| Instrument / key issue(s) |
Implications / Opportunities |
Enabling legislation |
Refer to BCSC Guidance Note 53
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Currently required on existing buildings at the point of a transaction (sale or rent). Certificates assess the efficiency of properties as designed (heating, lighting, air-conditioning rather than appliances within it). They do not measure operational performance but are intended to communicate the potential efficiency of a building and its services in the market place. |
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An improvement in an EPC rating - achieved through implementation of efficiency measures such as upgrading of building services - does not necessarily mean that a property will automatically reduce its carbon emissions. This would more appropriately be measured through monitoring achieved operational performance (i.e. actual energy consumed) both before and after measures have been introduced. |
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Energy Performance of Buildings Regulations |
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| Instrument / key issue(s) |
Implications / Opportunities |
Enabling legislation |
Refer to BCSC Guidance Note 53
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Current DEC methodology designed for public sector |
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Question over suitability of building categories and benchmarks for commercial property (and managed shopping centres in particular); little differentiation between shopping centre and other retail type buildings when it comes to calculation of energy performance |
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Query as to whether certificate will be for whole building or tenancies? |
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Landlord often does not obtain or know total energy consumed in whole building |
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Uncertainty as to whether or not DECs will become mandatory for private sector buildings. EU legislation wording is ambiguous e.g. "floor area over 500m2 and visited frequently by public" |
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DEC methodology should be revised – before becoming / in order to become – mandatory |
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Landlords and tenants need to share data |
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Opportunity : to communicate real performance (operational rating based on metered consumption) |
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Opportunity : Voluntary initiatives already exist but trend over time perhaps more important than comparison with public sector ‘benchmarks’ |
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| Instrument / key issue(s) |
Implications / Opportunities |
Enabling legislation |
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Participants are required to monitor their emissions and purchase allowances to emit carbon dioxide. The incentive is created through the direct correlation between purchase of allowances and tonnes of carbon emitted. |
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On 30 June 2011, Government published its response to the informal consultation on simplifying aspects of the CRC scheme. Stakeholders can comment on this response until 02 September 2011. A formal consultation on legislative proposals will be issued in February 2012, with the new legislation being published in September 2012 and coming into force in April 2013. |
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Allowance purchase in Phase 1 will continue to be retrospective. Allowance purchase in Phase 2 will be uncapped and at a fixed price, and sold via two sales, one at a lower price at the beginning of each compliance year, and one at a higher price at the end of each year. |
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Potential implications are:
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Currently affects companies that consume more than 6,000MWh of electricity p.a. Unclear if thresholds will change |
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Planning company budgets need to consider price and timing of allowance purchases |
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Reforms could lead to changes in carbon taxes more broadly. For example, CCL will likely be reformed to help support price of carbon. |
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Cost: the proposed minimum price of carbon will, depending on the initial level, drive carbon reductions for those seeking to shrink costs. |
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Proposed changes: the Performance League table will be retained as the reputational driver for the scheme. |
| Climate Change Act 2008 |
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| Instrument / key issue(s) |
Implications / Opportunities |
Enabling legislation |
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Intention is to steer market toward low carbon energy sources. Financial instrument that will reward lower-carbon procurement decisions. |
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Unclear as to future of CCL, both in terms of future changes of rate and also potential overlap with CRC which is moving down carbon tax route. |
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2011 - work on reform of CCL to provide support to the carbon price. Measures to strengthen carbon price might include extending CCL-exemption to all low-carbon generation or a carbon price underpin / tax. |
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Future unclear as to what procurement of non-CCL-exempt electricity will bring in cost terms to consumers. |
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Opportunity : Potential for greater range of low-carbon generation to be CCL-exempt – reduced relative unit cost on procurement of such sources. |
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Climate Change Levy Act 2001 (amended 2007) |
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| Instrument / key issue(s) |
Implications / Opportunities |
Enabling legislation |
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Part of the strategy to decarbonise heat in buildings. Also addresses decarbonisation of supply-side energy. |
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Government will provide financial support for a range of renewable heat technologies through the RHI. The scheme intends to cover the financial gap between the capital cost of conventional and renewable heat systems at all scales, with additional compensation for certain technologies with non-financial costs. Tariffs will offer a rate of return of 12% across all technologies and 6% for solar thermal. The technologies that are expected to be supported are: |
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Biomass boilers |
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Biomass district heating |
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Air-source and ground-source heat pumps |
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Solar Thermal |
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Renewable combined heat and power, |
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Use of biogas and bio-liquids, and the injection of bio-methane into the natural gas grid. |
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Key opportunity (particularly for landlords) to gain financial support for those opting for generation of energy used for heating from renewable sources. |
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It is currently not clear whether there will be a cap on Government support (Green Investment Bank?). If so, applicants should investigate options sooner than later. |
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Energy Act 2008 |
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| Instrument / key issue(s) |
Implications / Opportunities |
Enabling legislation |
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Financial incentive to invest in on-site renewables. Grants available for initial investment and FITs provide guaranteed income for 20+ years. Small scale renewables have fewer planning issues than larger schemes. The technologies covered for the commercial sector include: |
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Wind; |
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Solar photo voltaic (PV); |
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Hydro; and |
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Anaerobic digestion |
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Changes to the bands and accompanying tariffs (for solar photovoltaics over 50KW and farm-scale Anaerobic Digestion) means that many of the investors, and commercial real estate solar hosts who were considering rooftop solar systems greater than 150kW (or roughly 3,000 square meters) for their sites, are now reconsidering these projects given their reduced viability under the new tariffs. |
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Energy Act 2008 |
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| Instrument / key issue(s) |
Implications / Opportunities |
Enabling legislation |
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Companies can claim 100% first-year capital allowances on their spending on qualifying plant and machinery. Essentially works as a tax incentive for efficient technologies and measures (e.g. AM&T) which are listed. |
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If a company has REIT status that the ECA scheme is not applicable. Therefore, in terms of retail, more applicable to non-REIT owners / investors and retailers / occupiers. |
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Capital Allowances Act 2001 |
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| Instrument / key issue(s) |
Implications / Opportunities |
Enabling legislation |
Bill introduced to parliament Dec 2010. Secondary legislation – early 2012, with intention that first Green Deals appear Autumn.
