The Push Towards Low Carbon Development

11th October 2010

The property industry is being inexorably pushed to change the way it does things, the built environment is gradually going to look different around us all. There are several factors driving this change but one of the most effective at changing what happens on the ground will be the planned changes to Building Regulations Part L – conservation of fuel and power. Building Regulations for new dwellings are changing this month to match the targets set in the Code for Sustainable Homes. The Code is already working – at present all new affordable homes must be built to Code Level 3, ie a 25% CO2 reduction on current levels. You won’t get planning permission without meeting this requirement. This month building control swings into action, Part L is changed and all new dwellings (not just affordable ones) will have to meet the equivalent of Code Level 3.

The Code then states that by 2013 Level 4 will require a 44% reduction and by 2016 Level 6 will require reduction levels of 70 – 100% (ie zero carbon). Building Regulations again give these targets teeth – the current plan is for Building Regulations for all new dwellings to be progressively tightened in stages (2013 and 2016) to match the Code targets. Building Regulations for new non-domestic buildings are also to be progressively tightened – the plan is to be zero carbon by 2019 with new public sector buildings zero carbon from 2018. The new Government is still considering how best to implement this plan but favours a gradual tightening of Building Regulations along the lines of the domestic market.

On 8th July this year the EU also waded in, EU member states must adopt domestic legislation implementing their Energy Performance of Buildings Council Directive by 9th July 2012. This Directive requires new public sector buildings to be “nearly zero-energy” by the end of 2018 and new private sector buildings to be “nearly zero-energy” by the end of 2020. So the new government has limited room for manoeuvre even if it wants out of the targets set by the previous government, and there is little indication that it does, despite some wailing from some construction industry.

There are other factors pushing the construction industry towards low carbon development. Planning Policy Statement 22: Renewable Energy suggests that planning authorities will support a proposed development which has a percentage of its energy coming from on-site renewable energy. The Feed in Tariff (in force) and Renewable Heat Incentive (in consultation) offer financial carrots to investors in renewable energy. The Carbon Reduction Commitment Energy Efficiency Scheme offers both carrot and stick to those high energy users obliged to participate – financial rewards for those who successfully incorporate low carbon measures, financial penalties to those who fail to reduce their CO2 emissions. Quite apart from saving the planet, consumers will also feel the financial pinch of rising fossil fuel energy prices and there is a good business case for predicting that developments incorporating low cost, renewable energy provision will be attractive to the market.

What of the new government’s attitude to all this? On 27th July this year Grant Shapps, Housing Minister, issued a written ministerial statement setting out the new government’s approach to zero carbon homes. He confirmed the government’s commitment to “ensuring that all new homes post 2016 can be zero-carbon while ensuring that the costs of new build do not prevent appropriate and sustainable development”. He seems to have rather rowed back from the definite tightening of Building Regulations for new dwellings in 2016 to achieve a 70-100% CO2 reduction (equivalent to Code Level 6) and has announced that he has invited the Zero-Carbon Hub to do more work on testing for an appropriate level. However, how far can the government go given the EU Directive? He has also announced that the government will explore the possibility of allowing developers to meet their obligations through payments to fund local energy projects, possibly through an existing local tariff mechanism.

Local energy projects would seem inextricably linked to low carbon development. Integrating renewable energy and low carbon infrastructure into communal systems, for instance district heating systems can make a development both viable to meet existing 2016 CO2 reduction targets and viable financially. Developers have little experience in providing localised low carbon energy projects and may look to Energy Service Companies (ESCos) formed bespoke for the project or hired in as specialists in this area. There are European precedents and several UK precedents showing how successful communal energy systems can be. The European Directive has been handed down and the decision has effectively already been made – our villages, towns and cities are going to start changing shape as low carbon development emerges over the next ten years.

Law correct as at 11th October 2010.

If you wish to discuss any of the issues raised in this article, or for information on any other commercial property matters, please contact Jenny Harbord.

The information provided in this article is for general information purposes only and does not constitute legal or other professional advice and cannot be relied upon as such.  Any law quoted in this article is correct as at 10 October 2010.  Appropriate legal advice should be sought for specific circumstances before any action is taken.  Copyright © Murrell Associates October 2010.