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A Strategy for Making Offices More Energy Efficient in the UK – Discussion Paper

Some basic statistics:

Energy use

In 1980 offices/commercial buildings used 46 PJ of energy (1). In 1985 this was 60 PJ, and projected to rise to between 68, 77 or 86 PJ (depending upon economic growth) by 2000 (1). By 1994 offices were already consuming 114 PJ (2). This is a rise of nearly 2.5 times within 15 years (over the same period the rest of the commercial sector’s fuel consumption grew 25%). Half of the consumption is electricity. 37% is gas for heating. 11% of energy consumption is for office appliances. (2)

Age of offices

Over half of offices are over 40 years old (1) 35% were built before 1914 – usually smaller converted houses (1)

How many?

220,000 in all, occupying 65 km2 (1)

Size of offices

A small number of offices occupy a large proportion of square meterage: 4% of offices (eg, those over 1000 m2) occupy 48% of area 15% of offices (eg, those over 300 m2) occupy 70% of area. Conversely, 58% of offices occupy 11% of total area. The average size is growing, up 33% over past decade: now over 300 m2. (All source 1)

Ownership

Just 10% of offices are occupied by the freeholder. 70% of offices are multi-tenanted (1)

Potential energy savings

ETSU state 40-55% of delivered energy (1) 35-50% of energy costs. Savings value £700 m at 1997 prices (extrapolated from) (1)

Potential benefits

Realising even half the delivered energy minimum 40% potential would provide 0.74 million tonnes of carbon savings annually by 2010.

Sources (1) “Energy Use and Energy Efficiency in UK Commercial and Public Buildings up to Year 2000” Energy Efficiency Office, 1988 (2) Energy Consumption in the UK: DTI Energy Paper 66 (1997)

Summary position

We have a predominantly tenanted marketplace. Although there are a lot of elderly buildings, they are mostly small. The sector is dominated by larger, multi-tenanted offices. And energy use is growing exponentially. Most of the freeholds are owned by substantial investors – either pension funds and insurance companies, or specialist property companies.

Why is energy efficiency a low priority today?

  • Leasehold/freehold clash of interests.
  • Energy diminishing proportion of costs, never very high.
  • Accountancy practices, writing off conservation investments over shorter period than physical lifetime.
  • Lack of awareness of best practice.
  • Rents determined by location rather than performance of building.
  • Energy service charges incorporated into overall rent.
  • There is little likelihood of these barriers changing. So counter-structural incentives are needed.

Proposals for action with minimal public expenditure implications:

  • Place a duty on freeholder, (or initially via a voluntary code) at time of granting new lease or at rent review, to undertake an energy survey of the property, providing details of results to tenant. (Equivalent duty to requirements for annual health and safety checks on heating and other appliances). Use experiences of US building Energy Star Ratings. Note commitments under Article 4 of the EC Save Directive 1993.
  • Extend the Home Energy Conservation Act duties for councils as Energy Conservation Authorities to include all offices within their area. Using Normalised Performance Indicators developed under Best Practice scheme, collect information and publish comparative ratings. Set improvement targets as per HECA.
  • Require each plc to make a statement in its annual report setting out fuel consumption per m2 in past years, and declare targets for future years. Subsequently publish comparisons between these two. Companies with buildings above a certain size (say 1000 m2) to publish consumption figures and targets per building.
  • Target certain freeholding companies on either a flagship, or a Name and Shame basis. Emphasise potential to reduce service costs to themselves via investment in energy efficiency, whilst maintaining existing charges to tenants.
  • Require freeholders to publish % of sq m2 owned by them with individual gas and electricity meters. Require publication of future targets for installation of individual meters – a Voluntary Agreement? (Given predominance of estimated bills and quarterly standing orders, it must be accepted that by themselves providing such meters will not be much of a spur to tenants’ activity. But it will concentrate minds). Note that this action will conform with EC Save Directive 1993 Article 6.
  • Extend Environment Agency’s powers under Integrated Pollution Control to cover office blocks over a certain size (say 1000 m2).
  • Allow tenants to undertake energy efficiency works at their own volition, with landlord required to object in writing and with reasons within four weeks of application in order to halt activity.
  • An extensive publicity campaign to influence the office market to take action.

Note: Read ” White Collar CO2″ for further information on carbon emissions from the services sector

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