed. I would go further and suggest a mixture of loans and timeline deadlines. At this stage of the emergency, the only way we can ensure people take up loans is to set deadlines by which date they must be done. It is a little like a situation that arose when I was in the North when planning guidelines were changed for disability access to buildings. Rather than trying to incentivise behaviour, the British Government informed people of the financial supports in place and told them clearly that they had a set number of years, after which their buildings no longer would be compliant. Easier access to finance and clear timeline deadlines are what we need in this area.

While I know it is not the witnesses' own area, I have some concerns and I hope they might be able to make some comments that will inform us for when we have representatives of the Department in afterwards. A major concern I have is that while a significant amount of money has gone into upgrading local authority stock through retrofits, the BER rating up to which that stock is being taken up remains very low. It is a B rating rather than the higher one. Have the witnesses any thoughts or ideas in terms of its development?

I am glad Mr. Kenny mentioned the issue of gas boilers. It seems absolutely crackers to me that we are about to have a new set of regulations in place and 50% to 60% of all new builds will have gas boilers. It makes no sense and I do not accept some of the construction industry arguments that it would be prohibitively expensive, particularly when one looks at the savings for homeowners in terms of reduced energy costs. They would actually get a much better deal. I am also hearing from people purchasing new homes, particularly homes that have mixed photovoltaic, PV, and gas or PV and electricity pump systems, that on buying their homes, a lot of the stuff has not been installed properly or in such a way that they get its maximum use. When they buy the home, there is an additional cost in getting a lot of the technology actively working in the house. Is that something the witnesses are coming across? Could they comment on that and give us their thoughts? That emphasises the strong point that was made in terms of the need for additional training.

I am amazed at the planning restrictions, about which I did not know until recently. The Minister has been willing, in both very good and very bad ways, to rapidly push through statutory instruments that have very significant planning implications, whether on building heights, building sizes or what we are getting at the moment with short-term lettings, which I welcome. This seems to me to be a no-brainer. Is there a reason it has not been done? Is there any resistance or opposition to it? That seems to be one simple recommendation we could make.

In terms of the one-stop shops, do the witnesses have an idea about how they could be best rolled out? For example, could we have one in every local authority in the country or what would work? Can the witnesses advise us on some of that, particularly from the experience in Tipperary, where there has been a lot of good work?

To go back to finance, could we consider making the case that Home Building Finance Ireland, HBFI, for example, could try to work in some of the points Mr. Barry made into the Rebuilding Ireland home loan scheme, whereby loans being issued from HBFI should have some of the same kinds of differentiating criteria? That would be a significant development as well. The witnesses might share with us any thoughts they might have about the criteria that could be developed for the Rebuilding Ireland home loan.

Finally, can the witnesses go into greater detail about building materials? Concrete is obviously the big one. There are lots of interesting new building technologies available, although that raises the same problem again of whether our construction professionals and workers are sufficiently trained. What kind of building materials should we be moving towards and what should we be leaving behind in order to do some of the things that were spoken about?

We will go to Mr. Barry first.

Mr. Pat Barry

I will start with the last thing first. On the building materials, under the nearly zero energy building, NZEB, standard, the actual construction products that go into buildings will account for more carbon in the year of construction than the entire operation of the building over 60 years, and that is in the year we build them. Globally, the embodied carbon of construction building now accounts for 11% of the total carbon globally, and concrete alone is 8%. We now have to start regulating and we need to start moving towards regulation of embodied carbon because it is so significant now at the level of efficiency we are at.

When Mr. Barry says embodied carbon, that is the carbon that is a consequence of the production of the materials in the process.

Mr. Pat Barry

Yes. Some of it is a consequence of transportation and constructing the building but most of it is from the process of manufacturing the material. What we are trying to do is to get manufacturers to produce data, and we have an environmental product declaration, EPD, programme that gets them to do that. It is not just about the material itself but also about the quantity used, so it about optimisation of the structure and using less as well as using lower carbon materials.

Again, there are great opportunities for the rural economy in producing lower-carbon materials like fibre or hemp insulation. In France a farmers' co-operative has developed a whole business around hemp insulation. We do not produce any of that in Ireland. We could produce lower-carbon wood fibre insulation from our forests. We need to move to timber frame and CLT instead of concrete.

Mr. Pat Barry

It is cross-laminated timber, which allows the building of massive beams - up to 22 storeys can be built with solid timber.

There is potential to set criteria for finance. It is not just about the energy efficiency of the homes themselves. The biggest cost for a home buyer is the transport he or she needs to access the home. If he or she needs to own a car it can add up to €1,000 to the monthly mortgage cost. That is not taken into account in a mortgage. If people live where they can walk and cycle, they do not need cars and it is not taken into account in their mortgages. There is great potential to set criteria around all of those factors, such as embodied carbon, transport and energy efficiency.

Mr. Paul Kenny

I will try to take the questions from the beginning. The first question concerned the difficulty in accessing grants and one-stop shops. Those questions can be blended. Some of the Sustainable Energy Authority of Ireland, SEAI, grants are extremely easy to access. The problem is getting someone to do the work and being assured that he or she will do a good job. There must be competence and capacity in the market. We have very unregulated plumbing, insulation and construction industries. That is the challenge. Several years ago we ran a scheme funded by the SEAI. It was pushing the idea of grouped access to grants. We offered a single figure for three-bedroom semi-detached houses. All the homeowner needed to do was sign and we organised everything else. People contacted us and said they only reason they were doing it was that it was really easy. Otherwise they could not be bothered. It was the same grant, but streamlining it to make it very easy made the difference.

That is what the Tipperary Energy Agency has aimed to do. We are a social enterprise, governed and set up by the local authority. We act on behalf of the local authorities in Tipperary and surrounding counties. It is a model that could work very well. It works well across Europe. It has been under severe pressure. There were a lot more energy agencies in the early 2000s. A lot of them disappeared due to the financial crisis. Our business model is under pressure to deliver. That is a very good thing. It means we have to be lean and that kilowatt-hours are important. The energy efficiency obligation scheme, which applies to energy suppliers, is part of the funding model. An undertaking that is internal to a local authority and is not subject to the stick of having to deliver would not be a good idea. How to make one-stop shops work is pretty well known across Europe. Our model has been very effective in Tipperary. That is partly because of the support of the local authority and partly because we have had some brilliant staff over the years. It works, though a little bit of funding might be needed to get it up and running, perhaps in the form of programme-based funding for people to get energy advice as a paid-for service whereby one gets X hundred euro per energy advice.

We wrote a proposal for the Department several months ago. It was submitted to the Joint Committee on Climate Action. I am happy to send that to this committee's members as well. It would not be very expensive to do. This is what I mean by market development. The State is focused too heavily on grants without spending more money on training. The reason the training is not working is not because of the Department of Housing, Planning and Local Government or the SEAI. A different Department, which has not been engaged, holds responsibility here. There are no apprenticeships in plumbing. Nothing is happening in the area of training and capacity-building. It is very hard to hold the Department of Housing, Planning and Local Government or the Department of Communications, Climate Action and Environment responsible for something that is a different Department's responsibility.

That dovetails very neatly with the question of market capacity and new homes. The biggest concern of the Department of Housing, Planning and Local Government, as Mr. Armstrong will allude to, is what would happen if we installed 30,000 heat pumps next year and nobody has a clue what they are doing. We would have a serious problem then. I share Mr. Armstrong's concern. We have all talked about this concern for the last seven years. It is still a concern because we have done nothing about it. We need to fix that problem urgently so that in three years' time we do not find we are unable to mandate it because the market does not have the capacity to deliver it. We have just completed a research project on the optimisation of homes for air source heat pumps with Limerick Institute of Technology, ESB Networks and Electric Ireland. It is not very hard to do but it has to be done. There are a couple of steps. Heat pumps need to be designed and installed properly. It is not rocket science. All heating in Sweden is now either from district heating or heat pumps. Sweden has phased out fossil fuel boilers. It is used across the board in Japan and Australia. There are lots of places that do not use fossil fuel boilers for domestic heat. It is a question of having the right skills, regulation and continuous professional development for plumbers and so on.

The last question concerned finance. We have a scheme for SMEs which consists of the Department of Finance and the European Investment Bank, EIB, de-risking money and it is run through the pillar banks. Exactly the same model could apply here. It is being rolled out in several European countries. Discussions are being held with various officials across the board. Everyone is aware of what needs to be done. It is a question of delivering it. The State can borrow at a fraction of the cost of other borrowers. If a homeowner is offered a payback over ten years, an interest rate of 8% or 9% on the loan removes the payback. It becomes very costly. If the interest rate is 2% it is a totally different game.

The opportunity is very clear. While the necessary steps are hard work, they are not rocket science. As a State we have overcome much more challenging things. These things need to be put in place urgently. The people in the background know all of these solutions but ultimately there are not enough people in the Department of Housing, Planning and Local Government and the Department of Communications, Climate Action and Environment to get all of these things done. Unless the Civil Service has the capacity to deliver the changes, we will be sitting here with a long list of things to do and no-one to deliver them. The biggest barrier in Ireland for the last five years has been a lack of civil servants. That is visible not just in this Department but across the board. We need to build the capacity so the Civil Service can deliver those programmes.

Mr. Pat Barry

There was a question touching on minimum building energy rating, BER, standards for rental accommodation. We are currently holding a consultation on how a minimum BER might be implemented. We are doing a lot of consultation with the industry. The key response is that it needs to be signalled well in advance and it needs to be supported. We must offer the same grants to landlords. There are a lot of smaller landlords with a couple of properties. They do not have the wherewithal to renovate them. If a minimum BER is introduced we will also need to bring in the same grants and support structures.

I wish to mention two things. For the record, notwithstanding the fact that they are going to give us the document, could the witnesses give us a little bit of detail on how the operation in Tipperary works, its costs and its origins? If that model works we do not have to reinvent the wheel. This could be rolled out in local authorities over several years.

I asked a question about social housing and retrofitting. Again, the witnesses may not in a position to comment on this. If they have thoughts on that I would be interested to hear them. I did not mention the private rental sector but I should have done. The witnesses have prompted me to ask a further question.

There are 340,000 registered rental tenancies across the State. The vast majority of those are once-off, accidental or semi-professional landlords. They can already write off any capital improvements, albeit only at 8.5% or 12% annually. Is there an argument that they should be able to fast-track that? Should we offer a different kind of loan product alongside a clear target date by which they would have to come up to a certain standard? I do not want to open up the debate around carbon tax but even one is in favour of it and thinks it incentivises, the one group for whom it will do nothing is the renters. They will be paying the tax but will not have any ability to control the retrofitting of the property. Do we need something specific for the private rental sector? It is currently decreasing but it is likely to start to increase again at some point in the future.

Mr. Paul Kenny

On social housing, I am sure the officials from the Department of Housing, Planning and Local Government will allude to this question later. There is a two-step approach of fabric first and then heating. I think that is broadly the right thing to do. The problem is that for a lot of local authorities, particularly those in rural areas, the primary appliance is solid fuel with a very inefficient stove that can burn cheap fuel at €5 a go or whatever. If we multiply the efficiency by 60% it still results in a very poor BER rating. If we get the fabric right, the next phase will be to put in a very efficient heating system. It is broadly very sensible to get the whole stock up from a fabric and ventilation point of view and then to address the heating aspect. My local authority is moving into phase 2 and the schemes are now available for heating for that phase. I broadly think the scope, scale, type and approach that the Department has taken is right. We are all frustrated with the lack of pace but that is an Exchequer question. It is beyond my pay grade, for want of a better phrase.

