Presentation by Gordon McCrath, partner, Pinsent Masons at the CBI Property Breakfast Seminar - What’s the case for green buildings? September 2009.

1. Green buildings: law and policy
What still needs to be done
Gordon McCreath, Partner
CBI Breakfast Briefing, 9 September 2009

2. Pinsent Masons specialist knowledge
• IPF Sustainability Special Interest Group
• CBI Sustainability Group
• London Climate Change Partnership:
– Better Buildings Partnership – Green Leases Forum
– Financial and Liability Group
• JCT – Sustainability Review Panel
• UK Environmental Law Association – Climate Change Working
Group

3. Agenda
• What do we have?
• Will it deliver in 2019? - some issues
• Some recent developments
• What still needs to be done?

4. What do we have?
• Climate Change Act 2008
• Carbon Reduction Commitment
• Energy Performance Certificates and Display Energy Certificates
• Building Regulations
• Construction Site Waste Management Plans
• Supplement to PPS1 on Climate Change
• Supplement to PPS1 on Eco Towns
• Planning & Energy Act 2008
• Enhanced Capital Allowances
• SDLT (Zero-Carbon Homes Relief) Regulations 2007
• Lowered VAT rate for energy efficient materials
• Landlord Energy Saving Allowance
• Code for Sustainable Homes
• Low Carbon Buildings Programme
• Carbon Emissions Reduction Target
• Warm Front, Decent Homes
• Energy Saving Trust, Carbon Trust
• BREEAM 2008, LEED, GREENSTAR, BPF–LES/TER

5. Will it deliver in 2019?
• GBC: The definition of zero carbon (May 2008):
– the definition of zero carbon is not achievable on 80% of new homes
• GBC Report on Reducing CO2 from Existing Homes:
– ...fundamentally there is a market failure. Many of the measures needed
to improve the energy efficiency of the existing stock (such as loft
insulation) are already cost effective. Yet…a mainstream market
demand for energy efficiency work does not yet exist, even though there
are overall financial and comfort benefits to the householder. This
suggests that government intervention is required to correct the market
failure.
• Only 15 homes have met SDLT relief criteria: The Times 28.11.08

6. Some issues
• Definition
• Scattergun/unstable approach: policy, delivery bodies – unintended
consequences. Long term policy certainty required
• Data and awareness: lack of it, lack of consistency of methodology.
Comparability required.
• Theory and reality: EPCs and DECs
• Link between sustainability and value
• More incentives: rates, tax breaks, subsidised capital investment
• Lifecycle analysis
• Existing buildings
• Delivery of decentralised energy
• Non-domestic buildings
• Landlords and tenants: who pays and who benefits?
• Resources and skills: regulatory – inconsistent interpretation of PPS1
• Resources and skills - supply chain

7. Definition
• Carbon compliance targets: reductions in emissions from 2006
levels of 25% (2010), 44% (2013), 70% (2016)
• Code for Sustainable Homes: offsite provided externally accredited
and additional
• Stamp Duty Regulations: required private wire connection for offsite
• Amendments to CSH technical guidance to bring in line
• Supplement to PPS1: onsite or near-site but not remote offsite
• Planning & Energy Act: in locality

8. Definition
• Consultation:
– onsite, except for directly connected LZC heat, for carbon compliance
(i.e. target above)
– No buy out mechanism
– Directly connected offsite renewable electricity for allowable solutions
– 2012 review
• Removal of energy appliances and 70% confirmed for 2016 c.c. (July 09)
• Consultation on amendments to Parts L and F of Building Regs
• More to do: task group on energy efficiency metrics and standards
• EPBD: must define it by 30 June 2011

9. Non-domestic buildings
• Account for 16.5% of UK’s total CO2 emissions
• 2019 “ambition”
• Various voluntary tools: green leases, BREEAM, LES-TER
• Not one size fits all
• Apply zero carbon homes standard of building regs plus planning
and other tools
• Unregulated emissions may vary widely and therefore be difficult to
monitor – could connect to use classes with allowances for
unregulated emissions

