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Pro

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ability M

atters - the p

ractical reality K

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Executive summary 1Timetable of (likely) implementation of relevant laws, regulations and guidance 3

The wider picture 5

Introduction 5

Climate change – an update 7Latest evidence 7Carbon emissions: oil and gas 8The alternatives 9Bio fuels 9Climate change and air quality 10Climate change-related insurance issues 11

The practical reality forproperty 15

Lower environmental impactproperty – greener buildings 15Why professionals need to know 15What professionals need to know 19What to do/ what not to do 20Tools to help the property professional 22Examples of greener buildings 22Further information and references 23

Case studies – “how sustainable are we?” 25Case study 1: Beaufort Court Renewable Energy Centre, Kings Langley, Hertfordshire 25Case study 2: Peterborough Innovation Centre, Lynchwood Business Park, Peterborough 27Case study 3: Aykley Heads Site 4, Durham 28

UK landfill regulations – remediating contaminated land 31

Planning and development issues 33

Planning for housing provision 35Planning and compulsory purchase act 2004 35Environmental assessment 35Strategic environmental assessment and sustainability appraisals [sea/sa] 35PPS23 35Ecological matters 35Planning for housing 36

Asset management 39Managing energy use strategies – the carbon trust 39Waste management contracts 39

Valuation – sustainability and property appraisal 41

Legislative updates – a reference guide 43

UN and international objectives 43UN world environment day – green cities: plan for the planet 43An alternative to the kyoto agreement: asia-pacifi c partnership on clean development and climate 43

EU strategy and directives 442004 Environmental policy review 44The Lisbon Agenda 45The 2005 review of the eu sustainable development strategy: initial stocktaking and future orientations 45EU green paper on energy effi ciency ordoing more with less 46The greenhouse gas emission trading scheme (EU ets) 46Climate change – future EU strategy 47

UK property-related statutes 47Energy performance certifi cates: part l of the building regulations and energy performance of buildings 47Directive on waste electrical and electronic equipment (weee) 48PPS10: planning for sustainable waste management (july 2005) 49PPS 9: biodiversity & geological conservation 49Sustainable and secure buildings act 2004 49Regulation 4 of the control of asbestos at work regulations (2002) 50London’s supplementary planning guidance: sustainable design and construction. 50PPG3: supporting the delivery of new housing 50Securing the future: the uk sustainable development strategy 2005 51

UK property-related fi scal changes 51Uniform business rates 51Climate change levy: still frozen in a warming climate 52Household energy effi ciency 52Fuel duty 52Company car tax 52Company car fuel 53Vehicle excise duty (ved) 53Waste management 53Landfi ll tax 53Countryside and natural resources 53Aggregates levy 53Sustainable land use 53

Central and local government estates 53

Contents

This publication is printed on environmentally friendly, chlorine free paper produced from sustainable stock.

King Sturge: Property Sustainability Matters

1

Executive summary

Climate change is a reality, however caused; we must prepare for the uncertainties that this will bring.

The economic cost of global warming could double in the next 10 years, reducing global economic growth by 2% pa.

Insurance premiums on property are set to rise substantially, especially following recent events in Mumbai, India and New Orleans, USA.

There is now a clear correlation between air pollution and the rise in the sea temperature, causing storms and hurricanes.

Without global dimming (pollution preventing sun reaching the earth) climate change could be much worse.

Energy prices will continue to rise as existing oil fi elds become exhausted.This, together with the objective of reducing CO2, will stimulate new development of non-carbon energy sources. Bio-fuels will become commonplace.

Energy Performance Certifi cates (EPC) could bring enormous uncertainty to the property market but their implementation will not meet the deadline of January 2006.

The EPC framework was due to be implemented with the reissued Part L of the Building Regulations in January 2006; however, it has been announced that some of Parts F and L will be implemented from April 2006 to allow the building industry time to prepare.

Requirements to make EPC available for prospective buyers or tenants, and to display EPCs with fl oor areas over 1,000m2, and to require boilers and air conditioning systems for inspection, will not be necessary. Further ODPM announcements are awaited.

The ODPM now intends to invoke the article in the EPC directive allowing implementation delay, which refers to a lack of experts to carry out the work. A ministerial statement was due in October 2005, but we expect they will not be implemented before mid-2006, after Part L, probably with an implementation period.

Residential energy certifi cates are due to come in January 2007 with the introduction of Home Information Packs (HIPs). This requires vendors to provide reliable energy effi ciency information with the Home Condition Report. The ODPM may also choose this date for energy certifi cates for other types of property.

Waste management strategies will become increasingly important when managing commercial property.

The UK and other states now face legal action for not implementing the Waste Electrical & Electronic Equipment (WEEE) directive in August 2005. Re-cycling all electrical items will become obligatory; the only question is when will it actually happen?

According to the DTi, WEEE producer registration is anticipated for January 2006. June 2006 will see producer responsibility for fi nancing and retailer take-back begin, with WEEE targets to be achieved by 31 December 2006.

As a result of WEEE, retailers may look to reduce the sale of own-brand goods to reduce fi nancial liability for recycling, the onus of which is placed upon the producer under current guidelines.

The Government Sustainable Development Strategy means all central and local government building in future will have to be designed, built and managed to more exacting environmental standards.

2

King Sturge: Property Sustainability Matters - the practical reality

Occupiers and investors are largely ignoring fi scal benefi ts which can be obtained from:- Identifying exempt items in the uniform

business rates- Minimising the climate change levy- Minimising the cost of waste management- Changing their car fl eet to reduce costs- Encouraging public transport

Many property investors do not have a set of guidelines to follow to reduce the environmental impact of fl oors, paint, timber, windows, and insulation. Both in terms of energy cost in use and embodied energy, the level of awareness is still extremely low.

Building Research Establishment Environmental Assessment Method (BREEAM) is increasingly accepted by town planners, but there is almost no attempt to quantity the embodied energy in construction plus the energy cost in use or transport when deciding planning permissions.

There is no common approach by town planners to the sustainable agenda and the growing level of legislation. Councils interpret the changes in varying ways. Frequently the market reality of costs and property valuations means, either the environmental issues are watered down or sites stand undeveloped.

Blending the environmental sustainability (such as implementing BREEAM) with social sustainability (such as town planning intentions) with economic sustainability (is it fi nancially viable in the short and long term?) remains un-resolved.

The following case studies demonstrate the clear advantages (at minimal extra costs in most cases) of undertaking environmentally sustainable development. - Beaufort Court Renewable Energy Centre,

Kings Langley, Hertfordshire (see page 25)- The Peterborough Innovation Centre (see

page 27)- Aykley Heads, Durham (see page 28)

“Sustainable development” will come eitherbecause landowners (eg local and central government) give away value to compensate for higher construction costs or, alternatively, a “rising tide” of legislation and social pressure will slowly change the built environment, making it become more sustainable.

3

Year Fixed dates On-going and forthcoming policies/regulations

1998 Regional Development Agencies Act 1998

1999 Circular 02/99 on Environmental Assessment A Better Quality of Life: A strategy for sustainable development in the UK

2000 Urban White Paper

2001 EU Transport White Paper: “Transport policy for 2010”EU Aarhus ConventionClimate Change Levy

European Strategy for Sustainable Development (2001)6th Environmental Action programme of the EU 2001-2010

2002 Environmental Protection Act 1990 and Contaminated Land Regulations 2000PPG 13 Best practice guidance on travel plansUK Emissions Trading Scheme

2003 Household Waste Recycling Act 2003Planning and Access for the Disabled: A good practice guideSustainable Energy Act 2003Waste and Emissions Trading Act 2003

EC Communication: Equal opportunities for people with disabilities – a European action plan

2004 EU Directive on Strategic Environmental Assessment (2001)EU Directive on Waste Electrical and Electronic Equipment (2002)Energy Act 2004Planning and Compulsory Purchase Act 2004Disability Discrimination Act 1995 (adjustments to buildings) Regulation 4 of the Control of Asbestos at Work Regulations (2002)Planning Policy Statements: 1, 6, 7, 11, 12, 22, 23Safer Places: The planning system and crime prevention (PPS 1 companion document)Community involvement in planning: The Government’s objectives (PPS 1 companion document)Building Regulations amendments: • Part A (Structure)• Part C (Site preparation and resistance to moisture)• Part E ( Resistance to passage of sound) standards details• Part F (Ventilation) consultation• Part G (Hygiene) consultation• Part M (Access and facilities for the disabled)• Part P (Electrical safety in dwellings)• Conservatories

2005 EC Communication: Towards a thematic strategy on the prevention and recycling of waste (2003)EC Communication: Towards a thematic strategy on the urban environment (2003)EC Draft Declaration on Guiding Principles for Sustainable DevelopmentEC Communication Com(2005) 37 Review of the EU Sustainable Development Strategy: Initial Stocktaking and Future OrientationsEC Action Plan for practical action fl owing from Energy Green Paper consultation (December)EC Communication on renewable energyClean Neighbourhoods and Environment Act 2005Building Regulations amendments: • Part B (Fire safety) consultation• Part G (Hygiene)Planning Policy Statements: 9, 10 (consultation ended and being assessed), 25 (consultation)Planning Policy Guidance Notes updates: 2 (consultation), 3 (‘Supporting delivery of new housing’ and ‘Planning for sustainable communities in rural areas’), 4 (redrafting) Consultation: Environmental Reporting Guidelines – Key Performance IndicatorsConsultation: Strategy for the promotion of micro generation and the Low Carbon Buildings ProgrammeConsultation: Draft Regulations for transposing the Linking Directive, which aims to link emissions trading with the Kyoto Project mechanisms.UK Regulations pursuant to EU Waste Electrical and Electronic Equipment Directive

New EU Sustainable Development Strategy EC Communication Comm.(2005) 35 on Climate Change – future EU strategyEU Thematic strategy on air pollutionEU Thematic strategy on the sustainable use and management of resourcesEC Communication on reducing the climate change impact of aviationEC Communication on biodiversity

Securing the Future: UK Sustainable Development StrategyReview of the UK Air Quality Strategy

2006 EU Directive on the Energy Performance of Buildings (2003)Building Regulations amendments: • Part F (Ventilation)• Part L (Conservation of fuel and power)

EU Green Paper on Promoting a European Framework for Corporate Social Responsibility (2001)Air Traffi c Emissions Reduction Bill 2005Civil Aviation Bill 2005Climate Change and Sustainable Energy Bill 2005Crime Prevention and the Built Environment Bill 2005Energy Markets Bill 2005Management of Energy in Buildings Bill 2005Natural Environment and Rural Communities Bill 2005Renewable Energy Bill 2005Small Renewable Energy Developments (Permitted Development) Bill 2005Stamp Duty (Lower Rate for Energy Effi ciency Measures) Bill 2005

2007 EU Directive on environmental liability (2002)EU Directive on taxation of energy products and electricity (2004)

Timetable of (likely) implementation of relevant laws, regulations and guidanceEuropean Union initiatives are in red / UK initiatives are in black

5

The wider picture

Introduction

Since King Sturge released its fi rst report on sustainability in 2004 “Property Sustainability Matters - caveat emptor”, there has been an unprecedented level of national and international news relating to the subject. Furthermore, international conferences such as the global “Stabilisation 2005” conference at the Meteorological Offi ce in Exeter in February 2005, the G8 Summit, and the EU Summit in the second half of 2005, all placed sustainability on the agenda.

