Cop 26 and Us

Ahead of the COP26 summit, Phil Winckles, Matthews & Goodman’s Head of the Northern Professional Services Team, questions the role the property sector is playing in trying to avoid a global climate emergency.

As the world flocks to these shores to participate in an event in what has been billed as ‘a make-or-break year’ – if we are to confront the escalating global climate emergency.

The built environment community (of which we are all part) is responsible for 40% of the UK’s carbon emission. But behind that startling fact lies a complex reality. As a sector, we have proved quite effective at harnessing technology to create smart buildings:

• With a net-zero energy capability (using solar and wind technology to produce the energy a building needs on site)
• Capable of achieving net-zero carbon emissions
• Exploiting AI to monitor (real time) energy efficiency and space performance
• Combining ‘digital twin’ technology (for predictive maintenance for example), with the ’Internet of Things’ (IoT)
• Adopting smart windows which are responsive to the sun/natural light variations, thereby reducing energy consumption used for heating/cooling
• Harvesting rainwater to reduce our environmental impact by storing it for later use
• Using ‘cool paints’ and reflective glass coatings to manage the temperature within buildings – a important part of a building’s energy management strategy.

In addition, consider how our sector’s business model is evolving – for example:

• Fitting out offices before marketing it to prospective tenants, rather than providing a basic finish which requires a full fitout when a tenant moves in
  • Fitouts will therefore take place every 8-10 years (in the lifetime of a building) rather than 20-30 times (during an indicative 60-year lifespan)
  • Minimising the discarding of (fitout) materials, which inevitably end up in landfill.

The fact that according to recent AECOM research, 40% of the world’s natural resources are consumed by the construction sector, is worrying.

However, it is interesting to note that many cities, from the US and Canada to Indonesia and Singapore are actively pursuing a Smart/Green City policy, designed to reduce their cities’ carbon footprint, as well as levels of pollution. Their policies focus on the use of technology to address the problems related to the fact that by 2050 over 66% of the world’s population will be living in (energy hungry and pollution creating) urban settings. These urban conurbations will generate 70% of global emissions and consume 66% of the world’s energy.

I appreciate that this blog is starting to read like one of those well-meaning sustainability leaflets, but I quote these facts simply to underpin the 40% figure cited above and to ensure we never forget the context of what we do.

So what can we do?

I guess the here and now is something very pragmatic (especially if you are involved in, or responsible for the management of your asset/s): improve the energy performance of the buildings we live, work and ‘play’ in. The catalyst for this is the Minimum Energy Efficiency Standards’ (MEES) ‘EPC ratings’ – part of the Government’s strategy to address the energy footprint challenges we face as a nation.

The Government’s intention, announced in their Energy White Paper, is that by:

• April 2025 every commercial rental building must have its EPC rating lodged on the national database – a call to action for around 10% of owners who have yet to do so
• April 2027 all commercially rented buildings must achieve at least a C rating – unless the building is registered with a valid exemption. This applies to all owners and will impact their right to receive rent – from both new leases, as well as continuing to receive rent from existing leases
• April 2030 it will be unlawful to grant new tenancies on commercial properties with an EPC rating lower than B – unless the building is registered with a valid exemption. Once again, this applies to all owners and will also impact their right to continue receiving rent from existing leases.

James Routledge, a colleague of mine who advises clients on the long-term value of their assets and portfolios, drew my attention to the fact that if, for example post 2030, a tenant decides to alter the fabric of the workplace after it has achieved a ‘B’ rating, for example by creating a new meeting space or server room might prove problematical because of new heating or cooling demands, it could impact the energy footprint of the building.

The alteration might therefore reduce the rating to a ‘C’ which means no rent could be charged for the space until the issue has been addressed.  Accordingly, whilst it remains to be seen exactly when (or even if) such proposals will become legislation, it would clearly be advisable to adopt a proactive approach. 

The point being that EPCs are now becoming increasingly more important and, to misappropriate that old adage, “landlords and owners beware”.

However, let me return to COP 26 and the role our sector is playing in trying to avoid (what activists claim is) a ‘global climate catastrophe’.

Not since the 2015 Paris Agreement have climate talks been so dominant on the global stage. The argument for eliminating coal-fired power plants appears to have been won. But the truth is that countries such as India, which produces around 70% of its electricity from coal-fired plants, still has a relatively nascent renewable energy capability, so it has no immediate option.

However, the average Indian consumes considerably less energy than his/her western counterpart. One statistic I came across claimed that the average American home consumes 34 times more electricity than its peer in India. A salutary fact.

Many believe that the silver bullet will be technology as it lies at the heart of every aspect of our lives – from transport and waste management to energy sources.

Greening the planet will not be cheap, but as Martin Luther King once said:

“There comes a time when one must take a position that is neither politic, nor popular, but he must take it because conscience tells him it is right.”

*The EPC rating of a building can be checked on the national database, accessible on www.epcregister.com