Working together to reduce carbon emissions

The independent Climate Change Committee report didn’t hold back. By identifying where the UK’s programmes to deliver net zero will fall short and setting out recommendations to put the UK back on track, it demonstrated just how far we need to go.  Changes to current policies to ensure they are successful in limiting climate change, a review of HM Revenue Customs’ tax strategy, the development of contingency plans (such as encouraging reduced consumer demand for high-carbon activities) and better public engagement were just some of its recommendations.  However, the report wasn’t all bad news. It highlighted areas where great progress has already been made, including the rollout of renewable electricity and promoting the electrification of vehicles.  Set against the background of the cost-of-living crisis and the need to end the UK’s dependence on expensive fossil fuels, the recommendations for decarbonising heat and greening housing have garnered significant attention. They are of particular relevance to those operating in the real estate sector, where the move from traditional sources of heating to greener alternatives and the trend for sustainable developments are already having an impact.  Decarbonising heat The decarbonisation of heat is a multi-faceted solution, and the CCC report highlights “the need for widespread deployment of zero-carbon generation and electrification of end-uses, complemented by use of hydrogen, bioenergy and CCS [carbon capture and storage]”.  For the real estate sector, this provides another piece of the decarbonisation puzzle. The market is already seeing increased demand for green buildings that use technologies that run on electricity, and which are powered by renewable generation and supported by green infrastructure such as electric vehicle charging.  While tenants are willing to pay premium rents for commercial space that will reduce their scope two emissions, the onus is on the landlord to ensure that their buildings really do meet the criteria. One way to do this is to look at zero-carbon generation. On-site generation in the form of solar (or solar-plus storage) alongside EV charging could be one route to providing green power and infrastructure. Combine this with integrated new generation, digital, automation and electrification technologies – which play a vital role in reducing energy usage and CO₂ emissions – and you have the blueprint for the building of the future.  Whereas with new builds the cost of integrating sustainability into the development can be played forward in rental premiums, for retrofitting there is always the question of who pays for potentially costly upgrades – particularly where the building might look to move away from traditional heating sources to newer electrified technologies.  Alongside the consideration that brown buildings may become unrentable, landlords need to balance capex costs against future rental income and look to collaborate with their tenants. Switching the building to green power is all well and good, but if the building still has a low EPC rating the landlord may not be able to lawfully let the building, unless they can register an exemption. Upgrades in areas such as lighting, insulation, electrification and green infrastructure may have a greater impact on the EPC rating.   Greening homes  The residential market has already seen a shift towards sustainable development with homes powered by renewable generation, heated by low-carbon technologies and linked to green infrastructure. The CCC report sets the conditions for the market to continue in this direction.   The report’s recommendations would ensure all new homes meet the current minimum standard for new dwellings, and that developers are held accountable to the standard they advertise through accurate performance testing and widespread reporting. In addition, long-term regulatory standards for affordable housing are recommended to ensure they reach EPC C by 2028, alongside finalising policy plans and delivery mechanisms.  Another point of interest was the CCC recommendation to publish targets for low-carbon networks, which sets out their contribution to decarbonising heat. Commercial developers and affordable housing providers have already been quick to take advantage of the growing number of district heat networks, but this could be the catalyst needed to support the further decarbonisation of residential developments while creating opportunities for green jobs and channelling investment into this technology. However, the residential market is already balancing supply chain challenges, rising construction costs and labour shortages with the need to scale up development to meet demand, so how can it deliver against the CCC requirements? A greater focus on using sustainable materials, a move to alternative construction methods such as modular – which is already gaining traction in the affordable housing sector – and access to green finance products could be part of the solution. However, this is where additional support in terms of policy may be required, and a need for further collaboration throughout the development lifecycle.  Collaborative action  The CCC report is a call to action for not just those operating in the real estate sector. The range of measures identified for urgent action are a reminder that these issues can’t be tackled in isolation. Governments and businesses need to act urgently and collaborate with communities and individuals. It’s only by working together that we will create the climate for change needed.  Alexandra Holsgrove Jones is a senior knowledge lawyer at TLT Read the CCC report here Image © Pixabay