Buildings & Cities (Jul 2023)
A residential emissions-based carbon levy: city and neighbourhood consequences
Abstract
What are the consequences of a local carbon levy applied to (1) all estimated residential consumption emissions and (2) all residential gas and grid electricity-related emissions? Housing stock simulations in the City of Southampton, UK, are used to explore whether a local carbon levy could pay for retrofits at a local level. The value of the levy is estimated for the whole city and for neighbourhoods at the census lower layer super output area (LSOA) level (about 1500 households) using recently published ‘official’ carbon values under two scenarios. The levy is then set against an estimate of the cost of retrofitting energy-efficient dwellings in each LSOA. The models show that highly emitting LSOAs (generally those with least deprivation) would raise sufficient levy to retrofit their dwellings within three to five years if an ‘all emissions’ levy were applied. This is not the case in low-emissions LSOAs which tend to be those with the highest deprivation. Here it could take up to 60 years to meet the retrofit costs if the levy were only applied to energy emissions. Redistribution of the levy from the least deprived but highly emitting neighbourhoods to the more deprived but least emitting would therefore be needed. Practice relevance This paper shows that a local area carbon levy on residential emissions would not self-fund energy efficiency upgrades in the City of Southampton’s dwelling stock ‘to a reasonable standard’ within an acceptable time frame. It would only be effective in high-emissions areas, and the levy would need to be redistributed to lower emissions (and thus lower levy-generating) areas, which also tend to be those with the highest energy poverty and worst housing. The paper is therefore evidence of the need for public investment to ensure energy efficiency upgrades occur within a reasonable time frame for those in greatest need. It also shows that innovation in financial models is required to ensure that the rate of upgrade, and thus decrease in energy use, emissions and energy insecurity is accelerated across middle to high emitters who are unlikely to receive direct government support, where their own capital is insufficient and their incentives to invest are relatively low.
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