On the one-stop-shop model, the agency was one of 16 set up and originally co-funded from Europe in the late 1990s. Three now provide those services. The idea was to provide services to both the local authority and the community at large, including SMEs, community buildings and housing. There are really only two of us left providing the suite of services. In our business model, the main cost is staff. About 78% of our running cost is the engineers and other staff. A certain portion of our business is commercial, so we have commercial clients that pay commercial rates. We charge them at a profit and use that profit to do public good work, including policy discussions such as today's and my own salary. We then have programmes like the SEAI-funded better energy communities initiative or the deep retrofit grant. We use a combination of funding from the SEAI, the homeowner and the energy efficiency obligation scheme to fund that work. We have some support from the EIB for three years to try to scale up that renovation. We have more or less tripled the amount of carbon savings and energy savings over the last three years with that support. It works out roughly at between 25% and 30% of the cost of providing the service. Hopefully by the time the EIB support is gone, we will be more efficient and better able to do that. Our board comprises representatives from the local authority and experts and it is governed to achieve a service. It is a non-profit service delivery overall. We charge a profit on commercial and operate on a non-profit basis for communities, charities and homes.

What are the annual operating costs?

Mr. Paul Kenny

We have approximately 24 full-time staff and another five or six people working with us on a part-time basis. Our turnover in the last fiscal year was approximately €2.2 million. We provide many services outside Tipperary because no one else is providing some of those services. Most of the costs are staff. We have to compete in the market for staff and pay engineers the going rate. In the region of two thirds or three quarters of our staff are technically focused. Their focus is very much on building renovations and consultancy. We have a communications and events section. We run an energy in agriculture event with the IFA and Teagasc to try to help that sector along. We do a lot of work with the SEAI on a number of its programmes and work for it in its public sector programme and so on. Our communications staff work on trying to get the energy transition more widely known. We do marketing campaigns, case studies, videos and events. We go around to public centres in Tipperary and so on to try to increase people's knowledge of the energy transition. It has been very successful but very hard. Some State support would be wonderful but if the State support is done incorrectly, we will get people sitting on the fence and not delivering. Any State support should be based on delivering an effective service. It should be based on kilowatt hours and carbon dioxide tonnes. It should be very much focused on supporting the market but it should be lean and effective.

Mr. Pat Barry

The Deputy asked about the BER. We need a combination of carrot and stick. We need the minimum BER to signal that landlords will be required to bring rental accommodation to a minimum standard. Then we need a couple of mechanisms specifically designed to help the landlords get across the line. Often they own one or two properties and have the same issues with accessing finance as an ordinary homeowner. We need a combination of measures to make it happen.

I have to chair a meeting soon so I will miss some of the commentary. I welcome our guests. It is very interesting and enlightening. They are at the cutting edge of what we should be doing. What they are doing is not being done everywhere, as they have stated. They clearly have the energy, knowledge base, enthusiasm and professionalism. How do we replicate that across the country in a way that is focused on outcomes? How do we replicate it in Louth, Meath or wherever? Mr. Kenny said there were two agencies still in existence. What is the other group?

When I get my energy bill after the winter months, I tell myself I had better do something about it. Most of us do not do anything because we know the bill is going to reduce for March and April. Something that might be useful that I did not see on my energy bill would be a reference to a hotline or a way to communicate with someone. Around February, I got a list from my local council of professionals I could go to who are registered and qualified to do BER work. People are thinking about people's bills, maybe that of the SEAI. Perhaps it is already there and I have not seen it. I understand that the ESB was talking about a scheme at one stage whereby whatever a person's energy costs were, it would keep them at a constant and that it would fund retrofitting energy improvements in the home. I do not know where that scheme is now. If one changed one's energy usage in terms of reducing the carbon footprint, the ESB would put that in and the bill would not get any dearer. People would know the maximum exposure they would have. That was an important point.

The people who need fuel most are older people and very young children. Older people often live in the least energy-efficient homes.

I know local authorities do much excellent work but what more could or should we do? Should we target older people in a special way?

I may have referred at a previous meeting to a decision taken by the local authority in Drogheda in the 1970s. Fossil fuels at the time were so expensive and electricity so cheap that the local authority, in its wisdom, decided that it would no longer provide chimneys in new houses. The oil crisis followed immediately and people could not heat their homes. The local authority then had to build chimneys in order that people could use fossil fuels again which, at that time, were cheaper than the electricity available form the ESB. Whatever is done, we must ensure the energy resource is available indefinitely and will not be subject to market forces, as happened in the 1970s. That was the trend then. I agree that we must reduce our carbon footprint.

Our guests are saying that people might be listening but are not acting. There is no communication pathway that provides access to key decision makers across Departments and three Departments were mentioned. Can we make a recommendation to Ministers that they ensure that they have the same agenda as the witnesses? There is no point in coming back in three years to say we should have done this, that, or the other. Those are my main points.

Mr. Paul Kenny

The Deputy asked who the other energy agencies are. There are three independent agencies. There is Codema, the City of Dublin Energy Management Agency, but it only really provides services for the local authority. The scale of Dublin's local authorities is such that they need a professional service almost entirely for themselves. To replicate a model like the Tipperary Energy Agency model in Dublin would take a large unit. The third one is 3CEA, the Three Counties Energy Agency, which covers counties Carlow, Kilkenny and Wexford. The model it uses is similar to ours and the two senior staff in 3CEA previously worked with us in Tipperary. They do great work.

ESB does not have a pay-as-you-save product. Part of the idea of a blend of loan finance and grants is that loan repayments would more or less match the savings. However, they will not always do so and we need to be frank. We have very low fossil fuel costs and high energy costs are unlikely to arise until a carbon tax is introduced. As such, a pay-as-you-save scheme will not work effectively. The green deal in the UK failed spectacularly, partly because matching savings with repayments was one of the rules. It is very hard to do that when fossil fuel prices are low and rather than taxing fossil fuels, much of the cost of providing them is subsidised.

The Deputy mentioned electric heating at the time of the oil crisis. I will share an anecdote. We renovated three private houses in what was once a social housing estate. In the previous year, the three households combined had spent €7,100 on heat using a mixture of oil, solid fuel, liquefied petroleum gas, LPG, and storage heaters. There were three very different heating systems in the houses that had changed over time. The three houses will be heated for less than €1,000 this year following the deep retrofit scheme funded by the Sustainable Energy Authority of Ireland, SEAI. It was not a cheap renovation but the three houses have no mould where once they had loads of mould and the residents had health issues. They are now warm, dry and cheap to heat. The cost of heating those houses is much less than the fuel allowance so it is essentially free. That is how we will remove carbon emissions and fuel poverty - through insulation and heat pumps, not through subsidies.

What was the cost of those retrofits?

Mr. Paul Kenny

Approximately €45,000 each.

Is that per unit?

Mr. Paul Kenny

Yes.

Who funded that?

Mr. Paul Kenny

The Government funded 95% and the owner funded the other 5%.

Mr. Paul Kenny

It is expensive. This will cost €50 billion. It is not a simple thing to do but we must consider an elderly homeowner who does not have to go to hospital for a week.

It makes a considerable difference.

Mr. Paul Kenny

It makes a massive difference.

Older people absolutely need this.

Mr. Paul Kenny

We have seen homeowners with chronic obstructive pulmonary disease, COPD, with seven or eight stints in hospital over a three-year period, who had no more such visits. We have seen children with very bad symptoms of asthma who no longer have any symptoms. I am not saying their asthma is cured but there are no longer any symptoms.

The Deputy said that people are listening but not acting. The Oireachtas Joint Committee on Climate Action put together a substantial report with all of the recommendations we are talking about, including on training, capacity building and so on. We are all very aware of the all-of-Government plan on climate action being drafted. I presume, as it is all-of-Government, that it will include some of those Departments, including the Department of Education and Skills. I am hopeful that will be included. It is not something the Department of Comminations, Climate Action and Environment does not know. I would say the Department is very frustrated that the other Departments are not doing what is needed. Members can ask Department officials that question, although they may not answer. I am very hopeful this will deliver a significant change but we will see.

What about the ESB? It proposed a pay-as-you-save scheme about three years ago. I presume it would be put into resources on which one would get a quick return. Mr. Kenny seemed to say that, notwithstanding that the alternative is so cheap, we still need to do this. He is really saying we should bring on the carbon tax and force change.

Mr. Paul Kenny

I know it is being debated.

I am just trying to understand.

Mr. Paul Kenny

Carbon tax is being widely debated. It is my opinion, having been at the coalface of renovation in Ireland - our organisation is probably retrofitting more houses than anyone else in the country - that if we do not have a carbon tax, we will not achieve anything near the scale we need. That is absolutely clear. However, if we only have a carbon tax and do not do the market development stuff, we will not get anywhere. We need grants and carbon tax but we especially need to focus on skills, training, the one-stop-shops and the service provision. The state of Upper Austria focuses a third of its budget on ensuring that when one wants to renovate one's house, instead of having a list of BER assessors who do not answer their phones, there is a professional service at the other end of the phone which commits to attending at one's home to spec the renovation and the contractor will come out the following week to start work. That is what we need. We must move to a position where it is easy for people to do this and they pay €300 per month or €500 per month for five or ten years, however much it costs, and it becomes really easy. If that is delivered, there will be much less of a need for carbon tax and grants to achieve the same results. Realistically, considering the scale of the challenge to go from 1,000 renovated homes to 45,000, we need all three measures at a significant scale. That is very important. We need to change from a completely hands-off, market led approach because the State needs to intervene. It is much cheaper to intervene through training and capacity building than it is to hope that the market will do that on its own.

Older people need home heating most but probably have the least income to pay. The impact on them has to be significantly reduced. Does that make sense? Whatever we do, we should protect older people from the impact of the tax on their capacity to live and heat their homes. I know there is a special system of grants for-----

Mr. Paul Kenny

Exhaustive studies on carbon tax have been done by the Department of Finance to make it socially just. We should use that fantastic work, notwithstanding the fact that insulation is the only effective means of protecting people from fuel poverty. It cannot be done with grants and we cannot afford to keep giving people subsidies for fossil fuel, as the State is doing.

We need insulation as opposed to anything else.

Mr. Paul Kenny

Yes.

Mr. Pat Barry

The Department of Communications, Climate Action and Environment has a pilot scheme to specifically target people with health and respiratory issues to improve the quality of their homes with the expectation that this will reduce their healthcare costs.

In terms of where we are at, it is worth noting that one can walk into a garage any day of the week, buy a new electric car with 0% finance and walk out the same day for the same as it costs to do an entire deep energy renovation on a home. It is a much more complicated undertaking for a homeowner. We must get to the same level of simplicity in delivering a deep energy renovation as is currently offered by the car dealerships in terms of accessing grants for electric cars.

I apologise for missing some of the presentations. Energy efficiency is a very important aspect of our efforts to deliver a just transition on climate. The Dáil agreed last week to declare a climate emergency, but we must be careful that our efforts in this area are not merely symbolic. The first practical step could and should be the inclusion of a commitment in the new building regulations, the publication of which, as I understand, is imminent, not to install any more fossil fuel heating systems. That is the first step and it must be done. If the Department has a reason that it cannot be done, its representatives should appear before the Joint Committee on Communications, Climate Action and Environment to explain it. If the Government intends to sign off on regulations that continue to permit fossil fuel systems, it must explain to the Oireachtas in advance why it is doing so. In fact, taking action now on this issue is possible, achievable and prudent and will save citizens the cost of taking existing systems out in ten or 15 years.

I agree that the 70% renewables target for 2030 is a game changer and I am confident that we can and will achieve it. An issue to consider is that it changes the numbers underpinning the bigger picture. Mr. Kenny mentioned that his organisation is working with the ESB on the integration of heat pumps and so on. A 70% renewables target makes the figures different for the low-carbon effectiveness of heat pumps, but is it also the case that if we have a large body of pumps, it may help us to deliver the 70% target? How close are we to providing that type of balanced and flexible demand management capability in the use of heat pumps? Are we doing it yet and is it being done elsewhere? It is a win-win situation in that the 70% target will help to justify the heat pumps and, at the same time, the use of those pumps will help us to achieve the 70% target. It is one of the main demand management flexibilities available to us and I am interested to know if there any specific examples which back up the case for it.

