Emissions from buildings must be cut

May 7 2008 by Richard Nixon, The Journal

GOVERNMENT statistics show that nearly 50% of the UK’s energy consumption is from buildings.

As part of its support for the Kyoto Protocol and in accordance with the EU’s Energy Performance of Buildings Directive 2002, reduction of emissions from buildings has been named as a key policy objective.

The provision of Energy Performance Certificates (EPCs) is becoming compulsory for commercial buildings. Many people who have been involved in the transfer of residential property recently will be familiar with these certificates with their fridge-style ratings system and advice on saving energy. For non-residential buildings, EPCs will be needed when selling or granting a lease or sublease of a building (though not renewal of an existing lease).

Introduction started with larger buildings on April 6, with smaller buildings affected from July 1 and all non-residential buildings from October 1. Where only part of a building is sold or leased, the EPC is required for that part, although shared facilities such as air conditioning and heating would also need to be considered.

Although the first phase has been introduced, sceptics point to the likelihood of the dates being postponed like the Home Information Pack introduction was, and then introduced in phases. The commercial deadline was altered last November by raising the size of buildings affected by the April introductions from 500m2 to 10,000m2, reducing the number of properties affected.

October 1 marks another important introduction – the requirement, initially in public buildings (including hospitals, universities, courts and police stations) of over 1000m2 to exhibit a clearly visible Display Energy Certificate (DEC). The DEC shows the actual energy usage of the building and provides information on its energy efficiency.

The DEC must be renewed every year and there is to be a minimum £500 penalty for failing to display one. As a companion to the DEC or EPC, the building will also need an advisory report setting out recommendations for improving the building’s energy efficiency. This report is valid for seven years and there is a £1,000 fine for failure to have one. However, there is no obligation to follow recommendations to improve the building. While a more efficient building may command a premium, in many cases it would be the tenant who would see the benefits of greater energy efficiency in reduced bills. A commercial landlord may be unable to recoup the costs from a tenant as the works would be an improvement rather than building maintenance.

Time will tell if the Government’s objectives will be met.

Richard Nixon is a member of the commercial development team at Dickinson Dees LLP.