A True Measure of Performance?

Article on Energy Performance Certificates (EPCs) for UK-GBC supplement ‘Building for the Future’, published in The Times, 22 September, 2009

In much the same way as GCSEs are intended both to drive academic performance across the Education sector as a whole and inspire effort and achievement in individuals, so should EPCs (and DECs) raise standards in Property and Construction and deliver better buildings and dwellings. Certification in theory is the answer, but the question is, will it work in practice?

No vision for a low-carbon economy can carry any credibility without strategies in place for delivering on aspirations for CO2 reduction and energy efficiency in the built environment. The process of turning such aspirations into achievements calls for targets to be first set, then met. So, how do we measure success?
One simple solution is to award grades in recognition of levels of achievement and performance, operating a comparative assessment and rating system.
Introduced as part of the European Performance of Buildings Directive, an Energy Performance Certificate (EPC) is now required when any building (over 50sq m) is sold, rented out or constructed, and in some cases following refurbishment. EPCs rate properties on a descending sliding scale from A to G and come complete with a Recommendation Report. Only qualified and accredited energy assessors or certified home inspectors can produce EPCs, which also form an essential part of the Home Information Pack (HIP) for domestic properties marketed for sale. In addition, certain public buildings must have a Display Energy Certificate (DEC) on show.
“Of course, Energy Performance Certificates (EPCs) should help improve compliance with buildings regulations”, acknowledges Dr Martin Gibson, Director of Government-approved provider of energy-assessor software, BuildDesk. “The theory is that people will start to make use of the EPCs in their buying decisions and though there doesn’t seem to be much evidence of this yet, it is still early days.
“I remember the early days of energy labels on white goods and it took a few years before people started to shy away from lower grades. However, the market for white goods has now been transformed and it is hard to buy anything worse than an appliance rated A or B. Who, after all, wants to admit to buying second best?”
Establishing the value of excellence in energy performance of commercial buildings and demonstrating benefits to owners and occupiers is vital to stimulating demand for certification and driving up standards. The accompanying Recommendation Report is arguably the most important part of an EPC, laying the foundations for ongoing improvement. It is however all too often ignored once the lowest-cost base rating is safely in the bag. If the scheme is to operate effectively going forward, buy-in on the part of clients is key, as Terry Dix, Director at Arup, explains:
“EPCs are only an effective measure for new buildings and even then only if clients set ambitious targets by doing more than getting a simple pass – in other words, more than just complying with minimum legal standards.”
Certification costs both time and money and clients need to be confident the effort is worth it. Seeking to sweat physical assets harder, corporate property owners and developers will be looking to EPCs to satisfy the demands of two audiences: one upstream, made up of investors and perhaps pension funds; the other, downstream, comprising letting agents and tenants. Badly performing buildings are hard to let and uncomfortable to occupy. They represent an unattractive prospect from both perspectives: Mergers and Acquisitions teams do not like liabilities on the balance sheet in the shape of unsaleable and unlettable property; tenants are concerned about committing to bottom-line cost impacts over time. Futureproofing against excessive utilities bills is good news for everyone, as is the promise of an indoor working environment that is conducive to staff health and wellbeing, minimising levels of absenteeism, maximising output.
There is a virtuous spiral in play here: Happy tenants make for happy owners and happy investors. When all are talking commercial building performance, certification is the common language. At present, though, there remains a sales job to be done for the metrics.
Selling the benefits of certification to developers and owners is an issue In the residential sector too. Amongst consumers in general, there is growing awareness of the advantages of labelling. With developers, homeowners and landlords, however, there is a need to establish a more positive attitude towards enhanced (re)sale and rental returns, based on strong certification ratings, consolidating and raising demand on the part of the prospective buyer or tenant. Achieving higher levels of energy performance in dwellings needs to be communicated as a matter of investment, not cost, as Chief Executive of the Energy Saving Trust, Philip Sellwood explains:
“We know that people are going to be looking to rent out places that are cheaper to run – it’s hardly rocket science. A poorly insulated three-bedroom semi-detached house could move from band F to C saving a tenant £700 a year on energy bills if the landlord installed straightforward energy-saving measures like insulation.
“There is no good reason for landlords to pass the cost of upgrading a property to meet energy efficient criteria to their tenants – there is financial support available which can help recoup any financial outlay involved.
“We urge all landlords to see this new legislation as an opportunity not a challenge. All the evidence points to the fact that an energy-efficient home will be much more appealing to prospective tenants.”
One thing is certain: There is no shortage of qualified and accredited assessors. Government targets for professional numbers have been exceeded several times over, with initial fears of a shortfall in personnel proving quite unfounded. A whole army of energy performance troops has effectively been enlisted in the fight for carbon reduction and energy efficiency in buildings. As the government wages war on Climate Change, it is the frontline battle for the hearts and minds of clients, owners and developers that still remains to be won.

To view the full Supplement online, please click here.