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The Green Deal will offer tenants and businesses, irrespective of size, the opportunity to install cost effective energy efficiency improvements without needing to meet these costs upfront. It will do this by offering a finance package with the option to repay through the savings on energy bills. |
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The “golden rule” to the Green Deal is that these savings will be greater or equal to the repayments, ensuring an immediate benefit. The financing package will be attached to a property’s energy meter and paid back over a specified time through energy bills. |
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Bill proposes powers for the Secretary of State to regulate in the future to require that Landlords make such improvements. It is important that the sector has the opportunity to make voluntary improvement first, and that regulation is only deployed if necessary to improve the energy efficiency of private rented properties, and without negative impact on supply. Therefore, these powers would only be enacted subject to the outcome of a review ahead of secondary legislation. The earliest date regulations could come into force is April 2015.” |
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Since not yet enacted, still general uncertainty. |
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Financing period has not been formally agreed. For example, will there be a cap on payback periods? |
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Is there still an issue of consent? E.g. signatory on energy bill might be applicant (retailer / tenant) but might need permission from other party (landlord). Is there going to be secondary legislation to allow landlord / tenants to enforce proposed improvement measures? |
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Opportunity for all stakeholders, but in particular retailers and SMEs since it is recognised that a major barrier to installing energy efficient measures is lack of capital. |
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Opportunity : Seeks to address issue of split incentives between landlords and tenants. |
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Opportunity : Has the potential to make use of existing instruments (Government intends to use EPCs to communicate improvements) and encourage adoption of others (Certificates for operational performance – DECs?) |
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Energy Bill 2010 |
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| Instrument / key issue(s) |
Implications / Opportunities |
Enabling legislation |
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Potential mandatory carbon reporting by 2012 under Climate Change Act 2008 (Companies Act 2006) |
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Reviewed and updated by Government with key decisions to be made during 2011. |
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Currently unclear whether reporting will be required to align with financial control of buildings or operational control. Would need to assess implications if financial control route is taken. Operational control maybe viewed as preferable to align with efficiency measures in other instruments. This will be looked at in the January update. |
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This will require companies to consider: |
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Metrics for performance measurement. |
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Data collection - Internal systems for recording, monitoring and targeting |
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Management systems – active management |
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Much like other energy saving schemes, appropriate performance monitoring and management will identify opportunities for carbon reductions and potentially subsequent cost savings. |
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Climate Change Act 2008 (Companies Act 2006) |
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| Instrument / key issue(s) |
Implications / Opportunities |
Enabling legislation |
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Minimum standards for renovation of part or elements of a building, performance of technical building systems, also limited solar gains (e.g. glass atria in shopping centres) |
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Tighter restrictions on passive building components e.g. envelope |
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Key requirement: Consequential improvements to energy performance: |
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Mandates improvements in energy efficiency performance when a building is refurbished |
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Value of improvement measure should exceed 10% of the value of the principal works |
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Applies to an extension and the initial provision of any fixed building service or an increase to installed capacity (excluding renewable energy generators) |
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"Where regulation 17D applies, consequential improvements, in addition to the proposed building work (the principal works), should be made to ensure that the building complies to the extent that such improvements are technically, functionally and economically feasible." Guidance available on what will constitute technically, functionally and economically feasible consequential improvements. |
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CLG (based on an exercise done in July 2010 informally asking industry how standards should be implemented) will issue a statement as to which of the Part L changes will be priority and hence which might be re-visited and tightened further still. Will involve consultation. |
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Consequential improvements requirement arises in existing buildings with a total useful floor area of over 1,000 m2 – which will capture many shopping centres (BCSC members). |
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Part L Building Regulations |
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| Instrument / key issue(s) |
Implications / Opportunities |
Enabling legislation |
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Currently voluntary. However, anticipated minimum requirements for BREEAM ratings |
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Enabling organisation: BRE |
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