I agree that there is not sufficient understanding of the scale of the challenge in respect of the deep energy retrofitting project. The national development plan includes a target of having 45,000 houses per year being deep retrofitted by 2021. As I recall, the objective is to get them up to a building energy rating of B1 or higher, which effectively amounts, in most cases, to a deep retrofit. The witnesses indicated that the current figure is 1,000 houses annually. When I asked the Department for that figure a few months ago, I was informed that some 220 deep retrofits are being carried out through the grant schemes. Going from 220 per year - even more so than 1,000 - to 45,000 is a huge gap to cross. The main difficulty, as the witnesses noted, is that we do not have the workers to do the jobs. I am hearing that anybody working in this space cannot get the contractors. At its conference two weeks ago, ICTU noted that 18,000 workers will be needed, which requires an apprenticeship scheme. People need to be trained for this career and anybody going into it is looking at a work stream for 30 or 40 years. We will have to employ tens of thousands of young Irish people to work in the industry.

I am slightly concerned by Mr. Kenny's statement that the likely financing mechanism for the deep retrofitting project will be via blended grants and loans. I am not certain we will have the budget to provide grants for the private property sector. I agree fully that the provision in the national development plan will not be sufficient given the scale of what needs to be done. Our first priority should be to deep retrofit all social housing to ensure social justice as we introduce the carbon tax. That sector should be the target of any State funding and, as owner of the properties, the State may be able to ensure better order in the process than it would in the private sector. However, the social housing stock alone would eat almost all of the budget, leaving very little for grants. At a recent meeting of the Joint Committee on Climate Action, we asked delegates from the Office of Public Works and relevant Departments where we are with the 33% energy efficiency target for 2020 in respect of public sector building stock. It seems we are nowhere near it. There has been a lot of work done on behavioural aspects but, as the OPW delegate observed, we have not touched the actual buildings. After social housing, we will have to look next at public buildings, including every school, hospital, Garda station, departmental building and so on, all of which will require direct State funding. With those two major projects taking priority, there will not be the budget available in the €50 billion deep retrofit initiative to cover much else. Even if moneys were available, there is a social justice issue in that we are seeing so many instances, including with broadband and social housing, where the State is providing huge benefit to private owners from public funding. At a certain point, one has to ask whether such funding would be better used in direct provision. We should be nervous about the feasibility of the grants aspect of the proposed funding model.

There is a debate that must be had in the next five months in terms of how to approach the introduction of a carbon tax system. One of the suggestions from other parties is that we should grant-aid private property in this space. Even if we did that, we are only looking at a maximum income, as the scheme ramps up over ten years, of perhaps €1.5 billion per year. It is not a sufficiently large purse to cover everybody. Again, there is a social justice aspect in terms of the best use of public funding. My instinct is that the majority of the private retrofit will have to be done by regulating the rental market, including by way of such provision, as Deputy Ó Broin suggested, that after a certain time period of renting, people will have to do the retrofit. That will require very solid, low-cost loans for the private rental sector. If we can get that finance packaging correct, we may not need to provide grants. Getting the right loan facility in place means the returns will cover the cost of the loan and a grant will not be needed. That is what we should be aiming to implement.

I agree that the cornerstone of this will be similar to what is being done in other European countries, namely, that one quarter of the loan would be covered by the Strategic Banking Corporation of Ireland, European Investment Bank capital would cover the risk capital for the first quarter of the loan, and the pillar banks or other institutions would provide the remaining finance. It is the most likely financing structure and I agree fully with that approach. My concern, however, is how we can get the loan down to 2% with the pillar banks involved. They do not make money on 2%. Perhaps some of the grant support will be provided by way of a type of loan financing, but I have concerns about the maths. Are we looking at a loan of seven years, ten years, 15 years or longer? The longer the loan, the better, and it might be helpful to have it attached to the property so that if it is sold, the loan transfers to the next owner. I agree that the most important thing is to ensure we have the workers to do the jobs, but the second most important is to get the loan financing package correct. We might need to try out different packages in the next year or two until we find one that works with the public.

I am of the view that we should, in the private sector in particular, strategically target houses in rural areas in the first instance for a variety of reasons.

First, if we are to get workers back home to do this, maybe from Australia or elsewhere, it might be easier to get them to live in Kerry rather than Killiney given the cost of rent in Dublin. Second, there is a real issue with carbon tax and justice throughout rural Ireland. We should proactively work against that or mitigate it by targeting rural Ireland. I have a sense from some of the work the Tipperary Energy Agency has done that it may be easier for us to go for deep-retrofit of one-off houses in the country rather than terraced houses. It is far easier with one-off houses in the country. We know we can put heat pumps in as well as an electric vehicle charging point. We should be doing all that at the same time. We should be going in with everything, including putting solar panels on the roof and installing a heat pump and battery storage. Insulation is first and foremost. In some ways, it might be easier to manage a large number of rural houses in that scheme. We do not have the difficulties that we run into in my constituency. Putting electric charging points is not as easy there as it would be in rural Ireland. There might be some difficulties with heat, although I think these are becoming less pronounced as heat pump technology improves. We might make a strategic decision in terms of deciding to target rural housing. I am interested to know the thoughts of Mr. Kenny on that.

Those are the three questions I have. I am sorry for going on for so long. Are we getting flexibility around heat pumps to help us deliver renewable energy and make the case for getting rid of all oil-fired and gas-fired burners? How do we get a 2% loan? Should we target social housing and rural housing first?

Mr. Paul Kenny

There are some interesting questions there. My first point is around heat pumps and flexible demand. We have just finished a research project with ESB Networks and Electric Ireland. We have tried a tariff at a fixed level to see if we can move the demand. It was universal. Once there is a reasonable level of retrofit in the house, we can put in the heat during whichever hour of the day that the grid requests. We have definitely moved it all out of the peak periods. However, we will still need to introduce heat at least every day or at least twice a day, for want of a better term.

How close are we to this? It is a question of digitisation of the energy system. Heat pumps can do the work but the communications infrastructure is not quite in place. I will not get into broadband today but that is very much part of it. If we need to dump load quickly to protect a transformer, then we need robust communications to manage flexible demand. One really interesting thing is that at -5°C the average load is 2.8 kW across the 20 homes we surveyed. The design load of the grid is 2.5 kW. There is no issue with the grid from an effective demand point of view with heat pumps, but it is very different if we put an extra 7 kW for an electric vehicle outside the house. From that point of view, we are not there in the sense of being able to roll that out tomorrow. However, there is no reason we could not do so. There is no technology barrier. It is a question of designing how we do it and coming up with the payment mechanisms or the standards. For example, if a person installs a heat pump then we need to specify that that person must do this that and the other. Some German cantons have required use of a smart-grid-enabled heat pump that can be dumped if required. That is the sort of thing I would suggest rather than the market payment mechanism, which holds that it has to be done a given way.

Deputy Ryan asked about deep retrofitting 500 to 1,000 houses. The deep retrofit programme had 220 dwellings. Other homes were renovated in other Sustainable Energy Authority of Ireland schemes, including better energy communities, as well as non-grant-aided projects. The data I looked at indicated that approximately 500 homes were rated B2 with a heat pump. They were registered for grant purposes. There are more houses besides these that are not certified with a building energy rating. I reckon the figure is somewhere between 500 and 1,000.

It is still only a fraction of what we need.

Mr. Paul Kenny

It is important to say that. Deputy Ryan asked a question about working on social housing stock first. It would certainly eat up all the budget. There is a question of social justice. A person who has bought out a social house was incentivised to buy it out. Such houses are private dwellings but there are many private fuel-poor households. I do not think it is right to suggest they would be not looked after in the same way as someone who has not bought out a social house or who has not put as much money or capital into it or someone who has not looked after the house. We need to look after all parts of society in a relatively equal manner.

Deputy Ryan asked a question around the €50 billion cost. That is the cost for housing alone. The figure for commercial building stock is probably the same again. We are talking about €100 billion over 30 years. How the public purse funds and incentivises a programme would require a mixture of regulation, which the committee will hear about today. This will include incentives, penalties, market development stuff and facilitating the market. If the State chooses to incentivise people with a carbon tax or a grant, that represents two sides of the one coin. If we do not have cost-effectiveness, people will not invest. One option is to make regulations to force people to do it. I wish the best of luck to any Government that tries to compel people to spend €30,000 on their houses without any State help. It is a question of whether we have the stomach for the carbon tax to push people to secure the payback loan so that they will make the investment and all the market development stuff that goes with that. Alternatively, we can have an incentive and a lower carbon tax. Let us consider what a grant of 30% does. It is probably cost-neutral to the Exchequer, or near enough to it, because the tax on the workers and the VAT alone on a 100% grant would already make up a major part of the 30% figure. There may be others more qualified in finance who could advise on it, but from the analysis I have seen a 30% grant is effectively cost-neutral to the State if it incentivises 100% of work. In other words, for every €100 spent, the tax revenue is likely to be €30. When we say this we mean that a 30% grant is more or less amounts to the State not taking a share out of the renovation. That is what would happen if we had no support.

How do we get to loan rates of 2%? There are some models around Europe. It is always important to look outside of Europe too. The German public KfW bank is a non-profit bank. It gets 2% rates. There is a region in France called Picardy where the regional government has guaranteed the other 20% that the European Investment Bank has not guaranteed. It represents low-cost finance. The money comes from a combination of the equivalent of a credit union and the EIB. The rate is 2.5% or 2.25% over 20 years and is unsecured. That is really difficult. I have been in discussions with credit unions, banks, Ireland Strategic Investment Fund and various other parties. I do not see how we can get a commercial bank to offer 2%. There is no way because they do not make any money on it, as the committee has heard. I am highly in favour of a certain amount of the grant being for buying down a low interest rate, but we need to de-risk first so that people can pull down the actual cost before we start subsidising. Otherwise we will simply end up subsidising private profit.

From a payback point of view, the question arises of how many years the loan is for. That depends on how big the carbon tax is and how expensive fossil fuels are. Denmark has 15 cent per kilowatt hour for oil and 18 cent per kilowatt hour for gas. Thus, the payback is far shorter than 5 cent per kilowatt hour for gas and 8 cent per kilowatt hour for gas in Ireland. The payback period is based on the financial payback. This is a matter of scale. We can decide on the carbon tax and the grant levels but ultimately if we do not have a payback at 10% or ten years or less, we will not incentivise people. They will decide it is not good value for money to do it. That is an important point. We have the slider. It is a public policy lever that we can use but we are currently doing neither one nor the other and that is why we have only 500 or 1,000 retrofits. If we do not get market development right, if we do not have plenty of contractors who are trained and if we do not have easy access to the market, then those numbers will all need to be higher. We will need higher subsidies and higher carbon taxes to get the same output.

Deputy Ryan asked a question around targeting rural Ireland first.

Burning ten, 12 or 14 tonnes of peat per annum to heat a 50 sq. m mass concrete home, which goes to a heat pump burning 1,900 kW hours of 30% green electricity, soon to be 70%, is a big opportunity, whether it is environmental, health or so on. I come from a rural county and I agree that rural counties should be targeted first. The gas network is in Dublin. It will not be possible to take houses off gas when there is 12 tonnes of peat going into another house if one is limited financially. We hear a lot about the just transition and the workers in Bord na Móna. I would be more concerned about the issues of social justice and carbon tax and people who cannot afford it. The drivers of heavy machinery will get jobs in construction in Dublin in no time. We are constrained in the capacity of workers. I would be less concerned about those issues and much more concerned about the huge impact that one can have from taking out solid fuel systems, particularly in the case of mass concrete ex-local authority cottages that were bought out, rural one-off houses and so on, the savings from which, environmentally, can be huge.

In terms of bringing workers home, there is capacity in rural Ireland to house people but not in Dublin. There is less capacity than we would like but there is still capacity in rural Ireland. We can get staff into the agency. I have a senior engineer coming from Perth next month, which is the only place one will find design engineers because there is no capacity in the market.

Mr. Pat Barry

On the low-interest loans, this discussion came up about five years ago when the Sustainable Energy Authority of Ireland, SEAI, was developing the Better Energy finance scheme, which was tracking the UK green deal initiative. The intention was to transition from grants to low-interest loans. The only commercially viable loans that the banks were suggesting were possible were around 7%. A lot of work was done, including with the banks, on the cost of subsidising the 7% down to 2% and 1%, the findings of which are available. We can do a lot with green mortgages paid over a longer period of ten or 20 years because then the additional cost to the mortgage is insignificant and it does pay for the energy bills.

