The government told the Climate Change Committee in October 2019 that it would consult on introducing a new scheme that would rate commercial and industrial buildings in England and Wales above 1,000m2 based on their actual energy consumption and carbon emissions, as part of the 2050 net zero target. And the consultation between the government and various owners and tenants of commercial and industrial buildings, investors, asset managers and lenders, energy consultants, facilities management companies, businesses involved in the retrofit of these buildings, as well as others from the wider market took place 17 March-9 June 2021.
The information from the consultation is now being digested before the scheme’s launch date in April 2022. It is set to increase the number of buildings that are currently required to report their energy consumption and carbon emissions by 13-fold. Despite only 7% of commercial and industrial buildings in England and Wales being larger than 1,000m2, they use more than 53% of all the energy used by commercial and industrial buildings.
“Benchmarking is quickly becoming operational best practice for the commercial real estate industry, where investors want transparency on the energy and carbon intensity of the building stock in a portfolio,” explains David Tobin, senior consultant at the Carbon Trust (pictured, top right).
He adds: “With net-zero targets in mind, it is therefore imperative that the UK seeks greater transparency regarding the actual in use efficiency of its own portfolio of large buildings.”
The scheme is expected to save English and Welsh businesses more than £1 billion per year, at 2021 prices, and reduce carbon emissions by 8m tonnes.
Under the proposed framework, owners and tenants of these buildings must onboard their building to the framework and annually submit their metered energy use data (and other relevant information) to the ratings administrator. The building will then receive an annual energy rating based on its performance, which will be disclosed publicly in the building and online. The rating will also be presented to prospective tenants and buyers before the building is let or sold.
It sounds familiar to the government’s SECR (streamlined energy and carbon reporting) policy for companies that are either quoted on the stock exchange or large unquoted companies that meet two of the following three criteria: having a turnover of £36 million, a balance sheet threshold of £18m, and 250 or more employees (see also www.is.gd/irekic).
So what’s the difference?
Tobin explains: “Where SECR requires reporting and ongoing intensity benchmarking at an organisational level, the new framework will help provide more granular comparison of energy performance at an individual building level, which should help drive more local improvement action.”
However, John Field, founder and director of energy management company Native-Hue and head of net zero compliance at Noveus Energy, says: “They are almost entirely focusing on large multi-let commercial offices, and not a lot on industrial buildings.
“Metered energy use in most industrial buildings is largely dominated by the process energy. The issue is that it’s hard to benchmark buildings with processes, so they focus on the building services: the heating and cooling, the lighting use and the use of compressed air, for example.
SOURCES OF INFORMATION
Where qualifying large organisations are already gathering energy and carbon data from building assets on an annual basis for SECR, the data required for the new framework should therefore be readily available, and hopefully relatively straightforward to add in.
Likewise, energy performance certificates (EPCs) already exist to assess the potential carbon and energy performance of a building through theoretical modelling of the standard of its fabric and services. However, because they are not based on actual metered consumption, there can be a performance gap where the actual consumption and emissions of a building are much higher than those implied by the EPC rating.
DISCONNECT
“Research by the Better Buildings Partnership and Real Estate Environmental Benchmark [www.is.gd/emibih] suggests that for large and complex buildings there is virtually no correlation between an EPC rating and the actual energy intensity of the site,” Tobin says. “Which makes it very challenging for those buying or leasing a building to have confidence that their new premises will be as efficient as advertised.
“Benchmarking based on actual energy consumption should, therefore, help provide greater clarity on the in-use energy performance of a building and how this has changed over time, which is beneficial to both new and existing occupiers as they progress towards challenging net-zero commitments.”
Additionally, large businesses are currently required to audit their energy use (including energy used in buildings) every four years, under the Energy Savings Opportunity Scheme (ESOS). The ESOS audit report provides tailored recommendations to reduce energy use. Again, companies that already take part in ESOS should find it simple to add themselves to the new framework.
This new framework is based on an Australian scheme, The National Australian Built Environment Rating System (NABERS), which is said to have delivered average energy reductions of 34% over the last 10 years.
Again though, Field says: “This has been shown to work well for commercial offices (which were the buildings NABERS focussed on), but for industrial buildings I think that approach needs a complete rethink, and I don’t think the government is likely to do that at this stage.”
In the first year of the new framework, the government does not expect ratings to be improved, it’s more a benchmarking exercise which will allow businesses, building owners and the wider market a chance to respond to it.
Office buildings will be affected first, with a soft launch proposed for April 2022. But all businesses and building owners can get prepared to ready their buildings for the introduction of the framework.
“Operations engineers need to look at best practice within their sector,” Field finishes. “And you’ve got to look at the climate change agreements, if you’ve got one for your sector (like most of the heavy industries do). You can get a lot of help from your sector authorities and research associations on that.
“For building services, you may be required to meter that separately and have a look at benchmarks and, again, best practice technology for lighting, lighting controls, environmental temperatures in production spaces and elsewhere.”