The insulation conundrum

How are the different parts of the world trying to reduce the energy consumption of domestic and commercial buildings? The Urethanes Technology International team takes a look at how different regions are approaching the issue.

The benefits of insulating a house are obvious. In the higher latitudes, they stay warmer for longer in the winter, while in lower latitudes, they stay cooler longer in the summer. An insulated house will leak expensive heat or cooling into the world around it more slowly. And polyurethane/PIR are some of the most cost-efficient insulating materials available to the construction industry.

But it can be hard for owner-occupiers of houses that were built some time ago to see the value in insulating their houses. This is despite systems such as the EU’s Energy Performance Certificates that allow homeowners to compare their house’s energy performance with their neighbours and similar houses in other parts of the EU.

For example, an 85m² detached house in the UK with an energy performance certificate rating of F (between 21-38) could be brought up to the UK government’s target of a C rating (between 69-80) for somewhere between £7500 and £19,000.

The householder might take a look at the long list of suggested improvements, and decide not to bother installing a hot water cylinder thermostat, or room and TRV heating controls. They might leave the serviceable but inefficient old boiler in place, and decide against installing solar panels. Their capital outlay would be lower, but they’d also miss out on a lot of the potential improvements in the house’s energy efficiency.

But these are not the only suggestions that EPCs make. For a typical cost of £5000 to £15,000, the householder could install internal or external wall insulation, floor insulation, and improve the insulation around the hot water cylinder. With this combination of changes, the householder might be expected to save more than £500/year.

At the lower cost, if the work had been completed on 1 January 2020, the householder would break even on 5 November 2028. At the higher cost it would take until 28 December 2047 to break even. This long pay-back time can make it hard to persuade people that they should invest in insulation.

Cost benefit

But there are strong environmental reasons for making the investment. If the loft and walls in our F-rated house were insulated to the recommended standards, the energy demand for heating the house would fall from 22.3 GWh/year to 9.6GWh/year. If we pretend that the house were completely heated using electricity from an average UK supplier, then the carbon footprint falls from 5.7 tonne CO₂/year to 2.4 tonne CO₂/year.

According to the EU, buildings are responsible for 40% of EU energy consumption, and 36% of its greenhouse gas emissions. The potential to upgrade energy performance of the bloc’s housing is considerable. About 35% of EU housing is more than 50 years old, while almost 75% is energy efficient. It’s clear that domestic housing represents a good opportunity to reduce the volume of carbon dioxide generated. But, according to the EU, only about 1% of the housing stock is renovated each year.

Cut carbon

The EU has agreed that it will spend an extra EUR750m over the next seven years budget of EUR 1.1 trillion to help the countries which are suffering most from Coronavirus to recover. Arnaud Duvielguerbigny, general secretary of PU Europe, the trade association for rigid polyurethane and PIR foam makers, told Urethanes Technology International in a telephone interview that they want this money to be used to renovate building stock. ‘Of course, there is no way it will be labelled for PU but, at EU level, we are pressing for this money to be used for better insulated buildings,’ he said.

Member states will be able to access the pot of money if they have projects that meet the EU’s objectives. They will have until April next year to put their bids in. But, he added, while countries have considerable discretion on how to spend regeneration money, the EU has a very clear long-term objective for climate neutrality by 2050 for all of its members. PU Europe, alongside partners in Brussels such as the Renovate Europe Campaign, are pushing for national actions and funding to be activated now for decarbonising the EU’s building stock.

As the EU covers climate-diverse territory from Finland in the Arctic Circle and Malta in the Mediterranean, EU members have agreed that it is up to individual countries to determine how they will meet the standard. ‘A country could decide that it wants all of its buildings to be passive houses solely due to a highly energy performance building fabric/envelope for instance, Duvielguerbigny said.

‘In another country, they could say we will implement this standard by relying on zero-carbon electricity like nuclear, photovoltaic or wind. Therefore, buildings will also achieve the zero-carbon target.’ But, he added, there will always be benefits in insulating a house; alongside winter and summer comfort will come additional health and productivity benefits.

While the EU has not set targets for the energy consumption of houses in the future, the Energy Performance of Buildings Directive means the member states have agreed to implement demanding building regulations. Duvielguerbigny explained that the directive is designed to decarbonise the use of buildings, and this means creating a very efficient building envelope. It does not consider the energy used to make the building materials, and only refers to the operational carbon used over the service life of the building.

The long-term goal is to have near-zero energy buildings across the EU. ‘[This is leading to] some quite technically sophisticated buildings with a high-performance envelope,’ Duvielguerbigny said.

New build pressure

A lot of stress is placed on new builds in the EU’s carbon reduction plans because the marginal cost of 5cm vs 10 cm (2 in vs 4 in) insulation is small compared to the total construction cost. But the environmental benefit of thicker insulation is huge.

