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New Energy Efficiency Targets Will Cost Businesses Dearly

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By Paul Homewood

h/t Ian Magness

New plans will cost businesses tens of billions of pound:

One million commercial properties will need to be renovated in order to meet the Government’s new carbon targets, according to impact assessments.

New plans would mean commercial properties having to score a “B” rating in energy efficiency by 2030.

While key players in the property industry say they support the Government’s ambition to make the UK carbon net zero by 2050, they have complained about amount of time until the new rules become law and said officials must provide a clearer idea of regulations beyond 2030.

The Department of Business, Energy and Industrial Strategy is consulting the sector on the plans, which it says could affect up to a million buildings across the UK.

The British Property Federation has accused the Government’s strategy of being short-termist, saying that it does not factor in the long turn around times of commercial property projects.

Alex Green, associate director of the British Property Federation, said: “The Government’s commitment to a new stretching Minimum Energy Efficiency Standard up to 2030 will also act as an important signal to industry, but this is still too short-term in its approach for commercial property investors whose investment decisions today are based on forecasts that span the next several decades to come.

“The Government must provide a regulatory roadmap beyond 2030 to support property owners’ investment into our town and city centres.”

Nils Rage of Landsec said it will not be easy for many buildings to meet the 2030 target.

Richard Quartermaine of Hammerson welcomed the net-zero strategy, but said that the energy efficiency target would be a challenge.

Mr Quartermaine said: “We welcome these initial steps, however, we need all types of property to be focused on. This will be a challenge, however shifting the mindset and accountability on to operational energy consumption is essential if, as a sector, we want to move forward at pace to reach net zero.”

The Department of Business, Energy and Industrial Strategy had not responded to a request for comment at the time of publication.

According to the Committee on Climate Change, energy efficiency targets will cost the commercial sector £20bn by 2030. Much worse still, however, is the ongoing cost of installing expensive low carbon heating systems, which together with the energy efficiency measures will bring a bill of £110 billion by 2050 for commercial and public buildings, equivalent to £3.6 billion a year:

Obviously somebody thinks money grows on trees! The Telegraph claims businesses will save £1 billion a year in reduced energy costs (printed version), but this sounds extremely unlikely. BEIS savings are based on this 2016 study, suggesting that energy use could be cut by 39% (and effectively by half for heating):

Most businesses, certainly larger ones, in my experience are always keen to look at ways to reduce energy costs. Any schemes with a reasonable payback would be readily considered.

And as we know with domestic heating, if gas is to be replaced with electricity energy costs will balloon, dwarfing any savings.

Given that the BEIS have woefully underestimated the cost of insulating residential buildings, I suspect the cost will be much more than the £28bn quoted.

Put another way, £28bn for 1 million buildings comes to an average of £28000 each. It will cost £19000 to insulate an average house to EPC-C, so I cannot see £28000 going very far, even with smaller commercial buildings.


March 23, 2021 at 06:06AM

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