fossil fuels such as coal and gas, with 17% from Nuclear and a mere 3% from renewables. So decarbonising the electricity grid with its built in inefficiencies of about 66% of production must be a key part of being a more sustainable country. For property, the government is taking a multi pronged approach. For large commercial energy consumers the Carbon Reduction Commitment was designed to encourage commercial property owners and occupiers to make energy efficiency improvements, but the change of the scheme to a tax in the 2010 budget unsurprisingly hardened the industry’s attitudes to the scheme, which they had reluctantly embraced.
At the recent Ecobuild conference I took the opportunity of being on the same platform as Greg Barker, the Minister of State at the Department of Energy and Climate Change, to make some strong points about the Government’s approach to improving the sustainability of the existing stock. In particular I highlighted the lack of incentives in the CRC scheme and the lack of mechanisms to increase competition between companies. This combined with the lack of clarity for the industry on the approach to charging appears to be acting as a barrier to effectively implement a transformation of the existing stock.
The Minister agreed on the need for more clarity and acknowledged imperfections in the CRC scheme; he however highlighted some studies revealing that the main driver for people to transform their home was not financial benefits but having a nicer home.
So the government is using the recent revisions to the EU Energy Performance of Buildings Directive, which introduced the requirement to have an energy performance certificate showing the notional energy level of a property for use as a comparator at sale or rental. The revisions allow for improved advice through more tailored recommendations for energy efficiency improvements to the property.
From the platform of an EPC, DECC are building the Green Deal for residential and SME commercial properties. The Green Deal is a funding mechanism for leveraging energy efficiency improvements into property. The principle, known in government parlance as ‘the Golden Rule’, is that the savings on the energy bill will be greater than the cost of making the improvements when funded over a number of years, through an attachment to the utility bill.
The deal will use the EPC as a starting point, but will also look at actual energy usage, including appliances such as fridges and cookers (not covered by the EPC), to give a flavour of how a property is being used which would enable advice to be given on behaviours. There is little point in have a sustainable property if the occupiers use it in a non sustainable way.
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My feeling is that the Green Deal will dominate the retrofitting market for a good number of years, probably to the detriment to the wider sustainability in property sector. Some quick calculations suggest that one property needs to be retrofitted every minute between now and 2050 to meet the targets, and that is if properties are given a whole house makeover. Most would agree this is highly unlikely in the current market. What seems more likely is that property owners will make improvements over a number of upgrades, as fuel costs increase and further funding is available. Currently the cost of upgrading any property type to a very high standard, an EPC of A or B, even those built to the most recent regulations would probably be too expensive to meet the Golden Rule.
So many are now questioning whether government will have to offer more incentives or even use some legislative stick to ensure that progress is made towards the Climate change targets. The danger with legislative sticks, however is the chance of unintended consequences that undermine the economic recovery, or to harm the competitiveness of the UK economy. Only time will tell what needs to be done as the deal will not be in place until, at the earliest, October 2012.
Turning to broader developments in sustainable retrofitting, BREEAM and the Code for Sustainable Homes will continue to set the levels to be achieved for new build sustainable properties, but there is a lack of usable measures for retrofitting.
In November 2009, RICS launched our own sustainability tool, initially for the office fit-out industry. Known as the Ska Rating it is designed to fit the project by allowing the project team to look at what is achievable by selecting from around 100 measures covering items as diverse as re-using carpets and sustainable resourcing of timber to reducing site water and waste. Projects are awarded a gold, silver or bronze rating depending upon the number of measures it incorporates into the fit-out project. More details can be found at
www.rics.org/ska
In conclusion, rising fuel costs, the need to reduce energy use and the need for improved security of supply will drive the government to continue to concentrate on energy efficiency over anything else. However my concern is that the sheer scale of retrofitting required in order to meet the CO2 targets in the Climate Change Act will be hard to meet without a dramatic change in legislation.
There will continue to be the more enlightened individuals and firms that see the potential future benefits of having more sustainable properties, but this is unlikely to be a major part of the market unless the government changes its focus to match the rhetoric of being the ‘greenest government ever’, by providing similar types of incentives to the Green Deal or legislative sticks to change the market focus to a more truly sustainable future.
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