These regulations are partly responsible for driving growth in rigid polyurethane building insulation by about 2% above GDP in a normal year, Duvielguerbigny said. In some markets such as the UK and Belgium, the market share of PU and PIR insulation boards in the building market is greater than 50%, he added.

While that low marginal cost is perfectly acceptable for new builds, retrofitting insulation to existing buildings is far more costly. The problem that governments now face is how to persuade a person living in an F-rated home to spend all that money to insulate their properties.

Duvielguerbigny is clear about the problem. ‘The issue we face with renovation is the cost of the works and the hassle,’ he said. ‘If you only look at the cash cost and the hassle cost, it seems very expensive. That’s why we’re in a campaign to put the emphasis on the side benefits of insulation. It is like having a BMW on the drive. Occupiers are glad to show a new insulate facade to the neighbours. Our campaign is more about a building’s appearance, and allowing occupiers to say to their neighbours that they care about the environment.’

Going its own way

The UK is taking a different approach to building insulation and, at time of writing, was planning a £3bn boost to domestic building insulation. The money is to be spent between October 2020 and 31 March 2021.

This is part of Chancellor of the Exchequer (finance minister) Rishi Sunak’s boost to the economy, with the aim of easing potential unemployment after the planned end to furlough schemes October 2020. Speaking in the UK parliament on 7 July 2020, he said:

I’m announcing today a new £2bn Green Homes Grant. From September, homeowners and landlords will be able to apply for vouchers to make their homes more energy efficient and create local jobs… I’m releasing £1bn funding to improve the energy efficiency of public sector buildings. We expect these measures to make over 650,000 homes energy efficient, save households £300/year, cut carbon by 500kT/year and support 140,000 green jobs.’

However, there were still plenty of questions that needed to be addressed ahead of the scheme going live. There were also a number of big challenges that were likely to reduce its success, according to Simon Storer, chairman of IMA, the UK’s rigid polyurethane insulation association.

Storer had particular concerns about the timescale. ‘Six months is a very short period of time in which to improve the 600,000 homes that the government intends will benefit from this scheme, and to ensure appropriate work is carried out to an acceptable standard.’

He pointed out that the work will have to be done during the winter ‘with a likely coronavirus spike already underway, inviting builders into the home may not be a particularly attractive proposition for many householders.’

Additionally, Storer said that the UK government is currently pursuing several energy efficiency goals for buildings: these include an objective for as many homes as possible to achieve EPC C by 2035 and the Net Zero Carbon target for 2050. ‘Work carried out under the GHG scheme must dovetail with these longer-term objectives,’ he said. ‘What mustn’t happen is for work carried out under the GHG scheme not to be sufficient for the 2035 target, requiring it to be done again.’

Reputational risk

Before undertaking any work, it is important to carry out an independent assessment of the building’s requirements and identify what work will be required, including any preparatory and ancillary work. Leaky roofs and gutters will need to be fixed and damp problems solved before airtightness and ventilation tests are carried out in conjunction with installing insulation and other measures.

IMA is concerned that if work is not done or done in the wrong order, problems could develop over time. Storer believes there is a risk that householders will assume these problems are a result of poor installation or poor products, when in reality the blame may actually lie in a lack of preparation or absence of ancillary work.

‘[The GHG] could be a stepping-stone to more investment and a longer-term initiative, but I am fearful the Treasury will only judge this on how close we get to the 600,000 homes target, which in my opinion is not achievable in this timescale,’ he said. ‘It would be better to invest in training to improve skills, so there are long-term jobs that improve the employment prospects for installers, as well as upgrading the building stock in line with the UK’s energy performance objectives. This [programme] must be for longer than just six months.’

He knows what needs to be done. ‘We have the materials and systems to make big improvements,’ he said. ‘It would be a great shame for a worthy initiative not to succeed because the industry was sent out to do the work with its hands tied behind its back.’

A spokesperson for the Department for Business, Energy and Industrial Strategy said the scheme covers reasonable work to support the retrofit, such as structural improvements like repairs to brickwork or floor joists, repairing and treating damp, and repairing and improving controlled ventilation.

‘Households should be assured that improvements to their homes will be of the highest quality, which is why all suppliers that carry out current and future government schemes will be subject to robust installation standards,’ the spokesman said.

The UK government hopes that by limiting work to contractors approved by TrustMark and paying them via a voucher it will be able to ensure the quality of the work. However, it declined to say how many of the 600,000 houses would be retrofitted by the end of the period.

Accelerated programme

A third approach is being taken in China. The country’s building stock has a floor area of 6000km², and a further 400km² is being added each year, according to a report from Guosen Securities. Between 80% and 90% of this is highly energy consuming, it said. Consequently, building insulation is a key area for the Chinese as they strive towards becoming net-zero in CO₂ emissions by 2060. This surprise target was announced to the United Nations by Xi Jinping in late September, and means that China will quickly have to get a grip on emissions and the demand for carbon-based fuels.

Estimates in 2018 put the country’s market for exterior building insulation would exceed CNY200bn in 2020, and was growing at 15% CAGR. The ambitious new target is set to expand this growth further.