In terms of prioritising rural housing, perhaps we should focus more on rural villages and towns because we would getter payback. A single house with four walls costs twice as much to renovate as an apartment above a shop in a rural town. The cost of renovating that apartment to a high standard is a fraction of the cost of renovating a house. If a house is reaching the end of its life in a rural situation, it might be better to move the occupants 1 km into the local village to an apartment above a shop. This brings life into the town and reduces the need for a car, which reduces the carbon from the house and the transport.

There is great work happening in the context of the Limerick regeneration project. Those involved are reimagining the centre of Limerick by renovating old Georgian buildings and transforming the streets as well to bring life back to them so that families will move into the centre of Limerick and renovate properties. Cars are being banned from the centre and playgrounds are being put in place. It is very inspiring. Targeting some of our smaller towns in this way would bring great benefit. For example, the installation of the greenway in Dungarvan has made it into a very vibrant place, but there are so many abandoned houses in Dungarvan that could be turned into excellent accommodation. This would in turn remove the need for one-off housing and it brings life to areas and makes them attractive to live in.

I agree. I would appreciate it if Mr. Barry could forward to me a copy of the UK bank research from four years ago.

Mr. Pat Barry

The research was done here as part of the Better Energy finance scheme. The SEAI should have a copy of it.

I thank Mr. Barry.

In some sense the solution to the loan finance is what already exists in the social housing sector. We have a Housing Finance Agency which provides Government-backed low-interest loans at 2% to 3% blended. The issue is the political question of whether, because they are on balance sheet, the State is willing to take that on. A facility could be easily designed, which could be operated by the SEAI or a stand-alone body modelled on the Housing Finance Agency. Even with a significant amount of borrowing, it would not have too much of an impact on the Government's debt-to-GDP balance given where the economy is going. If this issue is the priority we say it is, rather than convoluted off-balance sheet private sector financing models, which are always going to be more expensive, what we need is a model equivalent to the HFA to deal with it. The credit unions are now allowed to lend into housing. They have referenced up to 3% of a loan. It would not be a huge stretch to ask that one of their products be deep retrofitting. That would be eminently sensible.

When we talk about low-income families, it is important that we talk about low-income families based on their income and not their tenure. The ESRI has produced the research that shows that 70% of renters in the lower income decile face huge housing costs. Up to 40% of their net disposable income goes on rent. We need to target lower-income families, but a lot of them are in the private rental sector. A lot of them also are in the owner-occupier set. Of all new buildings built and bought between 1999 and 2009, only 1% has an A grade and those who own them are in significant financial difficulty and distress with high housing costs. I agree with Deputy Eamon Ryan that we need far greater loan finance, but it needs to be targeted especially at the people, whether council tenants or homeowners, who are in the lower income bracket. There are many who are outside of that bracket.

There is a third option to the two outlined. It is about an attractive loan offering with easy delivery and phase out dates. We did it with smoky coal, for example. That kind of firm regulation by the State went out of fashion for 30 years. Given the scale of the current crisis, it has to be part of the conversation as well. While it is fine to talk about how we can use pricing points to incentivise behaviour, the right loan and grant provisions, with speedy and easy implementation, provide the space for conversations about target dates. For example, if we were to offer landlords in the private rental sector a loan that is repayable at sensible rates, there would be no reason we could not state that particular targets had to be achieved in a particular timeframe and that they would have to move to the next target, say, five or ten years on from that. Without firm, legal regulations, a market left to its own devices, even with an even balance of carrot and stick, might not necessarily end up at that point. That has to be part of the conversation as well.

Mr. Paul Kenny

I agree that we should have a phase-out date for fossil fuel boilers, which should commence with new builds. We should then move to the phasing out of oil in the public sector and then the private sector, followed by the phasing out of gas in the public sector and then the private sector over the next 15 to 20 years. However, it is hard to do this when we are still allowing the installation of oil and particularly gas boilers in new public buildings and renovated public buildings.

Mr. Paul Kenny

Yes.

I thank the witnesses for attending. Even though we went well over time, it was very beneficial for the committee in preparing our report. I thank them for the level of detail they shared this morning.

Sitting suspended at 11.20 a.m. and resumed at 11.25 a.m.

At the request of the broadcasting and recording services, members and visitors in the Public Gallery are requested to ensure that for the duration of the meeting their mobile phones are turned off completely or switched to airplane, safe or flight mode, depending on their device. It is not sufficient to put phones on silent mode as this will maintain a level of interference with the broadcasting system.

In our second session today we resume our discussion on energy efficient heating. I welcome Mr. Jim Gannon, Mr. Jim Scheer and Ms. Orla Coyle from the Sustainable Energy Authority of Ireland, SEAI; Mr. Seán Armstrong and Mr. Alyn Deane from the Department of Housing, Planning and Local Government; and Mr. Robert Deegan and Ms Eileen O’Connor from the Department of Communications, Climate Action and Environment.

By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to this committee. If they are directed by the committee to cease giving evidence in relation to a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. Witnesses are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any persons or entity by name or in such a way as to make him, her or it identifiable. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or any official by name or in such a way as to make him or her identifiable.

I invite Mr. Deegan to make his opening statement.

Mr. Robert Deegan

I am grateful for the invitation to this meeting to discuss energy efficient housing. I am joined by my colleague, Ms Eileen O’Connor, assistant principal officer in the energy efficiency and affordability division.

Energy efficiency has long been a focus of Irish energy policy. This is because energy efficiency measures are among the most cost-effective methods of reducing emissions while providing tangible benefits to people and businesses. Ireland’s target for improving energy efficiency is 20% by 2020, and we are currently on track to achieve 16% efficiency by that deadline. While this represents solid progress, there is clearly more to be done, especially in the context of a new, more demanding target for 2030 that will be established as part of the forthcoming all-of-Government climate action plan.

The residential sector accounts for a quarter of Ireland’s total energy usage and approximately 10% of our overall greenhouse gas emissions. For that reason, improving the energy efficiency of our housing stock is one of the main areas of focus to achieve our overall efficiency goals. There are two key energy efficiency challenges to be addressed in Ireland’s residential building sector. These were mentioned in the earlier session. First, we must build a generation of new homes that meet our expectations for comfort and functionality while significantly reducing our energy use and CO2 emissions. Second, we must address the legacy of older housing with poor energy efficiency performance and high levels of CO2 emissions.

The Department of Housing, Planning and Local Government has the lead role in the energy efficiency of new homes while the Department of Communications, Climate Action and Environment supports a range of measures to help households improve the energy performance of homes. I will focus my comments today on the steps being taken by the Department of Communications, Climate Action and Environment to improve the energy efficiency of existing homes. To date, the central plank of the Department’s efforts to drive demand for energy efficiency upgrades has been grant schemes funded by the Department and administered by the SEAI. A range of grant schemes are available to householders and communities to suit their circumstances and the scale of work they wish to undertake. For instance, grants covering part of the cost of retrofits are available for those who can afford to invest some of their own funds while 100% funding is available for those on lower incomes at risk of fuel poverty.

The Department also funds pilot schemes focused on particular issues such as the challenges associated with upgrading to an A building energy rating and learning about the wider health and well-being benefits of energy upgrades for individuals with chronic illnesses. Funding is also provided to support community-based partnerships to improve the energy efficiency of the building stock in their area and to encourage innovative measures and solutions.

This would include those at risk of energy poverty, community facilities and businesses. The grant schemes have evolved over time in line with the policy objectives of the Government. For instance, within the past year, the measures available under the schemes have been expanded to promote deeper measures and support the transition away from grant aid for fossil fuel heating systems. The total funding allocated for these schemes for 2019 is €85 million, and this represents an increase of €40 million compared with the figure for 2015. Since 2000, more than 400,000 homes have received direct support under these schemes to carry out work such as installing insulation, heating controls or solar panels to heat water. In 2018 alone, 21,350 households and 37 community groups received support to improve the energy efficiency of their homes. Despite this investment, however, over 80% of homes still have a building energy rating of C or lower. When compared with other EU countries, our homes use 7% more energy and emit nearly 60% more emissions. The Government has accepted the need to redouble our efforts to improve the efficiency of our homes. This is evident from the ambitious commitments made in the national development plan.

The national development plan, NDP, has identified a target of upgrading 45,000 homes to a building energy rating of B for each year of the lifetime of the plan from 2021. This represents a very significant increase in the number and depth of retrofit delivery. To support the achievement of this target, funding of €3 billion, as well as an additional €700 million for switching oil boilers to heat pumps and providing solar technology in existing homes, has been allocated under the plan. This is clearly a substantial level of Government financial support. However, as the Minister, Deputy Bruton, has indicated and as discussed earlier, Exchequer investment alone will not be enough to meet the level of retrofit required. The overall targets can only be achieved by individuals making the decision to play their part in addressing climate change by investing some of their own money in upgrading their homes. We must now design initiatives to encourage and support people to make these decisions.

The Department is of the view that maintaining a focus on the existing grant schemes will not be sufficient to bring about the targeted level of retrofit activity. The Department intends therefore to continue to work closely with the SEAI to identify the lessons that can be learned from the schemes and apply those lessons in designing future approaches. Other steps must also be taken to encourage, support and facilitate energy efficiency upgrades. These could include the introduction of new delivery models to support more widespread retrofit activity, building the supply chain to ensure that the necessary businesses and workers are in place and available, addressing the particular challenges associated with rented accommodation, encouraging greater use of building energy ratings, and the development of novel financing schemes to fill the funding gap. All this will need to be underpinned by strengthened regulatory measures and the establishment of a more consolidated approach to measuring retrofit activity and impact. In recent months the Department has been working closely with other Departments and agencies, including the Department of Housing, Planning and Local Government and the SEAI, to develop new measures for inclusion in the forthcoming all-of-Government climate action plan. The plan will build on the targets set in the NDP and outline the steps Ireland will take to become a leader in climate action, including in the area of energy-efficient housing. It is anticipated that commitments relating to the built environment, including homes, will be core elements of the plan.

Significant progress has been made on improving the energy efficiency of our homes. We must now learn from what has worked in the past as well as the experiences in other jurisdictions to design the additional interventions required to meet the Government's new level of ambition for energy efficiency and carbon emissions. We are happy to address any questions the committee may have.

I thank Mr. Deegan. We move on to Mr. Armstrong from the Department of Housing, Planning and Local Government.

Mr. Seán Armstrong

I thank the Chairman and members for the opportunity to address the Joint Committee on Housing, Planning and Local Government on the topic of energy-efficient housing. I am joined by my colleague, Mr. Alyn Deane, principal officer with responsibility for building standards.

I would like to say a few words about Project Ireland 2040, which the Government launched last year. Project Ireland 2040 is the overarching planning and investment framework for the social, economic and cultural development of Ireland. It includes a detailed capital investment plan for the period 2018 to 2027 - the €116 billion national development plan, NDP - in support of a long-term transformational spatial strategy, the national planning framework, NPF, with a time horizon out to 2040. The aligned and shared vision of the NPF, in tandem with the NDP, represents a joined–up planning and investment strategy for Ireland's future growth and development, focused on a series of ten shared national outcomes. It includes a number of ambitious climate action objectives specific to the built environment sector, including delivering more sustainable growth of compact and connected cities, towns and villages. Greater energy efficiency is a key benefit of this type of compact growth. Higher-density residential development tends to comprise smaller units, which require less energy to heat. Multi-storey and terraced buildings in close proximity require less energy and make renewables-based systems of energy distribution such as district heating or area-wide technology upgrades more feasible.

