The 99% campaign - Incentives for action

Andrew Warren, director, Association for the Conservation of Energy

There are 17 million homes with cavity walls in the UK. Of these, 6 million have been insulated. Getting 40% of the remaining 11 million “filled” is the most ambitious part of the government’s domestic sector energy efficiency target for 2010.

For most of us, fuel bills are a diminishing proportion of our income, and installing cavity wall insulation is just too disruptive to bother with. Obviously, the government could create the Thermal Police, who would march round to your home and instruct you to insulate. It’s been done before: in the 1970s, when our heating systems changed from town gas to North Sea gas, we were all statutorily obliged to let the gas fitter into our homes.

There is a tax that is imposed on practically every home move. It is called stamp duty. Why not use that to send signals to the market? The Home Information Packs, require us to have an energy survey done as we move. It will tell us about our energy conservation options. Why not increase stamp duty levels, then offer to pay it back, if we introduce the recommended measures? That would certainly be a thick stick, but a bit of a carrot, too. One thing is certain: in practically every home that has uninsulated cavity walls, the survey will say they should be insulated.

Charles Macdonald, buildings strategy manager, The Carbon Trust

We need to find mechanisms to create a “market pull” for emissions reduction – for example, by pricing carbon. In the government’s climate change programme for 2006, a UK emissions trading scheme was recommended for further consideration. This seeks to cap emissions for large public and private sector organisations that are not energy intensive and so not covered by the European Union’s Emissions Trading Scheme. Most such emissions are buildings-related. Companies that emit less than their entitlement would be able to sell credits to those who had failed to achieve their targets. A market would develop for carbon, and occupying a low-carbon building would simply be good for the bottom line.

The scheme would be boosted by energy performance certificates. These EPCs enable the objective measurement of performance, and if performance can be measured, it can be managed and priced. Companies with corporate social responsibility agendas will not want to occupy poorly graded buildings. Chief operating officers will not want to waste energy resources by running badly performing offices. And tenants will
not be willing to pay the same for G-rated buildings as for A-rated ones.

Steve Smith, associate director, Cyril Sweett

Energy efficient technologies must become commonplace. To achieve this, energy efficient services should make financial sense, and this can be done by linking them to the energy efficiency certificates proposed by the Energy Performance of Buildings Directive. These should be introduced as a priority.

For highly efficient properties, the government should broaden out the Enhanced Capital Allowances scheme. At present, a company is granted immediate 100% tax relief if it purchases energy efficient products, such as sophisticated air-conditioning units. The list of approved products should be extended to include items that make a building’s fabric more energy efficient, such as double glazing.

To encourage the investment market to acquire energy-efficient buildings, a nil band of stamp duty land tax should be applied to A-grade properties. The rate of SDLT would then be applied on a sliding scale as the rating worsens. This would encourage specification of energy-efficient solutions for the refurbishment of existing property. Lower SDLT rates would increase the capital value of property, as seen with the disadvantaged areas scheme. This provides another incentive to investors seeking to maximise returns.

Dave Farebrother, assistant director, Land Securities

In terms of existing stock, we do not believe that emissions trading, favoured by some, would be an effective mechanism for property in the UK. As the only property company taking part in the current UK trading scheme, we have learned some of the benefits and problems that such a scheme brings. We consider this mechanism to be too complex, and unlikely to bring about cost-effective reductions in carbon emissions. Instead, we would suggest that the following approaches:

• Reducing or applying a zero-rate of VAT to energy-efficient technologies. This could apply to any equipment that is, say, 20% more efficient than a good practice benchmark.
• Changing the energy supply regulations to require energy suppliers to pay a market rate for electricity returned to the grid, thereby increasing the incentive for combined heat and power generation.
• Requiring energy suppliers to include an annual running total on every utility bill, in terms of kilowatt hours used and carbon dioxide emitted. This would make it easier for organisations to manage their energy use.
• Applying stamp duty benefits to the sale of energy-efficient buildings.
• Reducing local rates for energy-efficient buildings.

Who’s backing our 99%

The RIBA

Improving the performance of the existing building stock is vital to meet our carbon reduction target, and it needn’t be difficult.

It’s still perceived – wrongly – as prohibitively expensive and it’s maddening that the planning system remains a serious obstacle to the installation of energy-saving equipment.

Campaign this week …

URS (global engineering and environmental consultancy)

Investment in improving existing stock will have a far greater impact than improvements to Building Regulations or Ken Livingstone’s proposals for 20% on-site renewables.

The RICS

Reductions in council tax for making homes more energy efficient or a reduction in business rates for commercial property should be considered, but as an initial step the government must increase access to information on energy efficiency.

The British Council for Offices

There is an opportunity here to resolve the vicious circle of blame between developers, tenants, agents and owners. We believe this campaign may be a useful platform for further initiatives to develop an industry-led system.