10. Non-domestic buildings
• Similar phased reductions but balance of carbon compliance and allowed
solutions may be different for feasibility reasons
• Doesn’t explicitly support a code – more likely to endorse sustainability tools
that meet criteria as nationally described sustainable buildings standard for
PPS1 – leaves it to industry to propose these and UK GBC has already set
up task force.
• Recognises that operation must also be covered and lifecycle analysis
• Respondents support national tools and code
• Need one metric
• More to do: further detailed consultation later in year

11. Recast Energy Performance of Buildings Directive
• To be implemented by 31.12.10 for public sector and 31.1.12 for other
buildings: Government concern
• Lifecycle: Achievement of cost-optimal levels of building energy
performance for new buildings by June 2017
• Consistency: Commission to set a broad framework for a comparative
methodology for calculation energy performance. Methodology of
calculating energy performance must incorporate European standards
• Catching more buildings and systems:
– all new buildings must consider feasibility of alternative heating and
energy supply systems
– all buildings must meet minimum energy performance requirements for
major renovations, where technically, functionally and economically
feasible
– minimum energy performance requirements will apply to the installation
of technical building systems, such as heating and lighting

12. Recast Energy Performance of Buildings Directive
• Better information:
– “EPC”s by 31 December 2010 for all buildings where a public authority
occupies over 250 square metres of total useful floor area
– EPCs must be displayed where one exists in publicly visited
commercial buildings with a floor area over 250 square metres.
– EPCs to contain recommendations on measures to be carried out
• on a major renovation of building envelope or technical building
system
• to individual parts or elements of building (independent of
renovation)
– Energy performance indicator to be shown on advertisement for sale or
rent
– Member states must initiate information campaigns regarding how to
enhance energy performance

13. Recast Energy Performance of Buildings Directive
• “Member States” must draw up plans (the national plans) for “increasing the
number of buildings where both carbon dioxide and primary energy
consumption are low or equal to zero”
• Member States must:
– Define low and zero carbon buildings, in line with common principles to
be established by the Commission
– Set targets for % number of buildings which will be low or zero carbon in
2015 and 2020
– Separate targets must be set for residential, non-residential and public
authority occupied buildings
– Communicate the national plans to the European Commission by 30
June 2011 and submit a progress report every 3 years

14. Existing buildings
• Two thirds of housing stock by 2050 (assumes catch up from current market
stagnation)
• Heat and Energy Savings Strategy (applies to new too)
– Great British Refurb: biggest programme since switch to North Sea gas
– Target ambitions
– CERT extension and CESP
– Information: home energy advice by trained assessors triggered by e.g. refurb,
and meters and better billing info, and encouraging take up of green leases and,
in non-dom, BREEAM
– Upgrade on refurb under EPBD 2 and Building Regs consultation
– Will encourage district heating and CHP has a key role
– Clean energy cash back: RHI and FIT (further consultation on RHI later in year
with view to Apr 2011 introduction). Pay as you save.
• Consultation on amendments to Building Regulations Parts L and F
– Improvement when renovating but not where substantial alteration
• CRC

15. Getting Real: Delivering Sustainable Energy
Solutions
via Energy Service Companies (ESCOs):
• Generate power for development on location
• Promote low/zero carbon impact for development
• Increasingly combine power with district heating and cooling
• Objectives often required under planning requirements/s106s
• Energy regulatory system was established prior to ESCOs being
conceptually entertained

16. Solutions for landlord and tenants
• Incentives and self help
• Green leases: new; difficult to persuade tenants?
• MoUs: existing
• Better Building Partnership Green Lease Toolkit
• CRC

17. Still to do
• Much more to come
• Finalisation of definition
• Consistency
• Operational ratings
• Detail of and further incentives: RHI and FIT, business rates, stamp duty for
non-domestic, ECA
• Connect to value
• Lifecycle
• Development of market practice re landlord and tenant

18. Gordon McCreath
020 7490 6287
07881 855 163
gordon.mccreath@pinsentmasons.com
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