The key objective is meeting our needs today without prejudicing those of future generations.

The government defi nition of sustainability is outlined in the Planning Policy Guideline PPG1 “General Polices and Principles” as:“sustainable development ‘means living on the earth’s income rather than eroding its capital. It means keeping the consumption of renewable resources within the limits of their replenishment. It means handing down to successive generations not only man-made wealth (such as buildings, roads and railways) but also natural wealth such as clean and adequate water supplies, good arable land, a wealth of wildlife and ample forests’”.

But this simple objective is mixed up in argument, counter-argument, facts, disputed facts, self-interest and worries over immediate profi tability versus longer-term survival.

Sustainability should be seen as a three-legged stool, only standing up to scrutiny when these three tenets are incorporated:• environmental sustainability• social sustainability• economic sustainability

Blending these three concepts is the challenge. For the property market (occupiers, developers, fi nanciers, investors and their advisers) the immediate worries include:• Are buildings located and constructed to withstand

climate change – especially unexpected fl oods, droughts and storms?

• What additional measures are needed to manage and maintain buildings – including higher insurance premiums and more regular inspections and expenditure, perhaps to avoid litigation?

• What new legislation is in place or due soon, which must be complied with, including town planning laws and building regulations?

• What additional costs are to be incurred due to fi scal changes (and are there any fi scal benefi ts, including uniform business rates)?

• Are there growing pressures on an organisation’s reputation, to be seen as corporately and socially responsible? Will market image in this respect become increasingly important?

Property sustainability matters

FLOODSDROUGHTS

STORMS

CORPORATESOCIAL

RESPONSIBILITYand MARKET

IMAGE

EXTRA COSTSInsurance and

Litigation

LEGISLATION Building

RegulationsTown Planning laws

Taxation

GLOBALWARMING

andCLIMATE CHANGE

Source: King Sturge

King SturgeQ4 2005

The information contained in this report is believed to be correct but cannot be guaranteed, and the opinions expressed constitute our judgement as of this date. Reliance should not be placed on the information, estimates, forecasts and opinions set out herein for the purpose of any particular transaction, and King Sturge cannot accept any liability, whether in negligence or otherwise, arising from such use.

7

Climate change – an update

After reading the King Sturge report Property Sustainability Matters – caveat emptor in 2004, Sustainability Matters – caveat emptor in 2004, Sustainability Matters – caveat emptorJames Lovelock, the scientist famous for developing the Gaia Theory of the earth as a self-regulating organism more than 30 years ago, wrote:

“The climate forecast for the coming century is so bad that I doubt if any development, even sustainable development, is possible. What may be needed is a well planned retreat.

The government and the market have unwisely chosen to listen to the Greens and not to their scientists.

Nuclear power stations have been in Britain for 50 years and have produced enough high-level waste to fi ll 10 m3 - that’s the size of a small house. … 3 - that’s the size of a small house. … 3

each year the post-burning effect of coal and oil produces a 17 miles cubed [sic] of carbon dioxide that is invisible and deadly.

Think about the large invisible cube rather than the tiny one”.

Latest Evidence

Carbon dioxideThere is growing evidence that human activity is contributing to global warming highlighted by a sudden increase in carbon dioxide. It has been rising slowly from 315 parts per million in 1960 to 372 in 2002, then it jumped 2.54% to 376 in 2003.

Although it has been suggested that 400 ppm is a “safe” level, this is far from certain, hence the global conference held at the Meteorological Offi ce, Exeter, in February 2005 took as its title “Stabilisation 2005”.

Climatepredictions.net from Oxford University suggests the lowest estimate for global warming is 2 degrees celcius, but may range up to 11 degrees.

It is estimated 6.7 billion tons of CO2 per year is put

into the earth’s atmosphere, of which 42% is re-absorbed by plants and the sea. Even if the world totally stopped burning fossil fuels, the current effects of global warming would still worsen for up to 100 years.

Tim Barnett, a marine physicist at the Scripps Institute of Oceanography in San Diego, USA, has discovered a clear correlation between a rise in ocean temperature over the last 40 years and pollution of the atmosphere.

A rise in sea temperature could have a devastating effect on climate in many parts of the world and played a part in causing the extra-ordinary series of hurricanes in the Caribbean in late 2004 and New Orleans in 2005.

A rise in oceanic sea temperature will also adversely affect the Arctic ice-cap, which is melting at an unprecedented rate. Today it is half as thick as 30 years ago and has shrunk by 10% of its surface area. This trend could cause sea levels to rise by a metre or more by the end of the century, fl ooding many coastal areas and perhaps halting the Gulf Stream, which brings warmer waters to north-west Europe, possibly triggering the onset of another ice age. Climate change, however caused, is fraught with uncertainty.

Global dimming – Could climate change be worse than we have predicted?It is now estimated that since 1950s the sunshine reaching the earth’s surface has fallen by over 10%. In some regions of Asia-Pacifi c the decline is more than 35%. Air pollution facilitates the formation of clouds with microscopic particles acting as a catalyst around which water droplets form. Clouds prevent sunlight from reaching the earth’s surface, refl ecting heat and light back into space.

Dr V Ramanathan at University of California, San Diego, and Dr J E Hansen of NASA say we are only now realising the impact of this trend; it is slowing down the rate, or masking the true extent, of global warming and perhaps climate change

Dr Atmsumu Ohmura, a Swiss scientist, and others including Rachel Pinker of the USA, who have

8

King Sturge: Property Sustainability Matters - the practical reality

measured cloud cover for 50 years, now suggest this trend may have reversed since 1990 due to the decline in coal-fi red emissions and air particle pollution; more sunlight is now reaching the earth. Ironically, the less visible the air pollution, the more the globe warms up and the faster the climate will change!

The global climate is entering a period of extreme uncertainty; we must plan for change now.

Carbon Emissions: Oil And Gas

Supply of oil and gas

0

20

40

60

80

100

120

140

160

180

20152010200520001995199019851980

Existing field decline4 to 6%

Base investmentrequired

Required newproduction

World demand

Existing production

Mill

ion

s o

f B

arre

ls p

er D

ay o

f O

il E

qu

ival

ent

(MB

DO

E)

Source: Exxon Mobil - Future Energy Tends 2004

According to the energy company Exxon Mobil, by 2020 the world will require about 40% more energy than today, with growth driven by developing nations (such as China and India) who by that time will account for up to 85% of the world’s population.

These increases in energy demand are projected to be equivalent to 1% per year, despite continued improvements in energy effi ciency. If gains were achieved at only half this rate, the world would consume about 30 million additional barrels of oil-equivalent energy per day, close to the amount consumed by Western Europe today.

The ongoing task of the petroleum industry is to fi nd, produce and deliver this energy in an economical and environmentally sound manner. As the chart above illustrates, the petroleum industry will need to locate extra reserves of 100 million oil equivalent barrels per day by 2015 to meet demand.

Price of Brent Crude Oil

WTI Brent

7065605550454035302520

Sep-03 Mar-04 Sep-04 Mar-05 Sep-05

Do

llars

per

Bar

rel

Source: Energy Information Administration, Offi cial Energy Statistics from the US Government

Furthermore, the price of oil continues to rise, putting pressure on consumers to both cut consumption and fi nd alternative methods of energy production. Alternatives being developed are becoming more sophisticated and better able to meet the needs of our energy-hungry culture. Some of the alternatives are outlined later.

There is a growing awareness in the fi nancial markets about these issues. A recent analysis illustrated the use of carbon within the FTSE 100 group of companies.

Carbon direct emissions measured by carbon dioxide equivalent % for the FTSE 100 companies are as follows

Oil and gas 41

Electricity 21

Mining 13

Steel and metals 6

Leisure, entertainment and hotels

5

Other utilities 4

Transport 3

Construction and building materials

2

Others 5

Source: Companies disclosures, Truscost analysis/FT, 13 June 2005

9

By company they are as follows:Shell 23

BP 17

Scottish Power 17

Corus 6

BHP Bilton 4

Others 33

Companies such as Shell and BP are increasingly positioning themselves as “energy” companies, undertaking investment research into reducing the use of carbon fuels and seeking alternative sources of energy, such as gas to liquid (GTL) or green diesel, and wind power.

Carbon Emissions – The AlternativesThere is an increasing list of alternative sources of energy, which emit less or no carbon dioxide. Experts predict that, in terms of power generation, 80% replacement of fossil fuels and CO2 reduction targets could, in theory, be achieved in the next 25 years.

In September 2005 the Tyndall Centre for Climate Change Research published “Decarbonising the UK: Energy for a Climate-conscious Future”, outlining fi ve scenarios to show how the UK government can achieve a true 60% carbon dioxide target by 2050. The scenarios integrate the perspectives of energy analysts, engineers, economists and social and environmental scientists to produce the fi rst fully integrated view of the energy system and include carbon emissions from air, sea and land transport, as well as the built environment.

For more information:

http://tyndall.e-collaboration.co.uk/events/decarb.shtml

http://www.e-collaboration.co.uk/tyndall/media/news/tyndall_decarbonising_the_uk.pdf

The generation of electricity is the easiest energy source to make more environmentally friendly, as most of the technology is already available. There is however a monetary price to pay for cleaner air and environmental sustainability.