In recent months we have been engaging very proactively with the Department of Communications, Climate Action and Environment on the preparation of the new all-of-Government plan to tackle climate disruption across multiple areas, including in particular the built environment, and we are driving a number of actions that will contribute to energy-efficient housing. The retrofitting of existing dwellings is the responsibility of the Department of Communications, Climate Action and Environment, and we support this policy in a number of ways. The Department of Housing, Planning and Local Government has responsibility for setting energy performance standards for new homes and those undergoing major renovation. In Ireland, approximately 40% of total energy produced is used in the building sector. The energy performance of buildings directive sets ambitious goals for energy efficiency and renewables in buildings by requiring nearly zero energy building, NZEB, performance for new buildings from 31 December 2020. The directive also requires that major renovations to existing buildings are completed to a cost-optimal level where feasible. The implementation of NZEB is a key action for the built environment in contributing to Ireland's national low-carbon transition and mitigation plan.

I will focus on what we are doing to achieve NZEB in new dwellings. We have progressively updated standards relating to the conservation of fuel and energy in dwellings over the past decade with the aim of improving the energy and carbon dioxide emissions performance of all new dwellings to NZEB performance levels. Because of this, the final step on the NZEB journey is not as significant as it might otherwise be. Many of the techniques introduced in 2007, such as mandatory renewables for new dwellings and more energy-efficient boilers, have effectively eased the transition and minimised the additional costs and effort required at this stage to achieve NZEB performance for dwellings. Last month the Minister, Deputy Eoghan Murphy, signed the European Union (Energy Performance of Buildings) Regulations, which represent an improvement of 70% in energy and carbon dioxide emissions performance over 2005 standards for all new dwellings commencing construction from November this year, subject to the necessary transitional arrangements. An update to Part F - ventilation - of the building regulations will also be signed shortly.

A modelling and cost study was carried out to estimate the cost impact of NZEB. The average uplift in cost across all dwelling types modelled was 1.9%. When compared with the energy savings to the occupants over the lifetime of the house, this delivers real value, benefiting people's lives by bringing comfort and convenience, mitigating against energy poverty and ill health, and providing the societal benefits of lower carbon emissions. Under the previous regulations, a typical new dwelling is built to an A3 building energy rating. The NZEB requirements will equate to an A2 building energy rating. This represents a 70% improvement in energy efficiency and a 70% reduction in carbon dioxide emissions compared with 2005. It also introduces 20% renewables as a percentage of the total building energy use. An analysis of Central Statistics Office data shows that 97% of dwellings built since 2015 have achieved an A rating.

The NZEB requirements make it more attractive for builders and homeowners to incorporate renewable technologies further and move away from traditional fossil fuels. The Central Statistics Office analysis of building energy rating data demonstrates this shift away from fossil fuels. The installation of oil boilers has dropped from 36% to 5% in new dwellings since 2015, and electrical systems or heat pumps make up 38% of heating systems in new dwellings. This percentage is growing steadily each year. These new performance requirements mean that heat pumps have effectively displaced oil boilers in new dwellings. This regulation is set at cost-optimal levels. It is performance-based and technology neutral.

The cost optimal level performance is the best energy performance that can be achieved in a building for the lowest lifetime cost when both capital costs and operating costs are accounted for over a 30 year period.

The availability of a choice of different energy systems delivers economic benefits, including competition and choice for consumers. It is a matter for the designer to choose the most suitable technologies to achieve the required performance. The cost optimal calculations are reviewed every five years and regulations will be amended if performance levels deviate off cost optimal. This regular assessment and flexibility provides opportunities to capture the benefits of innovation and economies developed in industry over time in regulations.

It is estimated that the cumulative improvements to regulations mean that a dwelling built to the 2011 Part L regulations requires 90% less energy than the equivalent dwelling built in 1978 to deliver the same standards of heat, hot water and light. This shows the very significant progress that has already been made in the standards for new buildings.

In regard to existing buildings the challenge is inevitably more difficult. The Energy Performance of Buildings Directive requires that where buildings are undergoing major renovation, the whole building should be brought up to a cost optimal level, in so far as this is technically functionally and economically feasible. Major renovation means where more than 25% of the surface area of the building envelope undergoes renovation.

Our technical guidance documents provide detailed guidance on how this can be achieved in practice for buildings undergoing a major renovation. The performance levels have been set to be proportionate to the original cost of works and to be ambitious but realistic, so as not to create an unintended barrier to renovation.

Building regulations will not increase renovation rates in themselves, but they will ensure that when renovations are carried out they are carried out to this level - typically equivalent to a B2 building energy rating.

In regard to social housing, funding of €128 million has been provided from 2013 to the end of 2018 to improve energy efficiency and comfort levels in almost 68,000 local authority homes. In addition, energy efficient measures have been incorporated into the 9,000 plus vacant social housing units that have been returned to productive use since 2014. This effectively means that approximately 50% of our social housing stock has been retro-fitted. While energy efficiency activity had traditionally been focused on the refurbishment of vacant properties, the current energy retrofitting programme launched in 2013 was aimed more broadly at the social housing stock, in particular to improve the energy efficiency of older apartments and houses by reducing heat loss through the fabric of the building to improve comfort levels and address issues around fuel poverty.

This social housing programme has 2 phases. Phase 1 focused on the lower cost improvements such as cavity wall and attic insulation. Phase 2 is now targeting higher cost measures, for example, fabric upgrades and glazing. There are significant costs associated with this deeper retrofit. We estimate a cost of up to €1.8 billion to upgrade 60,000 social dwellings to a B2 rating, with a typical cost of €30,000 per dwelling.

In addition to the areas I have outlined we are supporting local authorities which are taking a strong leadership role in piloting one-stop-shops for retrofit in conjunction with the SEAI. We are working very hard to meet housing demand, both in regard to new build and in the private rented sector. We have ambitious targets in terms of the quantity, type and location of homes to be delivered and we are also ambitious for climate action, including energy efficient housing. Through our building regulations we are ensuring that the quality of the homes we are building for future generations continues to achieve the high standards we are setting for decarbonising our built environment.

We are happy to address any questions the committee may have.

Thank you, Mr. Armstrong. I call on Mr. Jim Gannon to make his opening statement.

Mr. Jim Gannon

I thank the Cathaoirleach. I will make a couple of key points from the earlier slides and I will then delve into it in a little more detail as we move along. On the first slide, the key point is that Irish homes are about 7% less energy efficient than the European average, but we are approximately 58% worse off in terms of CO2 against the European average. As we look towards 2030, in particular, and our targets become more focused on CO2, we must look to decarbonise as we increase energy efficiency. The type of heat we use - oil, gas, moving towards heat pumps and other types - decarbonised heat becomes considerably more important.

It is important to consider how big housing is in Ireland. The two key points are that a quarter of all energy used in Ireland is consumed in our homes. Some 60% of this is space heating. The issue of heat in the residential sector and how we heat in terms of carbon comes into very stark relief as to how we decarbonise Ireland.

I will make two key points as we consider where we have come from. I will make two key points here. More than 400,000 homes have been upgraded through Exchequer-funded SEAI grants over 15 years. That is 400,000 people who made a decision to do something with regard to energy efficiency in their homes. That sort of bite-size chunk makes a material difference as to how we design future programmes and the fact we can have confidence that there can be a high-volume uptake. The second point relates to new dwellings. New dwellings are 70% more efficient than those built in 2005. It is important to make the point on the baseline of where we were and where we are with building regulations.

On SEAI programmes, I will take a quick look at 2018. Our different programmes look at shallow, medium and deeper retrofit. While our deep retrofit programme looks at where our housing stock needs to be by 2050, we need to be realistic and say that we are not going to get every home in Ireland to move to that in a single step. We need to look at how we can finance and technically deliver a smaller step-wise transition towards that level. There are varying levels of activity within that. People tend to do a greater volume of shallower retrofits.

Importantly, we funded the upgrade of approximately 21,000 homes last year. Separately and distinct from that cohort, motivated by the obligated parties, under the Energy Efficiency Obligation Scheme, EEOS, programme that sits under the stewardship of the Department of Communications, Climate Action and Environment, an additional 20,000 homes went under some form of energy retrofit, admittedly at shallow level. That is approximately 40,000 homes who made a decision to upgrade their homes. How does one motivate these people to make it deeper and help them finance that, because the technology is there?

It is very important to understand some of the technical challenges that are there and I will speak about the supply chain later on. It is also important to consider that the opportunity is there to. Approximately 300,000 homes are heat pump ready as to their fabric. They do not have to do a deeper retrofit of their windows, walls or attics. They are ready to go. How do we locate these? Comparing the building energy rating database specifically with where the small area economic data of the CSO tells us we have people who can and people who have more difficulty paying is a powerful resource for the policy decision-making process that will follow.

In regard to new buildings, the trends are quite important. In 2010, there were oil boilers in 30% of all new builds while in 2018, it was approximately 3%. This year it has moved down to less than 2%. There is a negligible number of oil boilers being installed. What interests me is that over the pathway from 2010 until now, for the first period, gas displaced oil, but for the latter half heat pumps have been displacing oil, growing to a point where they represent almost 50% in the first few months of 2019 in terms of what is supplying heat to new builds. The trend is there. We are moving in the right direction. The issue is how we increase the volume and how we finance that.

On the retrofit targets and challenges, the BER database shows that 94% of buildings are at B3 or less. Under the 2018 revision of the Energy Performance of Buildings Directive, we need to publish a long-term renovation strategy to upgrade our building stock to nearly zero-energy building, NZEB, by 2050. This is another leap altogether. These are the larger numbers mentioned earlier on by other people.

What is key is that many of the technologies and practices are available but not at the volume and skill level in terms of competency and supply chain required. Separately, we need to look at trigger points for those individuals to make a decision to spend that money on their home. Is it at that the purchase of a house? Is is at a change in lease of a house? Is it during a typical renovation where we get them to go further?

Is it at the point where people receive their retirement lump sum? Again, the demographics we are involved with indicate that this is a particular point where we can engage people in improving their home.

On finance, it is very important to recognise what has gone before. The SEAI has tested employee incentive programmes and low interest finance with credit unions over a number of years. We are working actively with the European Investment Bank, EIB, and SBCI here in Ireland to look at that low finance loan offering. Those are all very important. If one takes the par of the personal finance loans being offered in Europe and de-risks it by about 4%, one might get to 2%. However, if one takes par here for what personal loans are offered at, it is naturally higher. With respect to an absolute target of 2%, instead of saying that in Europe the finance for this has been de-risked by about 3% or 4%, thus making it more appetising to people, the starting bar in Ireland is higher. It is, therefore, the differential that can be brought down. By de-risking it and using the EIB, it may be possible to reduce it to 3% or 4% instead of the 2% available in Europe because we are starting from a different baseline.

Similarly, we will see more of the pay-as-you-save approach as the obligated parties become more interested. The final piece is the sociological impact of deep retrofit. Our behavioural economics team is looking at the wider benefits and how people value them. For example, why do people do a cost-benefit analysis on insulating their attic but not on buying a Belfast sink or marble counter top?

On the building energy rating, a key point is that while more will be asked of the BER, it is a tool from which we can derive far greater value in terms of looking at people's homes and their value and advising them more explicitly on what they can do to their home and the payback. An extended and deepened advisory report will be produced with everyone's BER from the end of this year onwards.

A key gap is the supply chain. We have upgraded 400,000 homes at different levels of retrofit in the past ten to 15 years. We know where weaknesses in the supply chain are, including geographically. As a result, we work with the National Standards Authority of Ireland, NSAI, on developing specific national standards and also with the Wexford and Waterford Education and Training Board on developing that sort of supply chain. We agree with all stakeholders that there is a significant challenge in this regard, especially given the buoyant construction economy.

On SEAI priorities, in terms of alternative options for housing retrofit finance, we believe there is no single solution for all demographics. There may be a need for residual grants but that is not a preferred option because it becomes a structural market support and we do not want grants to become such a support. We need to look at low interest finance, tax rebates on the purchase of a home and the home renovation incentive, HRI, where a tax rebate is provided on renovation of a house.

In terms of a one-stop-shop for a homeowner journey, there are many different examples of how that has worked in different jurisdictions. We believe that for volume, aggregated demand and confidence, people need to be brought through that pipeline. It is important to offer that in the market. We caution that we need to try to remove, where possible, the adviser from procurement decisions that could influence their income. People must ensure they are getting truly objective advice in any such model so it cannot be sharpened, as it were.

