Sustainable Property in 2019
by Owen Griffiths
So what is on the horizon for sustainability in the property industry in 2019? Sustainability and limiting the effects of climate change remain high on the political agenda. December's Katowice agreement aims to deliver the Paris goals of limiting global temperature rises to well below 2C. The UN's Sustainable Development Goals include targets to substantially increase the share of renewable energy in the global energy mix, and to double the global rate of improvement in energy efficiency by 2030. How can property developers strike a balance between economic growth, innovation and environmental protection?
1. Net Zero Carbon Buildings Commitment
The World Green Building Council's (WGBC) Net Zero Carbon Buildings Commitment (the Commitment) urges signatories to achieve net zero emissions in all new buildings by 2030, and to achieve the same for existing buildings by 2050. A zero emission building is highly energy efficient and fully powered by renewable resources. The Commitment's targets will lead to the elimination of 209 million tonnes of carbon emissions by 2050 and the WGBC believe the framework is capable of reducing global warming by up to 2 degrees. Founding signatories include the Berkeley Group, which builds 10 percent of homes in London, and Bruntwood. London's signing of the Commitment echoes the UK government's plan to make the city the greenest in the world by 2050. The revenue contribution to global construction of the 42 signatories is over USD 22.95 billion. In support, the UK Green Building Council (UKGBC) has launched its Advancing Net Zero programme to promote the advancement of a zero net carbon built environment, with signatories including the Redevco Foundation, BAM and Hoare Lea. The future of the construction industry is therefore to position decarbonisation as a fundamental feature, acting as a driver towards a global net zero carbon environment.
2. Building Regulations
A new SAP 10 document launched this year, with the Greater London Authority (GLA) announcing that consultants must use the new CO2 emission factors from January 2019. The updated CO2 emission factors sets out electricity as the lowest carbon option for heating based on how many KgCO2 per kWh a fuel uses and the decarbonisation of the grid. In contrast solar power will have less of a benefit as the energy it is offsetting is cleaner. Solar power can also no longer be averaged out across a block of flats or commercial units, but must be directly connected to each unit. Future buildings are now likely to substitute electricity for gas. Ground source heat pumps, which channel heat from the ground into appliances, have a much less harmful environmental impact as they use less electricity than they produce. These are likely to be favoured by developers, combating both the overheating issue in new flats and reducing the "offset" payment for CO2 where they must be "zero carbon"; reducing this for 1-2 bed flats from £1,800 in the old SAP to approximately £600.
In Scotland, the £250m Queen’s Quay regeneration project in Clydebank will use water from the Clyde to help heat a mix of residential, commercial and public buildings via 5MW of heat pumps and a district heat network, making a major contribution towards the Council’s climate change targets to reduce CO2 emissions.
3. New Reporting Regime
The Carbon Reduction Commitment Energy Efficiency Scheme (CRC) comes to an end in 2019. The new Streamlined Energy and Carbon Reporting (SECR) regime then comes into force on 1 April and will require reports to include emissions data, intensity of those emissions in relation to the size/ revenue of the business, total energy use and commentary on energy efficiency action taken that financial year. Quoted companies automatically qualify for the new regime. Large unquoted companies and LLPs also qualify if they have two of the following within a financial year:
- More than 250 employees
- An annual turnover of greater than £36m
- An annual balance sheet greater than £18m
Businesses consuming 40 MWh or less during the relevant financial year are exempt from SECR. This is significantly lower than the 6,000 MWh threshold under the CRC and will potentially capture a significant number of businesses that have not previously been subject to mandatory reporting requirements.
In January 2019 London's Canary Wharf Group (CWG) launched a smartphone app using artificial intelligence and machine learning to encourage visitors to reduce their plastic waste footprint. Developed by HELPFUL, the app allows a user to scan their water bottles and coffee cups via a smartphone camera, before directing them to the nearest recycling bin, which themselves have scannable codes. The customer then logs depositing the bottle or cup and receives reward points as a result, which can be spent on refillable aluminium water bottles and reusable cups. CWG will encourage all staff and visitors to download the app as part of its ambition to become the world's first plastic-free commercial centre. CWG has installed 15 water refill stations across the estate since June 2018 to encourage visitors to use refillable vessels. CWG has additionally launched a steering panel to accelerate progress in eliminating single use plastics, working with Surfers Against Sewage (SAS) to track the development of a lower-plastic lifestyle on the development.
The above examples indicate that sustainability in 2019 is no longer viewed as a tokenistic CSR add-on, but is becoming embedded in policies of both governmental and commercial property organisations seeking to future-proof themselves by balancing competing economic and environmental goals, so that they can deliver a sustainable future for generations to come.
If you have any questions or comments on the above please contact Jonathan Cohen, Partner & Head of Energy at Howard Kennedy.