The following table demonstrates the cost of producing electricity per KWh from different sources of energy.

Operating cost per MWh

Capital cost to build 1,000MW

Est cost per KWh

Gas £30 £1bn £2.50 - £3.50

Coal £32 £1bn £3 - £3.50

Nuclear £43 £1.5bn £2.50 - £5

Wind onshore £40 £700m £3.50 - £4.50

Wind offshore £60 £1.2bn £4.50 - £7

Hydro Electric £55 N/A £5.0 - £6.0

Marine wave £60 £1.5bn £5.0 - £7.0

Photovoltaics £150 N/A £12 - £16

Windsave micro units

N/A £10,000 for typical household unit saving approx 30% of household electricity.

Source: Nuclear Energy Agency/Int. Energy Agency

Gas, coal and nuclear remain the least expensive at £2.50 to £5 per KWh; wind power, hydro electric and marine wave power cost between £3.50 and £7 per KWh; and photovoltaics costs up to £12 - £16 per KWh.

Making transport greener will be more diffi cult. Public transport is leading the way with hydrogen fuel-celled buses but the big target is introducing hydrogen power into cars. Fuel effi cient road vehicles are beginning to appear in some areas but the cost of making hydrogen and providing refuel stations is very high (although it is being tried out in Los Angeles).

Society is generally not yet ready to pay a high price for a cleaner environment, which may slow down climate change.

Bio FuelsThe concept of sustainable energy is to use only that energy which can be produced by the earth, year by year.

Bio fuels (a form of sustainable or renewable energy) are considered neutral over a 100-year timescale because they are not “adding” carbon dioxide to the atmosphere.

Randolf Diesel demonstrated an engine run on peanut oil in Paris in 1900. By 1973 Brazil started the new wave of bioethanol production from sugar cane. Today the USA and Brazil both produce more

10

King Sturge: Property Sustainability Matters - the practical reality

than 3 bn US gallons of ethanol per year. In the USA there are about 35 bio-diesel plants and in some states it is exempt from state tax, making it retail at a similar price to that of petroleum diesel. The EU 15 now makes almost 2 million tonnes of bio-diesel annually.

In the UK, British Sugar is pioneering the development of bioethanol as a renewable fuel, but it currently costs about twice as much as fossil oil. Under the Energy Act 2004 the UK may introduce a Renewable Road Transport Fuel Obligation, requiring its use. British Sugar estimates a 5% use of bioethanol, blended with existing fuels, would be the equivalent carbon saving of taking 1 million cars off the road.

As the case studies in the report show (eg Aykley Heads), the property development industry is also starting to take this concept seriously.

Climate Change and Air QualityThe Budget 2005 contains a prediction by Swiss Re that the economic costs of global warming could double to $150bn pa in 10 years, with insurers facing $30-$40bn in claims pa. The U.N. Intergovernmental Panel on Climate Change has found that the indicative global economic costs of an increase in global average temperature of 2.5oc (this would be near the average of predicted rises over the next 80 years) could be between 1.5% and 2% of global GDP pa.

Reductions achieved for several key air pollutants (eg particulates, nitrous oxide and lead) as a result of new vehicle emissions standards, fi xed-point pollution control and local air quality management plans, are also noted in the UK Budget 2005.

Projection of GDF losses in 2010

Source: Intergovernmental Panel on Climate Change

11

Climate Change-Related Insurance IssuesInsurance acts as a fi nancial litmus test for sustainability. Choices that society makes today will affect future costs. Insurance can help quantify these costs. In June 2005 the Association of British Insurers issued a report, Financial Risks of Climate Change, based on international scientifi c research that showed that climate change could lead to losses greater than we have ever seen before. Many of the potential costs described by the report could be avoided by taking action now. The summary of the report is detailed below:

Abi - Financial Risks Of Climate Change, June 2005

Insurance is a messenger of the costs of climate changeThis groundbreaking study uses insurance catastrophe models to examine the financial implications of climate change through its effects on extreme storms (hurricanes, typhoons, and windstorms). By publicising the results, the insurance industry is communicating the potential level of future risk arising from climate change, enabling governments, businesses and individuals to make rational decisions on whether and how to avoid these costs.

Climate change could signifi cantly increase the costs of windstorm damageAnnual losses from the three major storm types affecting insurance markets (US hurricanes, Japanese typhoons and European windstorms) could increase by two-thirds to $27bn by the 2080s. Focusing on the most extreme storms (losses occurring once every 100 to 250 years), by the 2080s climate change could:• Increase wind-related insured losses from

extreme US hurricanes by around three-quarters to total $100-$150bn. This additional cost would be equivalent to two to three Hurricane Andrews in a single season (at 2004 prices).

• Increase wind-related insured losses from extreme Japanese typhoons by around two thirds to total $25-$34bn (¥2,700 - ¥3,700bn). The increase alone would be more than twice the cost of the 2004 typhoon season, the costliest in the last 100 years.

• Increase wind-related insured losses from extreme European storms by at least 5% to $32-$38bn (€25-€30bn). This additional cost would be equivalent to the Martin storm in 1999, which cost $2.5bn (€2bn, 2004 prices).

Climate change could also increase costs of fl ooding, particularly in EuropeClimate change could increase the annual costs of flooding in the UK almost 15-fold by the 2080s under high emissions scenarios. If climate change increased European flood losses by a similar magnitude, annual costs could increase by a further $120-$ 150bn (€100-€120bn).

Increased losses could raise the cost of capital and increase the volatility of insurance marketsUnder high emissions scenarios (where carbon dioxide levels double) insurers’ capital requirements could increase by over 90% for US hurricanes, and by around 80% for Japanese typhoons. In total, an additional $76bn could be needed to cover the gap between extreme and average losses resulting from tropical cyclones in the US and Japan. Higher capital costs combined with greater annual losses from windstorms alone could result in premium increases of around 60% in these markets.

Socio-economic factors could exacerbate climate changeThese loss estimates do not include likely increases in society’s exposure to extreme storms due to growing, wealthier populations and increasing assets at risk. For example, if Hurricane Andrew had hit Florida in 2002 rather than 1992, the losses would have been double, due to increased coastal development and rising asset values. Adaptive measures to limit vulnerability could prevent costs escalating.

Climate change impacts on other sectors could have fi nancial implicationsFor other weather-sensitive sectors, like health and agriculture, the overall effects of climate change are likely to be mixed (some positive, some negative). But recent events have shown how harmful the impacts of extreme weather could be.

12

King Sturge: Property Sustainability Matters - the practical reality

• Changes in the weather have already doubled the chance of a very hot European summer like 2003, when at least 22,000 people died prematurely.

• In January 2005 Sweden was hit by windstorm Gudrun, causing the largest-ever insured loss for the country. Half of the costs comprised losses to commercial forestry ($0.25bn or €0.2bn).

Many costs of climate change could be avoided by taking action todayReducing carbon dioxide emissions from a high to a low scenario would reduce the impact on losses and insurers’ capital requirements for extreme windstorms by 80%. Flood risk across Northern Europe may only increase two- to four-fold in low emissions scenarios, saving $120bn (€100bn) each year by the 2080s.

Action to reduce society’s vulnerability to some inevitable impacts of climate change, through more resilient buildings and improved flood defences, for example, could also result in considerable, but targeted, cost-savings.

Policy appraisals should take account of extreme eventsWe need to understand the consequences of climate change to make informed choices about the future. Policy-makers should incorporate financial assessments of the impacts of climate change on extreme weather, as well as on average weather, in cost-benefit analyses of options.

We need to understand more about climate change and its financial consequencesFurther studies are needed on climate change impacts where there is limited scientific consensus at present. This will enable further modelling of the financial costs arising from these effects. The effects on European windstorms and flooding are two areas of particular interest to insurers, where more work is needed.

13

15

The practical reality for property

Lower Environmental Impact Property – Greener BuildingsThis section aims to take a practical look at the impact of sustainability issues on the day-to-day work of the surveying industry. In this section: • Why professionals need to know• What professionals need to know• What to do/What not to do• Tools to help the property professional• Examples of greener buildings• Further information and references

Why Professionals Need To Know

Current and likely future legislation:In recent years, the UK government has made clear its commitment to many international agreements on the environment. At the Earth Summit in Rio (1992) and later at Kyoto (1997), the UK declared its intention to make the country less polluting, less of a consumer of natural resources, and, perhaps most signifi cantly, of energy in order to reduce the levels of CO2 and other greenhouse gases emitted into the atmosphere.

The government has identifi ed property and construction as being key sectors in fulfi lling these commitments and has introduced extensive environmental legalisation to ensure, at the very least, that property owners, managers and occupiers begin to move in the right direction. This scope of this legislation seems certain to widen in the future, much of it driven by EU initiatives.

Details on the Building Regulations Part L and Energy Performance Directives, which are instrumental in this movement, were set out in the section “Property-related Statutes”. As consultations continue in the run-up to the new regulations being rolled out, practitioners are strongly recommended to take expert advice from building services consultants regarding the details of the new scheme and its likely implications for property developers and portfolio managers.

For further information: www.odpm.gov.uk/buildreg

Kyoto/UK energy policySome 50% of CO2 is produced as a result of energy use in buildings: heating, lighting and cooling. The Kyoto Agreement of 1997 set targets for the reduction of energy use of an average of 5.2% for the period from 2008 to 2012. The UK government made a manifesto pledge to cut CO2 emissions to 20% less than 1990 levels by 2010.

For further information: www.sustainable-development.gov.uk

There are also government targets for renewable sources of energy – including photovoltaics (PV)/ solar, wave and wind power – which are that 10% of all energy is to be produced from renewable sources by 2010 and 20% by 2025; 50% grants may still be available for PV use for some residential property.

For more information: www.dti.gov.uk/renewables

Perceived benefi ts of greener buildings:Supporters of green design claim that low environmental impact buildings offer a range of benefi ts including fi nancial advantage, improved public relations and reduced health and safety risks.

Reduced running costsThere is extensive evidence that greener properties can cost less to run. This is partly explained by such buildings rarely being dependent on full air-conditioning systems for the control of their internal environments. Rather, “natural ventilation” systems are utilised, whereby air is heated or cooled as required and then moved around the building by means of convection or low-tech, fan-assisted systems. Signifi cant savings can therefore be made in energy costs.

