Transcript The voice of property

Sustainability and the
Real Estate Curriculum
Patrick Brown, Assistant
Director (Sustainability),
British Property Federation
2nd December 2011
What is the BPF?
> ‘Representative organisation for those
who own and invest in property in the
UK. We aim to create the conditions
in which the commercial property
industry can grow and thrive, for the
benefit of our members and of the
economy as a whole.’
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Buildings and Climate
Change Mitigation
> Climate Change Impact – 47% of UK carbon
dioxide emissions come from buildings, with
nearly 20% coming from non-domestic
buildings.
> Resource scarcity and fluctuating fossil fuel
prices.
> If we want sustainable growth, commercial
property must reduce its climate change impact.
> Climate Change Act targets.
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Existing Stock is Key
> Only 1-2% of non-domestic stock replaced in
each year so substantial number of nondomestic buildings standing today will be with us
in 50 years time.
> BPF supports a focus on existing buildings, as
an 80% overall reduction in emissions by 2050
will be extremely challenging otherwise.
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Scale of challenge…
> Carbon Trust Report ‘Building the Future Today’
said that average building energy performance
rating must be 4 grades higher by 2050 than
today. We face a significant challenge.
> Various academic studies have pointed toward
existing buildings as offering some of the most
cost effective opportunities for reducing
emissions (investor reaps energy cost
savings)…
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Most Commercial Buildings
are Rented…
Source: Paul Mitchell Real Estate
Consultancy update of IPF report The Size
and Structure of the UK Property Market,
and Department of Communities and Local
Government.
Improving the Energy Efficiency of our Homes and Buildings
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The
Splits in Energy
Procurement, Use, Control
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Barriers to Energy Efficient
Retrofit Arise (1)
> 1: Buildings have long lifecycles, with path
dependency arising from design and technical
decisions.
> 2: The majority of commercial property (whether in
terms of value, number, space or emissions) is
separately owned and occupied. In most cases,
landlords provide energy to their tenants to some
degree, which means if the landlord invests in
energy efficiency the tenant gets the savings.
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Barriers to Energy Efficiency
Arise (2)
> Operational issues (such as the disruption caused to occupiers
when buildings are changed).
> Information related issues (unavailability or poor transfer
between landlords and tenants of data relating to energy use).
> Commercial issues (varied and uneven distribution as between
landlord and tenant of the costs and benefits of, and control over,
energy use and changes in buildings or behaviours designed to
reduce it); and
> Legal issues (constraints within leases on how costs and
benefits associated with emissions and related expenditure or
behaviour change can be allocated between landlords and
tenants).
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Barrier 1: operational
> Disruption caused vs guarantees in the lease of
service provision.
> All leases in a multi-let building unlikely to come
up all at the same time.
> Asset certification tends to tell us that energy
efficiency stems from new kit not management.
> Leads to landlords and tenants preferring to
undertake retrofit when buildings are vacant.
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Barriers 2: information
> Old adage ‘If you can’t measure it, you can’t manage it and if you
can’t manage it you can’t reduce it.’
> Much of Government and industry mandated measurement and
reporting deficient and theoretical. Need actual measurement.
> Four success factors:
> Actual performance (not theoretical)
> Complete
> Boundary setting approach
> Context
> Operational measurement, particularly in energy critical for engaging
with tenants. Make performance visible a spur to action.
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Barrier 3: legal
> The lease’s approach toward retrofit (is it an
improvement or a replacement? Cost implications).
> Green Leases: sign in haste, repent at leisure.
MOUs more popular but non-binding and time
limited.
> CRCEES a particular case in point.
> More fundamental reform? Not there yet but
unpalatable truth may be dawning.
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Barrier 4: commercial issues
> Several studies pointing toward a ‘green
premium’ for buildings but valuation community
thinks this is unlikely to manifest. ‘Green’
buildings likely to become standard over time
and deficient buildings will have their value
eroded.
> Marginal cost of energy but some occupiers
beginning to factor energy price rises into their
equations (Ofgem and Deutsche Bank reports).
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What if we don’t get a binding
international agreement?
> National, regional, local, community efforts.
> Key role for developers and property owners.
Will localism facilitate this?
> Probably increased importance of adaptation
and preparation for a 4 degree rise.
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Buildings and Climate Change
Adaptation
Increased Weathering
> Increased risk of flooding.
> Fabric and structural
resilience to extreme
weather (impact on
choice of components).
Resource Efficiency
> Managing internal
comfort in climate
extremes while reducing
energy use.
> Managing excess and too
little water appropriately.
> Intermittency.
> Pressure on sewer
infrastructure.
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And finally: Sustainability vs
Value
> No uplift in value historically as a result of
improved sustainability performance.
> In the future: green premium unlikely. Why?
> More likely that green buildings will become the
new prime real estate. As a result, non-green
buildings will find that their value discounted.
> Revision of Valuation Information Paper 13
imminent.
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THANK YOU
Patrick Brown, Asst Director
T: 0207 802 0108
E: [email protected] W: www.bpf.org.uk
The voice of property