The West Midlands can benefit from real investment in the green economy.

Work undertaken by a task group sponsored by the West Midlands Social Housing Action Partnership (SHAP), chaired by Pat Laughlin of the MEBC, has identified that there is potential for some £3 billion of business and the creation of 2,000 new jobs as a result of the implementation of early measures under the planned Green Deal and retrofit programmes.

The group, which includes the contractor Wates through their living division, Midlands-based building supplies company EH Smith, the Orbit Group, the construction industry group WMCCE, Birmingham City and Coventry University, has modelled the materials and labour required to improve the energy efficiency of the West Midlands housing stock.

Rising energy prices, carbon reduction commitments at national and local level, and climate change, are driving the need to reduce energy use in existing buildings. This currently accounts for some 43 per cent of all UK carbon emissions. There is also an imperative to reduce fuel poverty and its consequences for a growing section of the UK’s population. In the West Midlands 22 per cent of all households are living in fuel poverty says a recent English Housing Survey.

Refurbishment already represents a market estimated at £28 billion in the UK. The projected refurbishment of housing, schools, hospitals and commercial and other property will make this appreciably bigger. The expected launch of the Government’s Green Deal in October should mean that this market takes a major step forward.

The Government believes that Green Deal will result in an increasing investment in green technologies and renewable energy, providing a catalyst for growth and job creation. In a recent Ministerial statement, Ed Davey suggests that the policies will create up to 60,000 jobs in the insulation sector alone by 2015, up from around 26,000 today.

The Energy Company Obligation (ECO) will provide a guaranteed £1.3 billionn investment a year (dependent on the costs of achieving carbon reduction through energy efficiency and generation) and will drive the refurbishment industry while take up in the Green Deal builds.

The West Midlands must aim to secure at least its own share of this market.

A recent report from DECC estimated that if the 2020 interim reduction target for carbon emissions (34 per cent) is to be met, some seven million homes in the UK will require improvement. This represents an estimated market value of £15 billion a year and achieving 80,000 energy efficiency refurbishments a year by 2016 to meet the 2050 target for 23 million homes.

Birmingham City Council has been leading the way with the decision to invest in the innovative Birmingham Energy Savers programme.

Birmingham is now proposing its own version of the Green Deal which will be pump primed with £100 million of investment. The collective investment of the region’s housing associations has already improved the energy performance of many properties in its ownership. But an estimated 470,000 houses across the West Midlands urgently need refurbishment and this applies equally to public buildings, commercial buildings and industrial estates.

However, there is much work to be done to maximise the opportunity for local businesses and job seekers. To date, retrofit programmes have focused on improving the energy efficiency of buildings through insulations.

While this has created and sustained some local jobs in installation and in construction, there has been relatively little impact in higher level servicing and manufacturing. For example, the opportunity offered by Feed in Tariff in 2011 resulted in widespread interest and a significant number of solar PV installations.

However, most components were sourced outside the UK (China, Germany and Scandinavia). By contrast, in each of those countries, public policy decisions have been made to invest in low carbon and they have successfully established a sizable product and services base on the back of this.

To maximise the economic benefits from this form of green economic activity, policymakers should encourage investment in a vibrant manufacturing and service sector (installation, maintenance and support services) to support the retrofit programme.

But there remains a real challenge. New, innovative products and services which support the reduction of energy consumption and allow buildings to adapt to the effects of climate change need to be developed.