Minimum performance regulation is essential. That is speaking to Teachta Ó Broin's point about considering phase-out dates. A method of dealing with that is to first consider the commercial sector where socially and politically one could become acclimatised to setting a performance target at change of lease. We would also need to provide some incentive or assistance to make that happen. We could then allow that to move to the residential sector, which is currently sensitive to that sort of market intervention.

Targeted communication involves finding the key decision point in a person's life or in the life of the building to provide him or her with the ability to do it, in other words, to finance it, and then the appetite to do it, which involves moving him or her to wanting to execute. I will finish on that point.

I thank the witnesses for their presentations. I assure them that just because there are fewer of us does not mean we will not give them a hard time or take up as much of their time as we did with the previous witnesses. As I have many questions, I will put some in a first round and come back to some of the others later. I will start with the near zero energy building standard. One of the points I am not clear on relates to the 2018 obligations for all new public buildings. The presentation indicates that 97% of dwellings built in 2015 achieved an A rating. I have asked a couple of parliamentary questions on where we are moving in terms of the A2 rating and the responses indicated that 98% of all new dwellings are built to an A3 rated BER. However, A2 is the standard. Rather than asking more parliamentary questions and upsetting everyone, what is the position in respect of the 2018 A2 rating requirements? What is not clear in the responses I have received from both Departments is who is monitoring that. I know it is the responsibility of the Department of Housing, Planning and Local Government to provide the planning and technical guidance documents and it is the Department of Communications, Climate Action and Environment that decides on policy but who is checking to make sure this happens? As we approach 2020, this will become increasingly important. Any information on the position as regards the A2 rating and the 2018 obligations and monitoring would be valuable.

I am looking at an SEAI slide and I have been trying to get my head around the CSO data. Is it the case that only 1.25% of residential stock is rated A2 or A1? For those of us who do not work in this area, it would be valuable to find out what volume of the residential stock needs to be moved in that direction by the 2030 deadline. That would give us a sense of the scale of the undertaking.

This committee has not been involved in the process of developing the NZEB requirements that are about to published. Taking on board what was said in the earlier session on gas boilers, was consideration given to including phase-out dates in those regulations? If the argument is that we do not have the skills, expertise or industry capacity to simply prevent gas boilers from being phased out now, was consideration given to incentivise the industry and the Government to increase capacity by having phase-out dates? Is that still being considered? If we were to take the advice earlier and have a series of phase-out dates for oil and gas boilers, what would be possible or credible given the costs involved, the skill set available and current capacity of industry?

A wonderful line was used in the presentation of the Department of Housing, Planning and Local Government in connection with the Minister signing the European Union regulations and the targets "subject to the necessary transitional arrangements". I ask for more information on those targets.

The committee has spent considerable time looking at sources of finance for approved housing bodies, small and medium size builders and the private sector to build housing. The challenges in that area are similar to those cited in this discussion. Are all the current discussions focused on ways to de-risk and reduce the cost of private finance or is consideration being given to taking a Housing Finance Agency-type approach to funding loan finance? That would provide much more attractive options in terms of the cost of the finance to the borrower, albeit with the borrowing being on the State's balance sheet, even if it is sourced from the European Investment Bank because it is guaranteed by the State. Likewise, in terms of credit union finance, where all sorts of issues also arise. The committee has discussed at great length when the credit union sector will be ready to have a special purpose vehicle to lend into the approved housing body sector. Are the witnesses involved in a similar conversation? The credit unions seem to me to be another eminently sensible source of finance. Home Building Finance Ireland, HBFI, is a fund with €750 million of taxpayers' money and it will leverage a similar amount from the private sector to lend to small and medium sized builders. At any stage, were either of the Departments involved in discussions to see if we could maximise the benefit of that lending to small and medium sized builders to ensure that those buildings have the highest possible energy efficiency levels? If not, would it be worthwhile to do so?

Training is primarily the responsibility of another Department. It is probably remiss of us not to invite departmental officials to this meeting but we may do so at another stage. Are discussions taking place with the Department? Is the Department part of the conversation in terms of interdepartmental engagement to try to fill the skills and capacity gaps?

A total spend of €128 million on social housing between 2013 and 2018 amounts to only €21 million per annum. It is a small amount of money in the context of the overall capital budget available to the Department. Are discussions taking place on increasing the annual spending on social housing? None of the information I have received today or from the CSO shows the BER rating of social housing stock. Is that information available? Can the witnesses tell us how many units are rated A, B, C, D and so on?

One of the figures suggested many of the retrofits are about bringing them up to a B rating. Do we know how many units of the social housing stock owned by local authorities or approved housing bodies have an A rating or is that information available? I will come back to some other questions in the second round.

Mr. Robert Deegan

Some of those matters relate more to the housing side. I will first make a more general comment about the interlinked nature of these issues. We need to be careful we tackle each one and come up with a comprehensive and overarching approach to achieving our objectives. If we were to focus on increasing demand and increasing access to finance without having access to the skills and training, and those kinds of things, we would effectively increase the unit cost and not achieve the carbon targets or the energy efficiency targets. Many of the issues we are talking about today can be siloed off but they need to come together into a cohesive approach.

On the issues in regard to the financing models, as Mr. Gannon mentioned earlier, a lot of work has been undertaken in this area over a number of years. We are not wedded to any particular approach. Whatever approach we take, each will be evaluated and we will be looking at the approach that best meets the objectives we have been set. We will also need to look at how the financing schemes and the grant schemes interact. Again, they have to be seen as a cohesive whole as opposed to just looking at the finance in isolation from the grants. A lot of the research that has been published in this area, much of it done by the Sustainable Energy Authority of Ireland, SEAI, has shown the importance and the interlinked nature of finance products and grants, and the fact grants might reduce the effective interest rate that is being paid, while still needing to have an attractive low interest rate to drive the demand for the finance product.

In terms of the discussions on the training aspect, one of the great things about an all-of-Government climate plan is that it is bringing all of the relevant players around the table, so it is a genuinely all-of-Government approach to tackling an all-of-Government problem. There has been engagement between the Department of Housing, Planning and Local Government and the Department of Education and Skills. We are looking at a number of players, including the Department of Housing, Planning and Local Government in regard to standards, the Department of Education and Skills and SOLAS in terms of training and apprenticeships, and the Department of Business, Enterprise and Innovation in terms of having the businesses there as well, so we will be able to scale up to the level of retrofit activity that is planned for the future.

One issue in terms of training is that much of the activity has been at the shallow end of the retrofit scale and there are many people with the expertise to do that kind of work. It is about upskilling those people for the deeper end and for the more scientific and engineering approaches that will be required, as was alluded to earlier. For example, plumbing is one area as we need plumbers with specialist expertise for the types of interventions we are talking about. I believe that covers the aspects involving my Department unless there other issues. Mr. Armstrong might address the issue of regulations.

Mr. Seán Armstrong

The first question was around what percentage are rated A3 or A2. The current performance requirements are implemented through part L of the building regulations. In 2011, a performance requirement was introduced that was equivalent to A3, although it is not set at A3. That took full effect in 2013 and the transition period for it finished in 2013. The CSO data since 2015 have shown that 97% of dwellings built since 2015 are A3 rated dwellings, which is because the minimum performance requirement under the building regulations was A3. The NZEB requirement was set based on the cost-optimal calculations, which are the life-cycle calculations, and it comes out as equivalent to an A2 rating for most dwellings.

That regulation was signed by the Minister at the end of last month and was published two weeks ago. For any building regulation, one has to give a lead-in time for the industry to prepare, so it takes effect for all new dwellings commencing after 1 November 2019. There is then a one-year transition period, which allows dwellings to get to wall-plate level because, obviously, there are many buildings in design and that have received planning at this stage, and it would be unfair to ask them to go back and redesign when they have only been given a six-month lead-in time. That explains why there is a one-year transition period. They have up to 31 October to get to wall-plate level, which leaves a reasonable amount of time for all dwellings to achieve the NZEB performance requirements by 31 December 2020.

The next question was about fossil fuel boilers. When talking about phasing out fossil fuel boilers, we have to recognise we have had a ten-year roadmap in place to improve the performance of dwellings. It started in 2007, when we introduced mandatory renewables and mandatory airtightness testing. In 2011, we advanced the fabric performance and achieved an improvement in performance of 60% over 2005 levels. This year, we are achieving the final step to NZEB, which is 70% over 2005 levels.

We have already gone through a roadmap of improving the performance requirements of buildings. As Mr. Gannon's slide showed, it has had a significant effect already in regard to implementing renewables and phasing out fossil fuel boilers. Mr. Gannon's slide showed that fewer than 100 dwellings had heat pumps installed in 2015 whereas the most recent CSO data showed that over 4,500 dwellings have heat pumps installed. Heat pumps have effectively displaced oil boilers in new dwellings, so we have begun the phase-out of fossil fuel boilers. The CSO data also show that solid fuel is no longer being installed as the main heating source in new dwellings, which was another point at issue. What remain are gas boilers. The installation of gas boilers combined with solar PV has the same net emissions as a new dwelling with a heat pump installed, so the net emissions of the dwelling are the same, whether it is a gas boiler with solar PV or a heat pump that is installed. Notwithstanding that, we recognise the move towards the elimination of or phasing out of fossil fuel boilers.

In all the points made earlier, there was a recognition of capacity and building the supply chain. There was talk about getting the technology working, having the right skills, training up the plumbing industry and training up apprentices. In order to build the supply chain, or in order to phase out fossil fuel boilers and move to gas fossil fuel boilers, we think it is important that the supply chain is developed. Standards need to be produced by the National Standards Authority of Ireland, NSAI, training courses need to be put in place and competence installers need to be available to the market.

Right now, that infrastructure is there to support the delivery of housing for gas boilers but it needs to be developed for the heat pump market. In that regard, we are talking to the Departments of Business, Enterprise and Innovation and Education and Skills in the all-of-Government action plan, and actions are being developed to build the supply chain. In addition, we are also working with the NSAI to develop heat pump standards and a proposal will be put forward to the NSAI in the coming weeks to develop that national standard. We are also using QualiBuild and the BUILD UP training programme that has been developed, working with key stakeholders, particularly Waterford and Wexford Education and Training Board. We have developed that into a national training specification for NZEB and Waterford and Wexford ETB is delivering it at regional level right now. As part of the all-of-Government plan, we are in discussions with the Department of Education and Skills about rolling that out at a national level.

We have made significant progress with the requirements for renewables with the advancement of building regulations in phasing out fossil fuel boilers. We recognise that further work can be done and we are working with the relevant Departments to build capacity in the supply chain. We will be reviewing our regulations and current performance requirements in the next five years to take account of any developments and innovations. We will review our building regulations again at that stage to take account of any innovation in technology, reduction in costs and the capacity of the supply chain to continue the roadmap towards the reduction of carbon emissions from new dwellings.

Mr. Jim Gannon

Approximately 1.2% of the housing stock is at A3 or above. As in previous years, last year we produced the 2018 energy in the residential sector report. That goes into all the national statistics. We will forward it to the committee. Similarly, if the committee wishes we will forward an updated report on the different finance options in the residential sector that have been examined. I believe Deputy Eamon Ryan asked for it earlier. With regard to the different forms of finance, we are having that discussion with the credit unions. In terms of the Housing Finance Agency, it is one of the options being considered. Part of what the Deputy said would have reflected whether it should be delivered differently with a focus on energy efficiency or where one would just look at that product and say that a minimum performance should be A, B, C, D or E. It could be considered as a viable alternative.

Regarding the social housing sector, our programmes are very commoditised and are high volume in terms of transactions. Two years ago we wanted to focus on where we could deal with single point landlords or the equivalent. An accessible route for us was the stock of the local authorities and the approved housing bodies. For the last year and a half we have been working with them to examine their portfolio and start looking at a five, seven or ten-year plan to bring that up to the standard we would like. The building energy rating does not discern between social housing stock and otherwise, but that data acquisition is ongoing at present and it will be available. We will be happy to share it when it becomes available. Importantly, with some of our funding this year and at the behest of the Department we have started working with local authorities and housing bodies to see how we can move some of the funding more efficiently to a single group of homes with a single transaction as distinct from 1,500 homes through 1,500 different transactions. It becomes more important as we talk about building the supply chain.

