Published: Suffolk Business Magazine

Date: 14th December 2010

Author: Toby Kramers

The British Government has committed itself to reducing carbon emissions:

1    Nationally under the Climate Change Act 2008
2    Through various EU initiatives and
3    By signing up to the Kyoto Protocol

There are several ways in which the Government proposes to meet these targets, which will have a direct bearing on property owners and occupiers. Firstly, Financial incentives are being provided for the generation of electricity on a small scale from renewable sources. These  ‘feed-in tariffs’ (“FITs”) were introduced on 1 April 2010. This scheme applies to any installation with a generating capacity of 5 megawatts or less and guarantees a payment for both electricity, which is used on site, and for any unused electricity exported to the National Grid.  Amazingly FITs are available to anyone, including businesses, landlords, local authorities and normal households.

Furthermore, the Government is also seeking to reduce emissions of carbon dioxide by ensuring that buildings are more energy efficient.  Buildings are responsible for approximately 50% of the UK’s total carbon dioxide emissions, with private homes responsible for approximately 27%.  Thus, changes are on the way for practitioners. Most Practitioners will be aware of Energy Performance Certificates, which are required pursuant to the European Energy Performance of Buildings Directive 2002.  However, the Energy Performance of Buildings Directive 2010 repeals the 2002 legislation from February 2012 and, amongst other things, introduces the concept of the “Nearly Zero-Energy Building” and requires member states to devise a method of calculating energy performance which is broadly consistent across the EU.

Moreover, the Government has announced that all new homes should be zero carbon by 2016 and that all new non-domestic buildings should be zero carbon by 2019.  In addition, there has been much recent talk about  “Green Leases”. These are a series of requirements for a lease, which make it environmentally friendly. While Green Leases might involve Landlords and Tenants in some expenditure, such arrangements could be attractive for both parties. They might, for example, result in saving energy costs and promote corporate social responsibility policies.

Evidently, much will, depend on the age and nature of the building to which the Green Lease will be applied, but it is clear that a growing number of institutional landowners are now taking these requirements increasingly seriously. It is very clear that environmental considerations will have a growing impact on property ownership and occupation. These preoccupations will inevitably involve some inconvenience but out of this could arise some real opportunities in the not so distant future.

For further information contact Toby Kramers Partner and Head of Commercial Property