Also, greener properties often use a range of other energy-saving features including low-energy lighting systems, carefully designed facades using external louvers to reduce solar gain and therefore reduce cooling loads, advanced IT building management systems and simpler and easier-to-maintain environmental systems such as exposed ducts etc.

16

King Sturge: Property Sustainability Matters - the practical reality

The RICS Building of the Year prize for 2001 went to the energy-effi cient, green building, the Wessex Water Operations Centre, near Bath. This building operates at less than one-third of the energy consumption levels of a conventional building. The building’s orientation is east-west, and solar shading, natural ventilation and the use of photovoltaic panels for hot water all contribute to the minimisation of energy use (CSM, 2002).

The RICS Awards also include an Energy Effi ciency category, and in 2001 the winners included the UCB Centre in Brussels, the Royal & SunAlliance Centre in Auckland, NZ, and the Central Square development in Newcastle, UK, in addition to the Wessex Water building.

In 1997, the RICS Energy Effi ciency prize was awarded to the Ministry of Defence complex at Abbey Wood, Bristol. The project’s building economists undertook a very thorough life-cycle costing analysis as the design progressed because, as a public agency, the MOD is accountable for its expenditure and was therefore required to justify the adoption of a green approach to the project. For this very large, new-build development of approximately 120,000 m², net offi ce space 97,587 m², energy savings have been estimated at more than £800,000 per annum compared with the projected costs for a “typical” comparable offi ce. The design utilises “natural” or “displacement” ventilation systems rather than traditional air-conditioning systems.

Reduced exposure to risk of litigationIn the design of greener working environments, a greater emphasis is placed on internal air quality, not only for ethical reasons but also because of perceived business advantages. A number of studies have linked higher quality working environments with reduced absenteeism, higher staff morale and improved productivity (PROBE, 2001).

More careful choice of materials (in particular, paints and carpets), cleaner air-handling systems and greater individual control can all assist in providing healthier working and living environments.

In a study by the American Medical Association, it was shown that health problems resulting from poor indoor air quality cost 150 million workdays and about $15bn in lost productivity every year (Rocky Mountain Institute, 1998).

A green approach can also help reduce the risk of litigation for building occupiers. In the USA, there has been an increase in the number of lawsuits relating to Sick Building Syndrome (SBS) often involving all parties to the project, including the manufacturers of the products used in the building. Recent cases include the award of some $26m to a client organisation for the costs of renovation of an eight-year-old public building suffering from SBS (ibid).

The British Council for Offi ces is currently carrying out a range of research projects studying the link between building design, performance and sustainability.

For their latest fi ndings and guidance notes, see: www.bco.org.uk

Of particular interest:

BCO Guide 2005: Best practice in the specifi cation for offi ces (February 2005)

Tackles the key drivers of the future design and construction of offi ce buildings. “In particular, the future design and construction of offi ce buildings will be driven by the ‘holy grails’ of sustainability, business performance and cost and value.”

17

Capital costsIn a joint study undertaken by the BRE and Cyril Sweett, it was found that the environmental performance of buildings can be increased for less than 2% of additional capital costs (BRE and Cyril Sweett, 2005).

As with the evaluation of running costs, it can be diffi cult to make meaningful comparisons between the capital construction costs of conventional and green buildings on a like-for-like basis. Some green buildings may indeed be less expensive than their conventional counterparts but may be different in terms of design concept and functional performance, eg utilising “natural ventilation” systems rather than full air-conditioning.

In the 28,885 m² Scottish Offi ce headquarters in Edinburgh, built in 1997, capital costs were reported as being approximately 20% lower, due in part to a 40% saving on services costs where a natural ventilation system replaced conventional air-conditioning (Shiers, 2000).

In the case of the Abbey Wood MOD Bristol project, with a total shell-and-core cost of £100m, the average construction cost of the project was £850/m², comparing favourably with such projects as Stanhope’s 1992 Ludgate development, which had a shell-and-core cost of £860/m² (MOD,1997).

In terms of other value-for-money advantages, the MOD report cites the optimisation of building layouts and the clear, simple and effi cient planning of buildings due to requirements and constraints of natural ventilation systems, ie need for a “stacking” effect. More careful specifi cation practices, justifying decisions on the grounds of a range of life cycle considerations including maintenance, replacement, necessity and functionality, are also identifi ed as an advantage.

The use of demountable partitions in offi ces is not a new idea but, in the context of green building design, their use enhances the green credentials of projects by minimising future waste and disposal costs, reducing management and “down-time” costs due to lost productivity resulting from “churn” and by providing fl exible and responsive working

environments. At Abbey Wood, the additional 40% capital cost of demountable “Monoblock” partitioning systems was offset by an estimated life-cycle cost-saving of £135,000 pa or £2m over a 50-year period. (ibid)

Management of the landscape of the same project also produced savings of some £17,000 pa by the planting of trees rather than large areas of “manicured” grass, requiring high levels of irrigation and maintenance. As the landscape designers point out, this approach has produced a more “natural” and mature landscape where ”staff would be made to feel more comfortable straight away by moving from the usual business park environment to something less ‘artifi cial ‘ looking”.

However, other studies have revealed that green projects do not always cost less than the conventional, equivalent building. In some instances, very extensive use of “green technologies” (eg where photovoltaics are used across entire elevations) can lead to construction costs up to 30% higher than in, say, the more common types of business park development (Keeping and Shiers, 2004). An approach which adopts the “radical” end of green building design can incur cost premiums.

18

King Sturge: Property Sustainability Matters - the practical reality

Market advantageWhile it is not possible to produce conclusive evidence that greener properties are always easier to let, achieve higher rents or provide better PR for owners and agents (being seen to be more environmentally and socially responsible), there are projects where this seems to be the case. Greener, healthier buildings can provide an alternative to comparable conventional building, where all other variables are equal.

For examples of such properties go to www.leedsvalleypark.com for a full scheme description.

There have been surveys to show that occupiers will pay a “green premium” (Goodman, 1994, Edwards 1998). However, in order for this to happen the property must offer the right type of accommodation to meet occupier demand, provide appropriate facilities and amenities and be in the right location. Where these preconditions have been met, it seems that occupiers may well be prepared to pay more, feeling that “green is good”.

“Convergence”Property investors are increasingly scrutinising the environmental profi les of both the buildings they own and the organisations with which they are considering dealing. In the case of The Prudential, the UK’s largest property investment manager, with over £11bn invested in property, it seems that in the near future only companies with a clear and responsible approach to the environment need consider themselves eligible to work with them. As long ago as 1998, they were expressing concern regarding exposure to environmental risk as a result of irresponsible practices:

“We expect companies in which we invest to be able to demonstrate and report on appropriate environmental policies.... We are unlikely to hold shares in companies where we are not satisfi ed with the appropriateness of their environmental policy, or their ability to manage the risks associated with environmental impact”(Prudential, 1998)

In their subsequent Environmental and Social Report of 2002, they go further by making a commitment to the principles of ISO 14031

(Environmental Performance) and of CSR (Corporate Social Responsibility). They state that “corporate citizenship will be at the heart of everything we do and how we relate to our business partners” (Prudential, 2002)

Most recently, the organisation has further consolidated its corporate responsibility policies, both nationally and internationally: “…we recognise the growing body of research suggesting that corporate standards and social and environmental performance are becoming signifi cant differentiators. Consumers will increasingly support those organisations that defi ne and exhibit values around trust, ethics and environmental responsibility” (Prudential, 2004)

19

What Professionals Need To Know

Defi nitions of “green” buildingIt should be remembered that in the same way that the term “sustainable development” has many different defi nitions and interpretations, there is no single view of what constitutes a “green building” or a “green development”. However, most green buildings are characterised by an integrated approach to their design and management; they are projects which seek to reduce environmental impact through careful consideration of all aspects of the building’s design and post-occupancy management, over the whole life-cycle of the building.

The majority of green buildings in the UK have undergone certifi cation under the Building Research Establishment Environmental Assessment Method (BREEAM) – a credits for good environmental design and management programme whereby buildings are awarded ratings of Excellent, Very good, Good and Pass by independent assessors, according to the standard of green design and building management, eg energy systems, amounts of low-impact materials used, transport strategy etc.

According to BRE;“BREEAM assesses the performance of buildings in the following areas:• management: overall management policy,

commissioning site management and procedural issues

• energy use: operational energy and carbon dioxide (CO2) issues

• health and well-being: indoor and external issues affecting health and well-being

• pollution: air and water pollution issues• transport: transport-related CO2 and location-

related factors• land use: greenfi eld and brownfi eld sites• ecology: ecological value conservation and

enhancement of the site• materials: environmental implication of building

materials, including life-cycle impacts• water: consumption and water effi ciency”(Source: BRE, 2005)

Design and building management principlesThough a relatively early example of a green building, Barclaycard’s HQ in Northampton, completed in 1998, includes a number of key design features still commonly found in green buildings.

The emphasis was to reduce energy consumption through the use of natural ventilation, maximising daylight and thereby reducing dependence on artifi cial lighting, reducing solar gain and therefore the need for cooling systems and extra-high thermal performance walls and windows.

While the designers of many green projects have rightly sought to address the important issue of energy consumption through the use of “natural ventilation” (the utilisation of natural convection as a means of ventilating buildings) rather than air-conditioning, more effi cient heating and heat storage systems, control of solar heat-gain in order to reduce cooling requirements and low-energy lighting etc, green buildings also seek to minimise:

• site impact - through sensitivity to site ecology; fl ora and fauna.

• the use of resources - eg by the use of “grey-water” recycling for landscape irrigation and low-water-consumption WCs.

• the environmental impact of building materials - through careful specifi cation in both new building design and in maintenance and repair work on existing buildings.

• the use of harmful chemicals - in the construction process and in the management of the building, eg some timber preservation treatments, cleaning fl uids, paints and solvents, landscaping weed and pest control etc.

• waste – in the construction phase of the building through more careful ordering of materials thereby reducing the amount of new materials thrown away unused, by separating site waste materials for recycling and in the management of post-occupancy waste disposal.