A second matter that is not often discussed but must be is that if we can upskill our supply chain and get a very good insight into that social and public housing stock and if we enter a countercyclical economic downturn in the next one to three years, it is an incredible opportunity to retain skills and workers in this country, while investing in something we must do by 2030. At some point in the next decade there will be an economic downturn and if we are prepared to take advantage of that by tackling climate concerns, and if we have the models in place, it is a major opportunity to balance the supply chain and also to help us move towards 2030. We should not ignore that opportunity.

I thank the witnesses. I have some additional questions and perhaps will pick up on some of the questions that were answered. With regard to the SEAI's grants, the witness spoke about the number of people who applied to the SEAI and utilised grants and how they could be activated to go further. Does the SEAI keep a record of the number of people who applied to the authority but were unable to access grants? How many are there? That is another cohort. Politicians often get queries from constituents who have applied but have not been able to access the grants for a variety of reasons. What are Mr. Gannon's thoughts on that?

One of the questions was not answered by the Departments' representatives. Who will monitor NZEB? There are two parts to it. There is the public building NZEB requirement, which is already in place for 2018, and I have a separate question about that, and there is the private sector and commercial buildings from 2020. As the public building requirements come into force from the end of 2018 and start of 2019, will all new social housing developments currently being developed hit the A2 rating or will there be a transitional period for that? I notice there is far more solar energy in the social housing stock now than there was two years ago in terms of the new builds, and likewise with schools and hospitals. Will the witness speak about the implementation of that?

I have two concerns about new buildings. On the basis of the slides presented to us there is no doubt that there is a significant decline in the installation of oil boilers but the level for gas boilers is quite persistent. It went up a little in 2013 and 2014 and then down. However, in terms of quantity, because from 2010 to 2013 we were building virtually nothing, we are building far more homes with fossil fuel gas boilers now. The negative impact on carbon emissions is far greater, despite the fact that the graph makes it look slightly more positive. I am not accusing the witness of presenting it in that way but simply making that point. Is there the same plan to try to reduce the installation of gas boilers as there was with the oil boilers? Given the 2030 deadline, are we not just storing up an additional cost that householders will have to pay or additional grants and loans that will have to be provided to remove those relatively recently installed gas boilers and replace them with heat pumps? What can be done in the building regulations either to phase it out as quickly as possible or if the gas boilers have to be removed in a decade, to make it as easy as possible?

I am particularly concerned about multi-unit developments. This is much more straightforward in a standard house but we are entering a phase in which there will be far more apartment developments. Making the change to a district heating system in 100 apartments with 100 gas boilers is far more difficult if some contingency is not made in the planning now. When I was a member of South Dublin County Council, we had detailed conversations about the Clonburris strategic development zone. We wanted to insert a requirement that even if multi-unit developments were not necessarily going to have district heating immediately they would be designed and built in such a way as to make the transition to a district heating system much easier if and when we reached that stage.

Is there any reason the solar panel regulations could not be done as quickly as the earlier presentations suggested? Is it just a question of a statutory instrument or is some other problem causing a blockage? That appears to be an eminently sensible way to go.

On the finance, the value of the HFA model is not just that one gets the lower interest rate. The way in which the cocktail of funding for the approved housing bodies works also includes the capital advance leasing facility, CALF, soft loan. It is a 100% loan but it is done in a different way. My question was not just looking at Government-backed low interest loans but also combining two different types of loans over a much longer period. That is all in the document so I will not ask the witness to rehash it. I will read it, but the more information there is about that, the better.

Mr. Seán Armstrong

The first question was about how the NZEB regulations are policed both for public buildings and housing. As regards the public building requirement under the energy performance of buildings directive, a circular was issued to Departments in December 2016 advising them of the NZEB requirement and advising that all buildings commencing design in January 2017 should be to NZEB performance. Soon after that we went to public consultation on our NZEB requirement for all non-residential buildings. The NZEB requirement for all non-residential buildings applied to buildings commencing construction from 1 January 2019. While the public sector would have been responsible for designing buildings to NZEB that commenced design from January 2017, from 1 January 2019 all buildings that commenced construction were required to be NZEB. The building regulations overtook the circular that had been issued to public sector bodies.

From 1 January 2019, all non-residential buildings, that is buildings other than dwellings, commencing construction are required to be near zero energy buildings, NZEB. That is enforced by building control regulations.

I presume that that is being monitored through the building control amendment regulations, BCAR, system.

Mr. Seán Armstrong

Yes.

Given the new areas of expertise, is the Department satisfied there are sufficient skills and competence among the assigned certifiers, who are essentially the watchdogs who are doing the inspections and submitting the reports to the building control management system? Is there not a requirement, given its importance, to have an additional level of monitoring or checking at a departmental level to make sure that, in that first year or two years, everything is going according to plan?

Mr. Seán Armstrong

We were conscious of the step-up in technology and skills. We did extensive consultation with the industry. My colleagues here in SEAI rolled out a programme of upskilling for designers on the new requirements for NZEB. That was done countrywide. I do not have an exact figure but many designers upskilled in these workshops.

Assigned certifiers are a key part of monitoring. Were they part of that training? Is Mr. Armstrong satisfied that that section of the industry, who are the people going out, inspecting developments as they are being built and submitting certificates to local authorities, has the requisite level of skills? That would include not just designers and construction workers but certifiers too.

Mr. Seán Armstrong

There are a few aspects to the question. We have rolled out workshops for assigned certifiers and building energy rating, BER, assessors. We are also supporting the provision of CPD through the Royal Institute of Architects of Ireland, RIAI, and Engineers Ireland.

Mr. Seán Armstrong

Continuing professional development. It would focus more on the assigned certifier than the BER assessor. With regard to NZEB skills, we have had a lot of experience in housing construction in the past ten years because that has led the way. We have also worked with Waterford and Wexford Education and Training Board, ETB, to develop a regional training programme on skills. As the volume of construction increases in the housing sector, we will need to provide more training and upskilling.

Mr. Jim Gannon

The answer to the Deputy's first question is yes. In mid-2016, we set out to put together a behavioural economics team to do two things. One was to look at the uptake of our own programmes and how many people got through marketing, although I hesitate to call it that, into a sales funnel and what the drop-out rate was throughout that process. It looked at people from their perspective and not just the complexity of the grant. If people came in for a single item, they were more likely to follow through than people coming in for three items. People with different perspectives were more likely to stay in than not. We started to look at methods of prompting them to continue with the process at the point at which they would normally drop out, because it is a process with up to five stages. We were able to analyse the warmer homes programme and why people would respond to a letter to say they would like that done to their home. We examined four different options. The option that worked was when we changed the language from asking if people would like a Government-funded grant to upgrade their home to asking if they would like a Government-funded grant to upgrade their home that was worth a certain amount. The rate then went up. We had a similar experience with heat pumps. With the BER data, we specifically we targeted recently built homes which are in that bracket where heat pumps make sense. We did it in four different ways with four different types of language. Interestingly, it was not just the funding that motivated people to do it. In some cases, language stating that the person had been selected made the difference while in other cases there were more subtle twists relating to carbon.

This is important because as we look to aggregate and build volume, we need to understand how to communicate to people, periurban or urban environments. We need to understand how to communicate to ABC1 market demographics instead of people in the lower end. We have great experience in communicating with the people who can pay and also with those who are technically within that fuel-poor environment and can qualify for it. There is a large cohort in the middle who find themselves unable to part-finance. We all understand and recognise that challenge. That is where some of this volume will have to carry through. It is a matter of how one gives someone the ability to make that choice, by helping him or her with the finance, and then separately making the person want to do it. There is evidence that some of this is working. In 2016, we had a budget of approximately €75 million. This year, it is slightly more than €150 million and appetite is outstripping what we have across our programmes.

How many people make initial contact but, for whatever reason, are unable to secure grants? Does Mr. Gannon have an analysis of what prevents them from going through with it?

Mr. Jim Gannon

Off the top of my head, no, but we have been looking into it and I am more than happy to collate that information and share it.

Mr. Seán Armstrong

The Deputy had some further questions. He asked what we are doing going forward to further reduce the impact of fossil fuel boilers in new dwellings. Even though we have made good progress in phasing out oil boilers and solid fuel appliances in new dwellings, we are still continuing to advance the performance requirements of the building regulations. The current revision of the building regulations takes effect on 1 November 2019. The performance requirement will be advanced to be 70% better than a 2005 dwelling. That will further drive renewables and efficient heating systems in new dwellings.

Another important element of the new regulations is that we have introduced the renewable energy ratio. Previously, the renewables requirement was based on an absolute value. We are changing that to a ratio which further facilitates the installation of renewables. We will see a further increase in renewables. In the graph that the SEAI showed earlier, one can see increases in renewables as the calculation methodology becomes more refined. The introduction of the renewable energy ratio will also facilitate greater penetration of renewables. At present, CSO data show that the rate of increase of renewables is 4% per annum. Its figures show 38% with heat pumps in the current mix, which is increasing at a rate of 4% per annum. We can conservatively say that it will continue but with the new performance requirements, it is likely to increase. In addition to advancing the performance requirements, we are also working with our colleagues in SEAI, Climate Action Ireland, the Department of Business, Enterprise and Innovation and the Department of Education and Skills to build a supply chain. We have had meetings with the National Standards Authority of Ireland recently. A proposal is being developed for the NSAI board to develop a heat pump standard. That will involve extensive consultation with the industry and review of the technical detail. That kind of consultative process with the industry, developing information, will further advance the penetration of renewables in new buildings. Training will also advance the penetration of renewables.

The Deputy asked about multi-unit apartments. In the current version of the technical guidance document to support the building regulations, there is only one example of a semi-detached dwelling and how to comply. In the new technical guidance document, which will be published in the coming weeks and has been available for public consultation for the last 18 months, we have examples of apartments, including apartments with renewables. We are providing detailed guidance on how to achieve performance requirements. There was another question about when gas boilers fail or have to be upgraded. The life of a gas boiler is perhaps 20 years.

What about when they have to be removed?

Mr. Seán Armstrong

A typical dwelling built under current regulations will produce approximately 800 kg of carbon per year, whereas a typical dwelling in the existing housing stock would produce approximately 5 tonnes of carbon per year.

While there is an opportunity to phase out fossil fuel boilers in new stock, the reduction in emissions achieved is much smaller than would be achieved in the existing housing stock. As I said previously, gas boilers with PV have the same net emissions as a heat pump installed. The technical guidance document is providing more detailed information about how apartments can comply. We are seeing many heat-pump proposals coming through for apartments.

On the removal or replacement of gas boilers, an important point is to have installed advanced insulation requirements in these new dwellings. Advancing the insulation is a good facilitator for the installation of heat pumps at a later stage.

The Deputy asked about solar panel exemptions. The planning regulations already provide for an exemption for solar panels of up to 12 sq. m on dwellings. Through the work we are doing on the all-of-Government action plan, we recognise that the 12 sq. m exemption limit needs to be increased, especially with the new grant scheme from the SEAI. The planning division in our Department has recognised this and is planning on reviewing that planning exemption by the end of this year.

I have a few questions as we will prepare a report on this area. We are moving to much new technology in the construction industry. Because of the lack of skilled trades that we have here, a deficit we are trying to address, we have moved to off-site technology to offset the current time lag in construction. What technologies are the Department and the SEAI considering to fast-track the construction of homes and commercial developments, and perhaps offset some of the labour required? Mr. Armstrong made a key point about career pathways for people in this industry. They need to know that there is certainty up to 2050, that there is a career pathway for them, and that there is longevity in this industry as opposed to the cyclical process we have seen in recent years. How do we market that in a proper manner, not just in Ireland but beyond?