The Ministry of Housing and Urban-Rural Development’s 13th five-year plan on Energy Saving and Green Building set a target that more than 50% of new buildings by floor area should be green, and at least 40% of the materials used in the new buildings should also be green. At least 60% of existing buildings in urban areas, and 10% in rural areas, should be energy efficient. By the end of 2020, more than 50km2 of buildings will have been retrofitted with energy saving products, if the target is met.

Last November, the National Development and Reform Commission issued its annual Catalogue for Guiding Industry Restructuring. This listed rigid foam using newer blowing agents as ‘encouraged’ for the thermal insulation industry. While the National Development and Reform Commission is encouraging the use of rigid and PIR, the China Development Bank and Construction Bank have loaned CNY463bn to Jilin, Zhejiang, Shangdong, Hubei and Shaanxi, and a further nine cities, including Fuzhou, Changsha, Guangzhou and Suzhou. This is to cover better insulation and energy saving renovations in older housing.

Polyurethane and PIR currently have a much smaller share of the building insulation market than other countries because of flame retardancy regulations. Both the think-tank VZKoo and Chem366, which handles statistics for the China Polyurethane Industry Association (CPUIA), estimate that polyurethanes and polyisocyanurates account for about 10% of the total building insulation market in the country.

Upfront costs

Insulation specifiers in China are price-sensitive, and the greater insulation efficiency of PU and PIR foams is often less important than its relatively higher price than less efficient polystyrene insulation. According to VZKoo, the price of PU insulation that is flame retardant to the national B1 standard is about 2.7x the price of XPS, and 3.3x the price of EPS insulation that meets the same flammability standard.

PIR and PU are doing well in the cold chain sector, where performance is everything. All of the flame retardancy regulations are applied across the country, but tier 1 cities such as Beijing, Shanghai and Guangzhou have more stringent regulations.

Despite the small market share and tough competition, companies are investing in the sector. For example, in August, Yubang Technology announced plans to build a CNY280m ($40m) plant in Jinzhong, Shanxi province. This will have 800,000 m²/year capacity for a combination of PU panel insulation, rockwool panels with PU edge binders, and other PU insulation materials. The project is on a 51,000 m² site, and should generate CNY225m in annual sales when production starts.

SPF market uptake

North America continues to be a very strong market for spray polyurethane foam insulation, in particular. ‘There continues to be growth, there have been some anomalies this year, but overall we are seeing good, strong growth of the industry on a sustained basis,’ said Doug Kramer, president of Huntsman Building Solutions, one of the world’s largest manufacturers of SPF products. ‘Over the past several decades, there has been anywhere from single to low-double-digit consistent growth.’

And there is a good deal of consumer awareness of the product in the north American market, too. SPF is commonly featured on the many home renovation shows on cable TV, which regularly explains its potential. ‘That mainstreaming has been very important to us, and is going to continue to help grow this segment within insulation,’ Kramer said.

He also believes growth will continue in the roofing sector.

‘Now that more consumers know what spray foam is and understand its benefits, and as the building envelope becomes more important, I think we will continue to see good growth with the roofing side,’ he said.

The market is growing globally, too. ‘Depending on the region, [the market] is five, 10 or even 15 years behind in terms of customer awareness and market penetration,’ he said. ‘But the consistent takeaway is that we are seeing growth around the world, whether it’s the UK or Europe, Asia, Australia.’

In terms of payback time for a spray foam project, clearly each circumstance is different, but there are areas where it is clear the returns will be achieved more quickly. ‘In retrofit residential installations, and even in new projects, the single biggest benefit is in the attic, and then all the perimeter walls,’ he said. ‘In terms of costs, it is certainly not less expensive than traditional insulations but it does provide a payback. Depending on the structure, it could be anywhere from three to five years, depending on the installation.’

Grants to homeowners to insulate their homes remain unusual in the US, although there can be some support at a more local level. ‘I do think in the future we will continue to see cycles of support that provide assistance in funding greater efficiency in construction, especially those that bring both economic and ecological value,’ he said. ‘With the elections coming up on November, the Democratic party has already proposed a $2 trillion Green Deal for the environment and sustainability, if there is a change in party.’

The result of the forthcoming election will have a wider impact on the situation. ‘During the Obama administration, I was fortunate enough to be invited to participate in the president’s plan of action committee along with the energy department at the White House,’ he said. ‘That was a significant focus during the previous administration. After the transition in 2016, under the new administration that focus and momentum was completely eliminated, and the group was disassembled.

A lot of its work revolved around the Montreal Protocol and other global agreements to reduce carbon footprints and greenhouse gases, and that whole plan in the US has largely been on hold.’ Several states have already implemented the federally stalled mandate for the introduction of HFOs at a state level, and others are looking into it. It has become a state level not a federal issue,’ Kramer said. ‘The November election will determine whether that is reactivated.’