And green buildings seek to maximise:

• the use of existing transport networks – by careful location of proposed buildings close to existing public transport routes and by having

20

King Sturge: Property Sustainability Matters - the practical reality

greener transport policies within the occupier’s organisation, eg car-sharing schemes for building users, facilities for staff using cycles.

• the re-use of existing buildings (embodied energy) – by refurbishment, conversion and adaptation or extension wherever possible.

• the quality of indoor environments – healthier working and living environments, eg through greater use of natural day-lighting to offi ces, and by ensuring a high standard of air quality and individual environmental control.

What To Do/ What Not To Do

If involved with or commissioning a low environmental impact new-build, repair or refurbishment:• Ensure that the design consultants have the

necessary experience in dealing with green buildings – it can be a steep learning curve. For example, if going for BREEAM accreditation, have the designers been involved in this process before?

• Discuss the proposed project with the local authority early in the development process – there may be negotiable benefi ts in terms higher densities, reduced Section 106 contributions, easier planning permissions if promoting greener building etc.

• Check that the specifi cation and building contract clearly states the client’s requirement for more environmentally and socially responsible practices from contractors in terms of site management, supply chain issues etc

• Even when carrying out minor works or refurbishment, refer the designers/ specifi ers of the project to the Green Guide to Specifi cation. The Green Guide is an easy-to-use, A-B-C reference book profi ling over 250 commonly used materials and components. Based on quantitative data from the BRE environmental data base, the information will enable designers and building managers to make the best environmental choices of materials and components. For example, according to the Green Guide:

Floors: Carpets are not necessarily green! Interestingly, and somewhat surprisingly, carpets

have the potential to account for a very signifi cant proportion of the environmental footprint of a building, primarily due to the quantities involved and the number of times carpets are replaced during the lifetime of the building (in offi ces, carpets will typically be changed every fi ve years).

One of the key factors in reducing this impact is the choice of underlay. Go for natural fi bre or recycled rubber crumb underlays. Within the “A” rated category, wool carpets perform better than nylon. Natural materials such as sisal and jute are also good options.

For example, according to the A-B-C ratings in the Green Guide (where A = the best environmental option):

Specifi cationSummary

rating80/20 wool/nylon carpet

Natural fi bre underlay A

80/20 wool/nylon, Sponge foam underlay C

Nylon carpet Natural fi bre underlay ASource: The Green Guide to Specifi cation – see for further options

Other “natural” fl oor fi nishes such as linoleum and cork are good choices as are the “hard” fi nishes; marble, quarry tile and ceramic tiles, primarily due to their durability. Wood fl oor fi nishes such as parquet, hardwood strip or softwood block also perform well environmentally, but designers and specifi ers should be sure that the timber is from responsibly managed sources, preferrably local.

Specifi cationSummary

rating

Ceramic fl oor tiles A

Hardwood parquet A

PVC tiles B

Synthetic rubber tiles C

Depending on the cleaning regime of the building, it may be preferable to avoid carpeted fl oor fi nishes as non-fi bre materials are easier to clean and less likely to harbour dust and air-borne fi bres which may adversely affect the health of occupiers.

21

It should be noted, however, that there are “greener” carpets available on the market. In particular, one US fi rm produces trademarked carpets with approximately 50% recycled content, and backings made from 100% recycled vinyl composite material.

Paints: Avoid solvent-borne paint. Generally, paints that are water-borne or oil-based rather than solvent-borne are better environmental options. Project managers should also ensure that appropriate clauses relating to the responsible disposal of paints, solvents and adhesives during building work are included within the building contract. The nearest drain or skip is not acceptable as a method of disposal!

Specifi cationSummary

ratingGloss solvent-borne alkyd resin,

isoparaffi ninicB

Gloss water-borne, styrene

acrylic resin A

Timber: Is it from a renewable source? Designers should seek to use timber from responsibly-managed sources that have been independently certifi ed under such schemes as the Forest Stewardship Council (FSC). Otherwise, ask suppliers if they have adopted a formal environmental purchasing policy, eg the scheme produced by Forests Forever.

For information on sources of sustainable timber:

• Forests Forever: www.forestsforever.co.uk

• Forest Stewardship Council: www.fsc-uk.demon.co.uk

• BRE Centre for Timber Technology and Construction: www.timber@bre.co.uk

The environmental advantages of using preservatives on timber, in terms of reducing the replacement intervals, are regarded as outweighing the initial embodied impacts of the chemical treatments. This is particularly true if the timber is treated under factory conditions where quantities, containment regimes and disposal can be carefully controlled. The use of preservatives is regulated by the Control of Pesticides Regulations (Anderson et al, 2002).

Windows: Timber performs best. Timber windows were rated as the best environmental option in the Green Guide, in both hardwood and painted/stained softwood variants. Steel and aluminium were rated next best while PVC-U was the least best option.

Specifi cation Summary rating

PVC-U framed C

Aluminium framed B

Hardwood A

Softwood painted A

Insulation: Is it ozone friendly? Best to specify zero ozone depletion potential (ZODP) insulations for both walls and roofs. Best options overall are low-density variants of rock wool and glass wool. Where intrinsic strength is needed for fl at roof construction, low-density polystyrene (EPS) and ZODP polyurethane (PU) foam can be used.

Specifi cation Summary rating

Foamed ins (HCFC blown) C

Expanded polystyrene B

Glass wool A

Tools To Help The Property ProfessionalThe following tools are designed for the property professional:

BREEAM – credits for good practice, an environmental “badging” system. Requires certifi cation by a registered assessor, but to help approximate the likely rating to be achieved under BREEAM Offi ces, and to see the level of information required by an assessor, three pre-assessment checklists are available. See BRE website for details of these free PDFs.

• ENVEST – a CD-ROM design tool primarily for architects. See BRE website for details

• Offi ce Scorer (for developers) – allows user to calculate relative environmental and fi nancial implications of new-build v refurbishment. A free, quick-to-use tool developed by BRE and the DTI. See Offi ce Scorer website for access.

22

King Sturge: Property Sustainability Matters - the practical reality

• Green Guide to Specifi cation – information on environmental impact of over 250 materials – uses a simple A-B-C rating system. See BRE website for details

Examples of Greener BuildingsFor information on a range of green building projects, refer to websites listed below:

Offi cesBarclaycard, NorthamptonSee: www.cig.bre.co.uk/referencefi le/Output.jsp?Project_ID=75

BRE Building 16, Watfordwww.egbf.org/PDFs/bre.pdf and www.cibse.org/pdf/bre/environmentalbuilding

Inland Revenue Building, Nottingham, and Portcullis House, Westminster, LondonSee: www.arkiektur.no/fi les/Hopkins.pdf

Scottish Offi ceSee: www.esru.strath.ac.uk/Courseware/Casestudy/scottish_offi ce/scottish_offi ce.htm

Business parksLeeds Valley, Akeler DevelopmentsSee: www.leedsvalleypark.com

Doxford Solar Offi ce, SunderlandSee: www.cig.bre.co.uk/referencefi le/Output.jsp?Project_ID=71 and www.oja-services.nl/iea-pvps/cases/gbr

InstitutionalDevonshire Building, University of NewcastleSee: www.estates.ncl.ac.uk/projects/devonshire/index.php

Elizabeth Fry Building, University of East AngliaSee: www.cig.bre.co.uk/referencefi le/Output.jsp?Project_ID=57 and www.www.johnmillerandpartners.co.uk/fry.htm

Residential/ Mixed useBedzed, LondonSee: www.Bedzed.org.uk/main.html

The Integer house, WatfordSee: www.cig.bre.co.uk/referencefi le/Output.jsp?Project_ID=268

House for the Future, LondonSee; www.cig.bre.co.uk/referencefi le/Output.jsp?Project_ID=221

See also: www.bre.co.uk/referencefi le for list and links to data on other sustainable projects

23

Further Information and References

Websites

www.bre.co.uk for information on BREEAM, The Green Guide to Specifi cation, ENVEST, EcoHomes

www.offi cescorer.info for information and access to this developers’ environmental and fi nancial assessment tool.

www.usablebuildings.co.uk for information on evaluation of building performance, occupier satisfaction, health and productivity etc. Produced by Leaman and Bordass (PROBE)

www.bioregional.com for information on sustainable property development and local eco initiatives including the Bedzed project

www.bco.org.uk (British Council for Offi ces) for information on “best practice in the specifi cation for offi ces” – will include guidance on sustainability issues. See also The Flexible Managed Offi ce Market (2005) and Offi ce Occupiers Survey (2005)

www.sustainable-development.gov.uk/delivery/integrating/estate for information on “greening” the government estate: includes sections on transport, energy and estate management. Relevant to all government work and has possible future implications for all publicly funded property projects.

www.odpm.gov.uk/stellent/groups for latest on the government’s Code for Sustainable Buildings (csb). “The code is a voluntary initiative, by government and industry, to actively promote the transformation of the building industry towards more sustainable practices by requiring buildings that use resources more effi ciently; energy, water and materials; and practices and materials designed to safeguard occupants’ health and well-being.”

www.constructionresources.com for information on suppliers of green construction materials.

Books• Anderson J, Shiers D E and Sinclair, M (2002) The

Green Guide to Specifi cation, Blackwell Science, Oxford

• BRE (1998) BREEAM for Offi ces ’98, BRE, London • Edwards, B (1998) Green Buildings Pay, Spon,

London• Gauzin-Muller, D (2002) Sustainable Architecture and

Urbanism, Birkhauser, Basle• Keeping, M and Shiers, D E (2004) Sustainable

Property Development, Blackwell Science, Oxford• Wooley, T (2000) Green Building Handbook, Spon,

London

REFERENCES

World Commission on Environment and Development (1987) Our Common Inheritance, OUP, Oxford

ODPM (2003) Sustainable Communities: Building for the Future, ODPM, London

DETR/DEFRA (2000) Building a Better Quality of Life: A Strategy for More Sustainable Construction, DEFRA, London

ODPM (Department for Sustainable Development) (2005) World Summit on Sustainability Development (WSSD) Commitments, see www.sustainable-development.gov.uk

Chartered Surveyor Monthly (CSM) (2002) RICS Awards

PROBE/ Bordass, W and Leaman, A (2001) Usable Buildings, UB Trust, York. See also various PROBE reports including:

Probe - Post-occupancy review of building engineering, BSJ 14-16 (July 1995)

Probe 1: Tanfi eld House, BSJ 38-41 (September 1995)

Probe 2: 1 Aldermanbury Square, BSJ 29-33 (December 1995) and

Probe 3: Cheltenham and Gloucester Chief Offi ce, BSJ 31-34 (February 1996).