Author: Jim McClelland

Waging War on Carbon

Article on Zero-Carbon New Buildings for ‘Smart Energy Management’ supplement, published in The Times, 15 September, 2009

In terms of property-related impacts and emissions, Great Britain is effectively at war with Carbon. The offensive started in earnest back in July 2007, with the announcement of a Government proposal for all new homes to be required to be ‘Zero Carbon’ from 2016. Following on from this initial assault on housing, co-ordinated campaigns have been launched to target non-residential buildings with zero-carbon compliance by 2019, plus an accelerated programme for both Education (2016) and public-sector property (2018).

As the target compliance dates for all building types fall within the Government’s critical first period to 2020 of its climate change strategy for overall emissions reduction, the spotlight will undoubtedly focus on success or failure in these areas.

So what exactly is the construction and property sector tasked with doing and what has been the response to the challenge?

Not surprisingly, much of the debate has centred around the precise definition of net zero-carbon emissions. In order to balance the zero-sum books, what exactly is allowable in the ‘credit’ column, to offset the ‘debit’ figure generated by the calculated carbon emissions of a property. In response, policy documents have set out a three-part hierarchy of achievement needs for zero-carbon design and development:

• In first place are the requirements for very high standards of energy efficiency in design, specification and construction;

• Secondly, carrying the most concern regarding cost implications, comes the call for carbon compliance in terms of on-site generation of renewable energy;

• Thirdly, provoking perhaps the most discussion, appears the potential for provision of other off-site measures and allowable solutions – only permitted almost as an conditional option of last resort, on the basis of credits earned in respect of achievement in the other two areas of primary and secondary need.

The key associated piece of building regulation is the Code for Sustainable Homes (CSH), now a mandatory requirement for all new housing in England and adopted into minimum standards in both Wales and Northern Ireland. Sustainability is assessed across nine design categories, resulting in Code star ratings ranging from the lowest Level 1, through to the highest Level 6 for Zero Carbon.

In response, there have undoubtedly been dissenting voices, with architects, housing developers and engineers in some quarters branding the proposals high risk and unrealistic. Some have accused the government of expecting too much too soon, in hoping for widespread achievement of CSH Level 6. Others have complained of there being too little in the pot, in terms of investment in both technology and skills. Doubts about financial viability have inevitably been raised in more minds as a result of the recent deterioration in economic conditions.

Overall, there remains though a strong body of industry support amongst leading players who welcome the policy framework and regulatory roadmap that have been born out of the vision of de-carbonising Britain. The agenda is gaining not only acceptance, but real momentum, albeit with some reservations, as Chief Executive of leading built environment consultancy Inbuilt, Professor David Strong explains:

“The drive towards zero carbon is very important – it has had a powerful effect in galvanising the UK housebuilding and property development community and in stimulating innovation. This may not have happened without such a strong legislative and policy initiative. A growing number of major housebuilders have a broad plan of how they are going to meet the Government’s zero-carbon targets and the intermediate stages planned for the 2010 and 2013 Building Regulations. The housebuilding industry is generally now more positive about delivering higher environmental standards than it was in the past. However, many are concerned about the cost of compliance and the potential liabilities and risks associated with the new standards.”

Zero-carbon aspirations are also considered both a driver and a differentiator of design excellence, with some architectural practices keen not to see the bar lowered too hastily, nor to have the issues taken out of their proper context of sustainable design. Alan Shingler, of Sheppard Robson, Architects of the UK’s first net zero-carbon home built to Level 6, The Lighthouse, advocates staying faithful to a big-picture vision of Sustainability:

“The Code for Sustainable Homes is likely to allow some off-site renewable power generation. Whilst we welcome the overall approach, we believe that the proposed legislative framework should not be allowed to confuse or dilute true zero-carbon development which takes a holistic approach to sustainability including embodied energy, social and economic longevity, as well as environment and carbon reduction.”

Nobody is pretending it will be easy and for developers and investors working with relatively long lead-in times and extended project calendars, it is vital that government provides both the strategic vision and leadership needed, but also builds in sufficient flexibility and room for manoeuvre.

As a key member of the newly-formed Carbon Consensus group, Claudine Blamey, Head of Sustainability at property investment and development company Segro, calls for more joined-up working between government and business:

“The government has to see their role as strategic planners in order to set the scene for business to deliver a zero-carbon economy in the most efficient way possible. The property industry then needs to be given flexibility to utilise the full-range of renewable energy solutions (i.e. on-site, near-site and off-site) in order to maximise carbon-emissions reductions. Furthermore, the capacity of renewable to deliver savings will change over time, as technologies become more viable.”

Sustainable development by definition calls for adaptability and whilst zero carbon might be the agreed target destination, the route map is being re-drawn on a regular basis. The challenge for both the property market and the construction industry is to continue to deliver on contractual project objectives, whilst operating within this evolving policy and regulatory framework. Living with this state of flux is the zero-carbon business challenge.

To view the full Supplement online, please click here.

Author: Jim McClelland