Landlords and large occupiers face mandatory energy reporting measures

Major property owners and occupiers could be forced to publish their energy in-use data as part of a new government proposal aimed at aiding the UK on its journey to net zero carbon. The Department for Business, Energy & Industrial Strategy has launched a consultation seeking to introduce a mandatory rating for energy use of buildings of 1,000 sq m and above. The proposals could see the NABERS UK scheme, brought over to the UK from Australia by the Better Buildings Partnership in November last year, move from being a voluntary scheme to a mandatory one. BBP chief executive Sarah Ratcliffe said: “This really could be a game-changer for the UK commercial property sector. The BBP applauds these aspirational plans to implement a scheme that will provide much-needed transparency for commercial property investors, owners and occupiers. This is vital in order to accelerate efforts to improve energy efficiency and drive the UK commercial property sector to decarbonise and deliver on its net zero targets.” UK Green Building Council chief executive Julie Hirigoyen also welcomed the proposals, saying that energy use in commercial buildings remained “stubbornly high”. However, she urged the UK government to follow in the footsteps of the Australian government in committing to the proposals through its own building occupation. “One key element of the Australian scheme is missing from the proposals,” she said, “a commitment that central and local government will only occupy buildings with a high rating. Making that commitment would send a clear message to the market that lower-rated buildings must improve or risk being unlettable.” NABERS’ success in Australia has been driven by the government, which is one of the country’s biggest occupiers. The UK government hopes that the new rating will go further in enabling the country to meet its decarbonisation goals than energy performance certificates have. While BEIS said that EPCs had contributed to a 14% decline in carbon emissions from buildings between 2008 and 2018, it recognised there was no evidence to show any correlation between a building’s EPC score and its actual and energy and carbon performance. NABERS in Australia, by comparison, has delivered a 34% reduction in energy use over past the decade. BEIS hopes to introduce the new rating system in three phases, starting with a focus on the office sector, which it believes is best prepared to adopt the new performance rating, before expanding it to other non-domestic buildings. Public disclosure As part of the scheme, office owners and large occupiers will be required to input their building into the framework within the next two years and then provide metered energy use data, floor area information and operational hours of the building every year to the ratings. It will receive a six-star rating back which will be publicly disclosed, both in the building and online. The landlord or tenant will also be required to publish the name of the organisation responsible for getting the rating, an up-to-date performance-based framework for the office and the location of the building. “This will ensure that large businesses and building owners will be aware of, and accountable for, how effectively they are using energy,” said BEIS. “It sends a clear signal to businesses and building owners that, having legislated for net zero by 2050, the government is ready to recognise businesses and landlords who have a low annual carbon footprint, and drive those who consistently emit more carbon than their peers to improve.” Louise Ellison, head of sustainability at Hammerson and chair of the BBP, said the potential introduction of the framework represented a fundamental shift. “It would appear we are moving to a place now where the government is really acknowledging that we have to look at operational performance and that is what will drive change,” she said. “It really has transformed the way offices are designed, operated and monitored in Australia and I can see that happening here relatively quickly.” BEIS said the new scheme would have the ambition of drastically reducing carbon emissions, saving some £1bn in energy costs and providing critical, reliable and trusted information so that building owners, businesses, investors, shareholders, insurers, lenders, energy consultants (and others) can clearly understand what the rating means and be able to translate that score into value. In Australia, a strong rating on the NABERS scheme has been proven to boost values by as much as 20%. At its UK launch last year, NABERS director Carlos Flores, told EG: “There are really concrete business benefits to sustainability beyond just saving money on bills. In Australia today, if you have a building that has a high NABERS rating, you have better financials on almost every metric that is important for the office market. “Buildings with high NABERS ratings are worth a lot more money because you are buying a building that is likely to have fewer vacancies and longer leases. That building is going to give you better returns, so we are seeing people pay more money for them.” John Davies, head of sustainability at Derwent London, one of the first to sign up for the NABERS UK scheme last year, said monitoring energy in use will be one of the key tools for the firm in its journey to net zero. “For me, what this really gives is the Ronseal seal of approval,” says Davies. “To a customer, to the occupier, and that is really, really important.” But the journey is only just at consultation stage and the UK built environment is very different to Australia’s. Ironing out the kinks “Some of the challenges will be around the age of our stock and the variety of our stock,” said Hammerson’s Ellison. “There is a huge tail and this will need to be driven right the way through that tail. There is a lot of work to be done here to actually make this have the teeth that it needs and deliver the change that we need.” Chris Cummings, director and head of technical sustainability at Savills, agreed. He said the government’s proposals could turn out to be the “biggest catalyst for UK energy efficiency since the EPBD some 17 years ago”, but warned there are plenty of potential kinks in the system to iron out. He pointed to government’s favoured hybrid approach, which would allow a performance-based framework and compliance-based framework to exist in parallel. This, he said, has the potential to create a messy regulatory framework. “The regulations must find a way to enable these competing ideologies to coexist in such a way that delivers clarity to landlords and tenants, without leaving loopholes such as an ability to pick and choose between approaches to shine the most favourable light on a property,” said Cummings. “There are hurdles to overcome but the move towards a performance-based metric that addresses energy and carbon separately is very welcome and very necessary for delivering a sustainable future for the built environment.” Consultation on the proposal is open until June, with a government response expected to be published in autumn. To send feedback, e-mail samantha.mcclary@egi.co.uk or tweet @samanthamcclary or @estatesgazette