All available on: www.usablebuildings.co.uk see under “PROBE”

Rocky Mountain Institute (RMI) (1998) Green Development, John Wiley & Sons, Chichester

BRE and Cyril Sweett (2005) Putting a Price on Sustainability, FB10, BRE, London

Shiers, D E (2000) Environmentally Responsible Buildings in the UK Commercial Property Sector, Property Management, Vol. 18, 5

Ministry of Defence (1997) Abbey Wood, unpublished project report

Goodman, T (1994) “Occupiers will pay more for green buildings”, Survey in Property Week, March 1994

Edwards, B (1998) Green Buildings Pay, Spon, London

Prudential (1998) Annual Report, London

Prudential Property Investment Managers (2002) Environmental and Social Report, London

Prudential Property Investment Managers (2004) Acting Responsibly, London

BRE (1998) BREEAM for Offi ces ’98, BRE, London

25

Case Studies – “How sustainable are we?”

The advance of sustainable buildings has been a long and slow process, but one that is gathering pace. Perhaps the most well-known building is the Bedzed development, at Wallington in Surrey; but how has the use of sustainable technology progressed since then?

The fi rst commercial zero-carbon-emission building in the UK was the Renewable Energy Systems headquarters at Kings Langley, Hertfordshire (see case study). Other key buildings include the Wessex Water headquarters in Bath; The Earth Centre, Doncaster; the Sainsbury’s supermarket at Greenwich; the Jubilee Campus at the University of Nottingham; the Swiss Re Tower at St Mary Axe, London (although this building increasingly raises questions).

Sustainable design and technology is being used more regularly in new-build schemes across the sectors, particularly in the public sector, where the government and other public-sector bodies are leading by example in their briefs for such buildings.

All of these buildings, however, are notable for their commissioning being either one-off designs specifi cally for the owner-occupier, or to tie-in with the end-use of the building (The Earth Centre, RES HQ), and/or the land has been handed over (often by the public sector) at a price discount to encourage slightly more expensive “sustainable” construction.

There has, as yet, been very little shift in the more general development sector towards sustainable technology becoming the norm, although British Land and Land Securities are making advances in this direction.

The equally-large refurbishment and repair sector, however, is lagging signifi cantly behind the new-build sector, and there is room for considerable changes to standard practice to achieve the improvements that are possible. The refurbishment of the DEFRA building at Smith Square, London,

due for completion by the end of 2005, is perhaps the exception to the rule and one that should form an example for the property profession to follow. There are many “easy win” items that can be incorporated within designs of both new and existing buildings that do not cost much, if anything, to include and that have a signifi cant impact on the sustainability of the development.

Case Study 1:

Beaufort Court Renewable Energy Centre, Kings Langley, Hertfordshire

King Sturge were appointed to act as project managers to convert an agricultural site to the UK’s fi rst zero emissions commercial development (2,185 m²), which completed in November 2003 and is now the head offi ce for Renewable Energy Systems, in Kings Langley, Hertfordshire.

The new head offi ce is a refurbishment of the old Ovaltine Egg Farm. The1930s Arts and Crafts buildings are a local architectural landmark but had been derelict for 30 years. They have been refurbished using state-of-the-art sustainable building techniques and high standards of energy effi ciency.

Beaufort Court is entirely energy-self-suffi cient and produces zero carbon dioxide emissions. All of the building’s energy and cooling is produced on-site through a wind turbine, solar panels that generate heat and electricity, biomass crop, a heat store and a groundwater cooling system.

As the development was a fi rst, and many elements had to be specifi cally made, there was a vast amount of research and design development, especially of the solar panels to the crop store. These had to be hand made in the Netherlands, following consultations with ZEN Solar and Shell in order to design this bespoke system to suit the site’s solar requirements.

The design of the heat store was also a major element as, again, this was a fi rst of its kind. The

26

King Sturge: Property Sustainability Matters - the practical reality

original size of the underground heat store was 2,500 cubic metres. All elements had to be specifi cally designed, including the heat store cover, which was heavily researched and developed before a suitable solution was determined. The original size of the heat store, however, had an extremely high capital cost, so, after careful calculation, the size was reduced to 1,500 cubic metres. This reduction did not affect its performance.

The project also involved the installation of a wind turbine and the testing for a suitable location on the site. This included the monitoring of wind speeds and the impact of a wind turbine in this location. It was found that the preferred location was not suitable as it became evident that the main TV mast for the surrounding areas was directed towards the site and would be affected by the turbine, which would block the signal. This “cone” effect would have resulted in the obliteration of TV signals in one direction for approximately 3-4 miles.

An alternative site was then determined, and it is now the fi rst wind turbine visible from the M25, Britain’s busiest road, by 170,000 motorists a day, and which generates pollution-free power for the new environmentally friendly offi ce development for wind energy. The turbine also sends surplus power into the local grid for use by homes and businesses.

The scheme has been hailed as a living case study for sustainability and a landmark example of the integration of renewable energy into the built environment. It also includes an “Energy Trail”, which is used by local schools and other interested groups.

The property has won numerous awards, including the Eastern Region RIBA Award; it was short-listed for the RIBA Schuco Sustainability Award 2004; won the Peter Parker Award in the Business Commitment to the Environment Awards 2004; and BCO Best Refurbishment in South England and South Wales 2004.

27

Case study 2:

Peterborough Innovation Centre, Lynchwood Business Park, Peterborough

This 3,700 m² Innovation Centre has been designed for the East of England Development Agency on a business park in the south-western part of Peterborough. The centre will house start-up businesses that are working within the sustainable business sector. It has been designed to encourage synergy and closer working relationships between the tenants and to increase innovation within the tenants’ businesses.

The client’s brief to King Sturge, the project manager, was that the development was to be an exemplar and iconic building, incorporating as much sustainable technology, materials and systems as possible within budget benchmark costs for comparable non-sustainable offi ce developments.

Consultation was undertaken with local businesses and community groups, while the design competition judges included other local stakeholders. Sustainable technologies to be used include comfort natural cooling through a ground source heat pump; solar water heating; improved U-values above that of current Building Regulation

requirements; sophisticated lighting controls including PIR with daylight sensors with manual override; passive solar gain through the orientation of the building; locally-sourced materials including cedar shingle cladding; Bubbledeck roof and fl oor slabs.

The architects are Ruddle Wilkinson, the mechanical and electrical engineers Atelier Ten, the structural engineers Teckniker, while King Sturge is project manager.

For further information or professional assistance contact:

Richard Fiddes Partner, Building Consultancy, Corporate Social Responsibility

Email: richard.fi ddes@kingsturge.com

Telephone: +44 (0) 207 7318 4331

James Tinkler Partner, Building Consultancy, Project Management

Email: james.tinkler@kingsturge.com

Telephone: +44 (0) 207 7529 6544

28

King Sturge: Property Sustainability Matters - the practical reality

Case Study 3: Aykley Heads Site 4, Durham

Aykley Heads is an offi ce development to be completed in the fourth quarter of 2005, built to the latest environmentally sustainable standards, going some way beyond BREEAM standards.

The main characteristics are as follows:The site, which was formerly in the ownership of Durham County Council, is within walking distance of central Durham (including the mainline railway station and other public transport facilities). Extensive cycle storage and showering facilities are included.

Part is to be used by Durham County Council (1,860 m²) The remaining 2,600 m² is designed as highly fl exible serviced offi ce space, particularly suitable for SMEs.

The building is orientated to minimise south-facing solar gain. The ‘thermal envelope’ has also been designed to reduce the embodied energy carbon dioxide created during construction. For instance materials have been sourced locally minimising transport energy and include natural materials like timber.

Unusually, it is a timber-frame offi ce building with earth-ramped spine walls providing substantial thermal mass to both retain heat in winter and reduce solar gain in summer. The post-tensioned in situ concrete slab on in situ columns is also designed to enhance the thermal mass.

It has external walls of larch cladding/lime harl on larch battens and laths. As much timber as possible has been locally sourced including the external cedar panels. Timber window frames have louvered ventilation sections.

The roof is covered with a sedum blanket (a living moss-like substance) creating a reduced rate of run-off. Low-fl ush toilets will use recycled rain water.

The primary heat source will be two highly effi cient wood-burning boilers using recycled fuel supplied locally.

A top-lit double-height circulation spine runs east-west, providing daylight penetration and passive ventilation in deep span areas. A water solar energy system will be used to heat tap and shower water.

A comprehensive data cable and wireless network allows for the monitoring of the building’s performance.

➊ Sedum Roof Blanket

➋ Composite timber roof panels with warmcell insulation

➌ Composite timber roof panels

➍ Earth rammed spine wall

➎ Internal timber columns Internal timber columns

➏ Post tensioned insitu concrete slab on insitu columns

➐ Larch cladding/Lime harl on larch battens and laths

➑ Composite timber stud wall panels with warmcell insulation

1

2

3

456

78

29

By using building materials from local renewable sources, and reducing the CO2 emissions of the building, Aykley Heads will be one of the most environmentally sustainable leased offi ce buildings ever built in the UK, both in terms of the “embodied energy” used in construction and “energy-in-use” of the facility.

Aykley Heads is being developed by Rivergreen Developments.

For further information contact:

Peter Candler Managing Director, River Green Developments plc

Email: Pcandler@rivergreeen.co.uk

Telephone: + 44 (0) 191 383 1174

Jonathan Sykes Partner, King Sturge LLP, Newcastle

Email: jonathan.sykes@kingsturge.com

Telephone: + 44 (0) 191 230 2033

31

UK Landfi ll Regulations – Remediating Contaminated Land

The UK Landfi ll Regulations 2002 imposed the ruling of the EU Landfi ll Directive on 16 July 2004; the co-disposal of hazardous and non-hazardous waste in the same landfi ll is banned. There are three routes to follows;1 “Dig and dump” when cleaning up a brownfi eld

development is now more expensive. Only 14 sites in the UK now accept hazardous waste.