We have had a number of conversations especially on the cost of construction with various stakeholders who have appeared before the committee. We had a very interesting discussion on universal design, which might add 3% to the cost but that would be offset later in that person's lifetime.

I know the Department has done considerable work on standard design and construction. I am seeing considerable variance in that, however, especially in social housing delivery. We are often criticised because of the four-stage process in the Department. However, I think that is teasing through a lot of design that is not required in housing and that would cause additional cost in the outlay. Does a house need a stove to be put in even if it is a pellet stove? Does a house need a stove with an A1 or A2 rating, or is that just vanity? It is not just the cost of the stove, but also the cost of the labour required, the cost of the chimney installed and the cost of what is provided outside such as coal storage or wood pellet storage. Is there a requirement for that?

On new technologies, I read an interesting article yesterday about solar panel windows. Are there case studies where that has been used especially in commercial development? What other new technologies are coming down the line of which we are not aware?

We look at regulations every five years. Is that too long? Should it be done annually? I know the construction industry needs to get certainty and we cannot keep moving the goalposts. Given that the industry is moving so fast, would every year be more suitable?

How can we benchmark against the UK's renewable heat incentive, RHI, scheme and heat pumps? There is an ongoing maintenance cost involved. When it goes wrong it can be really expensive. I say that as somebody who converted to heat pumps and heat-recovery systems a long time ago and I completely believe in it. There is no going back from that but there is a maintenance cost to it. Does Mr. Armstrong have an estimate of that cost?

Mr. Seán Armstrong

There are two aspects to the question. One is about how we are encouraging new technologies. The other is about standard design and construction, and maybe how we are encouraging rapid delivery and off-site construction. On rapid delivery, the Department has been involved in setting up frameworks and has worked with the Office of Government Procurement, OGP, and Dublin City Council in setting up a rapid-delivery framework in January 2017. I believe 12 rapid-delivery providers were appointed to that system. One is under way with Dublin City Council for multi-unit developments. There are also plans for further low-rise rapid-delivery frameworks.

The development of these frameworks is leading innovation. They are not typical construction types. They need certification and to go through due process to ensure they meet the 12 parts of the building regulations, in particular Part D, and that they are fit for their intended use. As we put out the rapid-delivery frameworks, we find that the suppliers are becoming more robust in their certification and becoming more detailed in how they present their tenders and their certification. They are improving the quality of what they are delivering. The provision of these rapid-delivery frameworks also is giving the suppliers confidence to put in place supply systems to deliver rapid-delivery frameworks.

In the context of energy, off-site construction has many advantages. It provides greater precision in tolerance. It is possible to do more detailed work in a factory environment and it is more repeatable. With regard to the attention to detail, rapid delivery supports the nearly-zero-energy building agenda for new dwellings. In addition the Department is developing standard specifications for local authorities to provide not a standard specification but standard guidelines to inform local authorities how they can standardise their designs. They are due quite soon. That is on the rapid-delivery side.

Some of that can be transferred to the retrofit area. In the Netherlands there is the example of Energiesprong, which is an off-site manufacturing system that can be applied with repeatable social housing of a poor quality. They develop a standardised design. It is manufactured in the factory and then brought to the site. It is implemented at scale and at lower cost. There is an opportunity to develop off-site in the retrofit area as well. The Chairman spoke about career development. All that creates certainty and is very interesting for people who want to work in the construction sector.

The other question related to new technologies. Building-integrated PV will be a new technology. If we can see it in glazing, we will see it in roof tiles. As these products come on the market and become certified, we work with the SEAI to incorporate them into our calculation methodologies. We work very quickly to adapt our calculation methodologies to introduce stuff.

We are also integrating the new exhaust air heat pump technology into our calculations.

What is that?

Mr. Seán Armstrong

Exhaust air heat pumps. They take the ventilation air and recover the heat from it.

At present, the energy performance of buildings directive sets a five-year timeline for the review of building regulations. To do it any more quickly would be too quick. Many developments take between a year and a half and two years to develop. To start changing the goalposts in the middle of that design would be unfair and would cause problems for the construction industry. The important thing is that we keep advancing our performance requirements and set realistic but ambitious targets for the industry to achieve. They must be able to achieve them but they must also be ambitious in order to meet our climate action goals.

There was a question about stoves, I think it related to social housing?

If they are A2 rating, there is never a need to put on a stove, is there?

Mr. Seán Armstrong

We set the performance requirements. Typically in most new houses, and in private sector housing, we see that the designers and developers choose to install a heat pump or gas boiler with photovoltaic as the main heating system. That will meet the heating needs of the dwelling. There was also a question about UK heat pumps and maintenance.

That related to SEAI grants.

Mr. Seán Armstrong

On the costs of maintenance, when we do our cost optimal calculations, it is on a 30-year life cycle cost. In those calculations, heat pumps have a life cycle of 15 years so the full replacement of the heat pump is -----

That depends on how well they are used, does it not? That time can be reduced dramatically depending on the amount that is being used.

Mr. Seán Armstrong

The standardised maintenance and replacement costs are built into the life cycle.

Is it anywhere between seven and 15 years?

Mr. Seán Armstrong

Fifteen years is the standardised value. Something that is possibly related to the Chairman's point is if there is a poor design or if they are designed not to meet the correct capacity of the dwelling, that can have an affect on their life cycle. That is why standards, capacity building and training are so important for the introduction of new technologies.

Mr. Jim Gannon

I will pick up on points Mr. Armstrong has not mentioned. I agree with him on modular off-site building. We have significant interest in some of the technology coming into this area, as it can improve consistency of build and quality. That is quite important. In terms of building integrated PV, in our research, development and demonstration programme, we recently have supported a number of projects on that, as well as across different building technologies that are coming our way. I may list some of those and provide accessible links for members who might be interested after the meeting.

Confidence in the supply chain comes from the Government not only setting out an ambition, which is currently 2030 and 2050, and also articulating the level to which we need the supply chain to respond, but also putting in place some of those facilities. A supply chain will know that not many of its clients can afford to do that right now and it will know that not many people are working on it right now. Something not considered terribly well is the value chain where the homeowner must make the decision to do something, the contractor must make the decision to do something, as must the architect and engineer, and they must all decide to do that, rather than doing something else. If there is a greater profit margin to be taken from new build, it is natural that people would tend towards that activity than another. That is why we need to increase some activity in retrofit but prepare for the opportunity that will come. We should push harder in that direction and lean into an economic challenge this time around.

There was an interesting dialogue earlier on how we could see a 70% 2030 target interacting with heat pumps. It is worth noting that there are two types of challenges which arise. One is the daily challenge where the wind will blow for six hours and then will not blow - heat pumps, smart meters and electric vehicles can help us with that - but there is also a seasonal challenge where our heating season is really four, six, seven, eight months and is changing thanks to climate change. In those summer months there is not the need for heat. Its ability to serve that responsiveness declines. We need to keep in mind both the instantaneous response and the long-term seasonal aspect, where there is a heating season of a certain length.

The first phase of the renewable heating incentive scheme in Ireland called the support scheme for renewable heat, SSRH, commenced last year for heat pumps only in the commercial sector, not for people in large industry who are already dealt with in the emissions trading scheme. It relates to that cohort which is not already forced to do something and which is now being incentivised to do something at the other end. Very recently, state aid approval was provided for a support scheme for renewable heat that looks at biomass and other aspects will come through. It was determined to use a capital grant for heat pumps because the challenge there is with an upfront cost, as distinct from supporting the kind of biomass fuel that will come over ten or 15 years. This was down to extensive analysis, economic, supply chain and otherwise, of what Ireland could be hoped to pursue. We had excellent, frequent communication, including several visits, with Ofgem in the UK and our peers in Scotland and Northern Ireland to ensure that economically, the best value for money would be achieved while incentivising the activity we wanted. In fact Ofgem in the UK is looking at some of the mechanisms put in place in the Irish SSRH to see if it can bring them back to its own scheme. We are comfortable that we are benchmarking well but we will not know until one, two or three years' hence as to where the economic activity came in. Separately, part of what we must do is admit to ourselves that we cannot anticipate how a value chain will respond to an incentive. It might need to be changed and tweaked, which is natural. That is how one approaches any economic incentive or any type: one responds to what one is told by the market and one ensures value for money.

In respect of solar planning regulations, the problem is certain categories of buildings, such as schools, are not included in exemptions. The sizes that are exempt were based on older technologies and this creates particular problems for the PVs. I acknowledge the Department is limited in staff and has a million other things going on but when I hear that a review is to be concluded by the end of the year, it makes me nervous because it really means that nothing will change until the next year or the year after. That is not a criticism but is this such a complicated thing that it needs a significant review or is it not just a case of trying to update the regulations? Surely, the exemptions that are currently applied to schools could be updated, given the major school building programme under way and considering the level of urgency.

On gas boilers, if I understand Mr. Armstrong correctly, he stated the net emissions reduction for solar and gas versus a heat pump is about the same. Does that include the embedded carbon emissions from the extraction of the gas and its transportation? While I assume that it does not, he should let me know if it does. Part of what we are trying to do is reduce our reliance on fossil fuels but I detected a hesitancy in Mr. Armstrong's response, to the effect that there was not necessarily an objective that these things eventually would not exist or would only exist in very small numbers. He appeared to be suggesting that it was actually okay if 50% of our new dwellings continue to use fossil fuels, albeit at a reduced level, particularly when we are talking about expanding the level of overall house construction. Will Mr. Armstrong talk me through this some more?

If we are providing technical guidance documents for multi-unit developments in which, for example, gas boilers are being installed at present and if at some point that building must be retrofitted to replace the gas with something else, surely there must be elements of the technical guidance that can be put in place now that will make easier or reduce the cost of that retrofit, if and when it happens in ten, 15 or 20 years' time. Is that something that is being worked into the technical guidance documents? Is it being discussed or considered? If not, should this not be the case, as it is quite likely that in ten or 20 years' time, Members of the Oireachtas will be speaking to the witnesses or their successors and asking from where they will get the money to replace all these gas boilers with something else? If we make that change as easy as possible now, surely that would be good forward planning.

Mr. Seán Armstrong

I have questions on urgency, embedded carbon and technical guidance and then there was the question of the future of fossil fuels and 50% of the dwellings.

It is related to the issue of gas boilers. Mr. Armstrong did not say we would eventually have to replace the majority of them. It concerns their life cycle and when they have to be repaired, etc. Is it the view of the Department and the Government that many houses can continue to have gas boilers indefinitely or will they have to be phased out at some point? How would that be achieved? Could the technical guidance documents, particularly for multi-units, make it as easy as possible in order that even if we cannot get rid of them now because of a lack of capacity and all the rest of it, design solutions could be put in place now to make it easier to move to a district heating system or something else when the buildings have to be retrofitted?

Mr. Seán Armstrong

The planning division recognises that it is important to do this and has included it in its business plan. There is a review of the statutory instrument. There is a process involved in that regard and there is urgency attached to it. The timeline is the end of this year, which is reasonably fast for legislation.

On embodied carbon emissions from gas, the extraction cost is included in the primary energy factor. With regard to the technical guidance documents, it is the same question as the one about gas boilers. The building regulations set the performance requirements. It is a matter for the designer to specify how the design complies with the building regulations. There are several solutions. The Deputy asked this question initially in the context of district heating systems. It is a developing technology in Ireland and supports are being put in place. Its use could become more widespread, but right now it is hard to forecast exactly what technologies will be used in different places in ten, 15 or 20 years' time. They are changing very quickly. We are advancing the fabric performance that makes a dwelling suitable for use of low carbon technologies. As for preparing for other technologies that may be available for use in the future, they are difficult to predict. The requirement is that the designer comply with the current performance requirements set.

I thank the delegates. We could spend days discussing this issue. I look forward to further documentation coming our way. I apologise that there was not a bigger turn out. I think it is due to the time of year. Members can watch a recording of the meeting. I also apologise for keeping the delegates for over an extra hour.

The joint committee adjourned at 12.55 p.m. until 9 a.m. on Wednesday, 29 May 2019.