2 Part II of the Environmental Protection Act 1990 and the Waste Management Licensing Regulations 1994 provide guidance to on-site treatment. A site licence or a mobile plant licence is needed, although some exemptions may be available.

3 The soil may be moved to an off-site treatment plant. The returned “clean” soil is still “waste” and developers then need to clarify the nature of the end-use of the land, such as for agriculture or improvements.

There is increasing pressure to develop on brownfi eld sites, raising implications for the remediating of contaminated land. Here is an extract from Sustainable Property Development (Keeping and Shiers 2004), which outlines various ways of how to remediate such sites:

Ex situ remediation·• Bioremediation: Treatment of organic

contaminants by degradation promoted by out-of-the-ground aeration or other treatment.

• Soil washing: Separation of contaminants from uncontaminated soil by mechanical or aqueous means. This process can also now be carried out in situ.

In situ remediation·• Bioremediation: Treatment of organic

contaminants by degradation by micro-organisms in the soil.

• Natural attenuation: Techniques include the degradation, dilution and stabilisation of contaminants so that their toxicity and/or mobility is within safe limits.

• Vapour and liquid extraction: Venting of the soil to promote biodegradation·

• Air sparging: Injection of compressed air or steam below the water table to promote biodegradation.

• Bioventing: Treatment of biodegradable contaminants by aeration processes.

• Fixation: Reduction of the mobility of contaminants by cement binding.

For more information on bioremediation: http://clarrc.see.ed.ac.uk/link/no_fl ash.htm

33

Planning and development issues

Government has attempted to force residential developers to adopt environmentally sustainable designs and construction methods through the planning system, but recognition is growing that a more pragmatic and co-ordinated approach is needed.

While building regulations impose minimum standards for energy effi ciency and social housing grants encourage innovation, the planning system has given regional and local government the discretion to impose much higher standards.

The Surrey County Council structure plan, for example, sets a 10% renewable energy requirement for all developments and regards the use of combined heat and power (CHP) technology as the norm in developments over 5,000 m². Such initiatives are implemented locally through local development frameworks and on individual developments through section 106 agreements.

Surrey stresses the fundamental aim of reducing carbon emissions and encourages local planning authorities to be fl exible where developers are showing real innovation and commitment to low carbon development. Enforced in this way, they have to be taken seriously by developers and the issue cannot be fudged: planning applications might have to consider and assess all “seemingly appropriate technologies”.

These measures have cost implications that, given current market conditions, cannot always be passed on. Planning Policy Statement 22 on Renewable Energy already provides that local policies should not compromise the viability of new development or place undue burdens on developers. The ODPM now reportedly acknowledges that the supply of new homes will be hit by an insistence on onerous standards and has withdrawn plans to introduce Sustainability Codes this year. Consumers will not pay for expensive energy-effi ciency measures and developers will not build homes they cannot sell.

Developers must react with vision and with

consideration for owners and occupiers if they are not to create uncomfortable homes with poor long-term saleability. The best developers have already recognised that the high levels of insulation and air-tightness required by building regulations will lead to unacceptable levels of heat retention. The air-conditioning and air-cooling systems favoured as a solution in high value schemes run counter to the objective of reduced energy use. Likewise, reduced glazing on northern elevations in the interests of improved insulation can result in unacceptably poor average levels of daylight. More sustainable engineering and design solutions are needed.

A debate over the most effective and most viable technologies is likely to cause long-term confusion for developers. Alternative ways of measuring performance – by kWh or carbon emissions – can further cloud the issue. Individual assessments suggest that:• wind power is a serious option only in the North

and West of England; • combined heat and power plants are most

effi cient shared over mixed uses• solar panels are of limited value on high-density

developments due to proportionally smaller roof area

• photovoltaic panels are altogether unviable for residential developments.

On top of these technical issues, there is little agreement over payback times for different technologies.

King Sturge would like to see a rationalisation of planning and building control requirements. It cannot be effi cient for developers to have to research and justify renewable energy options on each individual planning application. The options should be thoroughly considered and regularly reviewed by an appropriate agency – perhaps the Building Research Establishment – in the interests of developing an effective, cost-neutral strategy.

For further information or professional assistance contact:

John Foddy Planning and Development Partner

Email: john.foddy@kingsturge.com

Telephone: +44 (0) 207 7318 4343

35

Planning for housing provision

Planning and Compulsory Purchase Act 2004The principal effect of the Act – the origins of which are based upon the ODPM’s Sustainable Communities Plan – is the creation of opportunities for consultation arising from the requirement of local planning authorities to prepare a Local Development Framework comprising, among other things, local development documents.

Time will tell whether the intent of a more fl exible and responsive planning system can effectively be reconciled with greater public consultation and involvement in the development plan process. Early signs are that local planning authorities are producing local development documents for consultations at a pace and providing opportunities for both commercial and public interests to infl uence local planning policies.

Environmental AssessmentThe environmental assessment of developments proposed by planning application continues to be a process characterised by confl ict, from the earliest stages of determining a requirement or otherwise for assessment, through to the scope of effects to be assessed and the quality of the information provided within the resulting Environmental Statement.

Strategic Environmental Assessment and Sustainability Appraisals [SEA/SA]Strategic Environmental Assessment and Sustainability Appraisals are increasingly required to be applied to a range of plans and programmes – largely related to the new LDF system – as projects are now coming forward post-July 2004 “triggering” the requirement. Contributions from the private sector and/or at least data share between public and private bodies are likely to increase, and numerous consultancies of various disciplines have been quick to advertise SEA and SA capabilities.12.4 12.5 PPS23The publication of PPS23: “Planning and Pollution Control” (2004) brings with it, among other things, a requirement that local planning authorities should satisfy themselves that the potential for contamination and any risks arising from

a development are properly assessed prior to the determination of a planning application, and that a development incorporates any necessary remediation and subsequent management measures to deal with unacceptable risks. Thus, in situations where there is a confi rmed potential for contamination, detailed information must be supplied “up front” – gone are the days where such investigations could be subject to a condition imposed on a planning permission.

Ecological MattersPPS9, Biodiversity and Geological Conservation was published in August 2005 to replace PPG9 Nature Conservation. PPS9 “sets out planning policies on the protection of biodiversity and geological conservation through the planning system”.

For more information:

http://www.odpm.gov.uk/stellent/groups/odpm_planning/documents/page/odpm_plan_039821.pdf

As an example of the ever-increasing infl uence of ecology upon development, English Nature has recently published “A New Approach to Housing Allocations and Nature Conservation” for the Thames Basin Heath Special Protection Area (SPA), which supports internationally important populations of three rare birds. Recreational pressures on the SPA arising from new housebuilding could, it is considered, seriously harm these populations.

The Thames Basin Heath Delivery Plan is an initiative to “establish a strategic, sub-regional approach to the delivery of housing allocations across the 11 local planning authorities in the Thames Basin; put in place measures for conservation of the heathland bird populations, linked to housing development; increase the quality of the environment for residents through the provision of recreational green space and greenways; provide greater clarity for developers over where new housing may be located and associated planning conditions; and streamline the determination of planning applications.”

36

King Sturge: Property Sustainability Matters - the practical reality

The delivery plan seeks to identify:

• where housing development would need to mitigate the potential disturbance effects on the SPA;

• where mitigation of disturbance would not be reliable and therefore where development should not take place;

• where new public green spaces could be provided to cater for an increase in demand; and

• a clear timetable relating to greenspace provision

This approach is intended to be a working demonstration of sustainable development with effi cient planning and delivery of housing provision and a healthy heathland SPA to hand on to future generations.

It may prove to be yet another frustration to delivering homes in the South East, particularly where sites otherwise meet many of the criteria of sustainable development, such as those located on previously developed land etc.

Planning For HousingOn 18 July 2005 the ODPM issued a new Consultation Paper – Planning for Housing Provision, which proposes a new policy approach to making the planning system more responsive to the housing market within the overall objective of planning that contributes to sustainable development. The aim is to ensure that the plan and plan policies will deliver land, in the right places, more swiftly to meet the need for housing going forward. The paper does not address issues concerning the overall level of housing growth and how it is determined.

For further information or professional assistance contact:

Tim Pope Partner, Planning

Email: tim.pope@kingsturge.com

Telephone: +44 (0) 207 7529 6529

37

39

Asset management

Managing Energy Use Strategies – The Carbon TrustAsset managers can use the Carbon Trust, at its simplest, for advice on how to cut energy costs and, beyond that, as a source of information and assistance with developing energy strategies, objectives, and targets, benchmarking and reporting.

The Energy Savings Trust is a similar organisation aimed at residential property.http://www.est.org.uk/

The Carbon TrustThe Carbon Trust is an independent, not-for-profi t company set up and funded by the government to help the UK meet its international climate change obligations. Its aim is to create practical solutions to help businesses cut their emissions, bringing both business and environmental benefi ts.

The UK government aspires to create a low carbon economy by 2050 and has set a national target for a 20% reduction in CO2 emissions by 2010. The Carbon Trust looks to assist with both:• a strategic approach – businesses look to manage

carbon emissions in a holistic manner • an operational approach – businesses save

energy, cutting both costs and emissions

The Carbon Trust offers:• Financial support and accreditation, including

Enhanced Capital Allowances – more than 6,000 products, from boilers to lighting equipment, which meet government-prescribed energy-effi ciency criteria are eligible for 100% up-front tax relief

• Expert advice, including:- On-site energy surveys (Free if the annual

energy bill is greater than £50,000)- Design advice- Training- Energy helpline – 0800 58 57 94- Web-based tools and advice, including an

action plan tool and an energy benchmarking tool for offi ces – www.thecarbontrust.co.uk

Waste Management ContractsIn this section we ask, “What are the key ‘sustainable’ questions to ask when letting a waste management contract?”• Is the company ISO14001 accredited?• If not, does the company have an EMS

(Environmental Management System)?• Does the company use landfi ll or incinerate

waste?• What, if any, general waste is separated prior to

landfi ll/incineration (eg tin cans)?• How broad is the scope of the company’s

recycling (ie what materials is the company capable of recycling)?

• Is the company up-to-date and able to assist with current and future legislative requirements (eg for hazardous waste)?

• Can the company provide a cost comparison between removing general and recyclable waste?

• Can the company assist in implementing a recycling policy across a multi-let property?

• Does the company provide recycling and waste data?

To enable environmental reporting, the answers to these questions ought to give an idea of how much waste is being produced, the percentage being recycled and the opportunities for improvement.

For further information or professional assistance contact:

Simon Young Partner, Asset Management

Email: simon.young@kingsturge.com

Telephone: +44 (0) 207 7318 4234

41

Valuation – sustainability and property appraisal

The valuation of property will be increasingly infl uenced by the sustainability agenda.

In 2002-04 Kingston University, sponsored by IPD, DTi, Prudential, Investment Property Forum, Universities Superannuation Scheme, Boots and Forum for the Future, undertook an analysis of this issue.

From the study came a set of tools to assist the property market which were:• Future-proofi ng – an assessment of property’s

ability to respond to change.• The Sustainable Property Appraisal Tool – to

assess future-proofi ng issues.• A pilot for a Sustainable Property Index – to

benchmark over time “sustainable” property against the general market index.

At the heart of this analysis is the need to:• Assess “investment worth” against a “market

valuation”• Appreciate the “risk factors” in the appraisal• Estimate variations in “depreciation and rental

growth”

While the project blended the triple bottom-line concepts of sustainability: environmental, social and economic, it also scored sustainability criteria against seven issues:1 Energy use 2 Adaptability3 Pollutants4 Accessibility5 Climate control6 Waste7 Water

Against each, a score is produced:• Very poor performers • Typical performers• Good performers• Very good performers

The Sustainable Property Appraisal Project realises that this is a fi rst step to understanding the numerical implications of sustainability. Over the years to come, how Energy Performance Certifi cates and other factors of sustainability can be taken into account when valuing property, will become more apparent.

For further information: http://www.sustainableproperty.ac.uk/

L Ellison, Kingston University L.Ellison@kingston.ac.uk

For professional assistance contact:

Paul Hale Partner, Head of Valuation Group

Email: paul.hale@kingsturge.com

Telephone: +44 (0) 20 7318 4373

[reference]The legislative updates – a reference guide

43

Legislative updates – a reference guide

Un and international objectives A series of United Nations conferences on sustainable development (Rio de Janeiro 1992, Kyoto 1997 and Johannesburg 2002) set down a framework for global action. Initiatives such as Agenda 21, The Global Compact, and UN Environment Programme – Responsible Investment Initiative were outlined in our 2004 report Property Sustainability Matters – caveat emptor. This edition endeavours to bring attention to new initiatives as at summer 2005.

Kyoto Protocol to the UN Framework Convention on Climate Change.

As a result of ratifying the Kyoto Protocol, the UK is committed to reducing greenhouse gas emissions to 12.5% below 1990 levels between 2008 and 2012. The government’s own climate change programme is designed to take the UK beyond its Kyoto target, towards a 20% reduction in carbon dioxide emissions in 2010.

For more information: http://en.wikipedia.org/wiki/Kyoto_protocol

UN World Environment Day – Green Cities: Plan for the Planet The UN Secretary-General Kofi Annan, with the theme “Green Cities: Plan for the Planet for World Environment Day” (5 June 2005) wrote:

“In the next quarter-century, almost all population growth will occur in cities, most of it in less developed countries. By 2030, more than 60% of the world’s population will live in urban areas.

Such rapid urbanisation presents profound challenges, from poverty and unemployment to crime and drug addiction. Already, one of every three urban dwellers lives in a slum. And in too many of the world’s expanding towns and cities, environmental safeguards are few and planning is haphazard.

Indeed, the environmental consequences of urban growth are considerable. Cities are prolifi c users of natural resources and generators of waste. They produce most of the greenhouse gases that are causing global climate change. They often degrade local water quality, deplete aquifers, pollute the marine environment, foul the air and consume the land, thereby devastating biological diversity.

The rising concentration of humanity in cities and

towns means the world will not achieve the Millennium Development Goals unless environmental planning is incorporated into all aspects of urban management.

Creating environmentally friendly cities is an admittedly big challenge, but the technologies and expertise we need already exist. Clean transport, energy-effi cient buildings, safe sanitation and economical water use are possible now, not just in the future, often in a manner that is affordable for all.”

An Alternative to The Kyoto Agreement: Asia-Pacifi c Partnership on Clean Development and ClimateA new pact between the USA, Australia and four leading Asian countries – China, India, Japan and South Korea – was announced on 28 July 2005. Led by the US, which is the world’s largest polluter and emitter of CO2, the pact aims to use new technology to reduce emissions of greenhouse gases such as carbon dioxide from power stations, without the necessity of the mandatory reduction targets set by the current international climate treaty, the Kyoto Protocol. The US and Australia have refused to ratify the Kyoto Protocol, claiming it would harm their economies.

The signatories say they will cut back their emissions of greenhouse gases while still allowing their economies to grow by the development of new technology for low-carbon energy generation, such as clean coal burning and carbon capture and storage. This technology is currently being developed, and is expected to be available in the next fi ve years. Unfortunately, this means that no one knows how much the countries will cut back on their emissions, especially with no mandatory targets to aim for.

Rather than working with Kyoto, the pact offers a way forward that is opposed to the Kyoto approach of cutting back on energy use. Some claim that as such the accord will undermine the second commitment period of Kyoto (which begins in 2012) when the developing countries that have ratifi ed the treaty, such as India and China, may have been expected to take on emissions reductions of their own.

For more information:

http://en.wikipedia.org/wiki/Asia_Pacifi c_Partnership_on_Clean_Development_and_Climate

44

King Sturge: Property Sustainability Matters - the practical reality

EU strategy and directives

Information on the plethora of EU directives was outlined in detail in our 2004 report Property Sustainability Matters – caveat emptor. This edition endeavours to highlight changes to existing directives or bring attention to new policies as at summer 2005.

2004 Environmental Policy Review

[COM (2005) 17 fi nal: Communication from the Commission to the Council and the European Parliament]The communication highlights the fact that, while competitiveness has been the focus of EU policy deliberations over the past year, a growing consensus has emerged over “the contribution that eco-innovations and resource effi ciency make to EU competitiveness and on the market opportunities they offer”. Work will continue to “improve the use of impact assessment and to simplify environmental legislation so as to maximise cost-effi ciency of new legislation”. It is contended that environment policy and eco-innovation can “promote economic growth and maintain and create jobs, contributing to competitiveness and employment”. In terms of performance within the private sector, the communication states that: “a growing number of companies and investors are taking proactive interest in environmental performance and a number of recent studies indicate that good environmental management is linked to greater effi ciency, better fi nancial performance and opens new markets.”

In terms of the outlook for 2005 and beyond, the communication suggests that the EU will continue to focus on the issues of:

a) Climate change;b) Biodiversity loss; andc) Environmental impacts on health

a) Climate changeEU obligations to meet its greenhouse gas emissions reductions under the Kyoto Protocol are unlikely to be met in the short term. New research evidence indicates that the implications of this include:• More frequent extreme weather events (drought and

fl ooding). The annual average economic loss from such events has risen from below $5bn to $11bn over the last 20 years

• Species extinction increasing more rapidly – ranging from 15% to 37% of all species being on the path to extinction by 2050

• Rapid melting of glaciers, affecting drinking water supply, irrigation, hydropower and winter tourism

• Rising insurance costs and uninsured damage

The communication notes that “a number of sectors remain of concern”, with the transport sector being identifi ed as a key problem area. Policy actions for 2005 (and beyond) are to:• Step up Kyoto implementation measures• Launch international discussions on global emissions

reductions after the end of the Kyoto targets period• Prepare to adapt to unavoidable climate change

The short-, medium- and long-term implications for the property sector due to the EU’s concern over climate change are considerable. Greater activity in terms of the regulation of energy use is certain and continuation of regulatory efforts to increase the energy effi ciency of buildings, their users and the means of getting to and from them will become even more of a priority for governments. One key area identifi ed as an important area for EU policy is pricing of energy sources, goods and services to refl ect their “full costs to society”.

b) BiodiversityConsiderable work has been undertaken recently to identify and address biodiversity loss across the EU and elsewhere. The new research fi ndings presented to Parliament are, however, somewhat alarming: one third of the planet’s amphibian species (which are useful biodiversity indicators) face extinction, indicating potentially dramatic species loss. Furthermore, over 40% of Europe’s bird species are “now of conservation concern”.

The implications for the property sector will clearly be most felt in the rural context and the use of agricultural land, but there could be ramifi cations as far as the house-building industry is concerned or for other developers of greenfi eld sites. Furthermore, the use of Environmental Impact Assessments could, in future, become more widespread and detailed.

c) Environment and healthActions by the EU to identify the links between environmental pollution and human health have progressed. Given the diffi culties often apparent in establishing causal links between these two issues, there is an increasing focus on the known relationships between exposure to certain pollutants, such as air-born fi ne particulates, ozone and noise. The transport sector is identifi ed as a key polluter in respect of such pollutants.

The implications for the property sector will be felt in a number of ways. Of particular importance will be on-going research to identify the impact of transport on human health. Subsequent policy initiatives are certain to play a part in promoting both the use of public transport and new eco-technologies for transport systems. Another issue which may be of concern to property owners and developers is the result of the on-going research that will be further promoted on the relationship between

45

pollutants in the soil and human health. It is possible that regulation of the remediation and reuse of contaminated land will be further tightened.

For further information: http://europa.eu.int/comm/environment/docum/

The Lisbon AgendaThe Agenda, agreed by EU leaders in March 2000, aims to make Europe the world’s most competitive knowledge-based economy by 2010. It contains a range of measures designed to increase job creation within the EU and the competitiveness of its businesses, while protecting social welfare and the environment.

The Agenda stresses that sustainable development lies at the core of the process of making the EU a more competitive economy. Sustainable development has been termed a “reference point” for the Agenda, the chief intention of which is to improve the living conditions and the well-being of current EU citizens and that of the generations to come, while choosing a balance between economic, social and environmental development.

For more information: http://europa.eu.int/comm/environment/lisbon.htm

The 2005 Review Of The EU Sustainable Development Strategy: Initial Stocktaking And Future Orientations

[COM (2005) 37 fi nal: Communication from the Commission to the Council and the European Parliament]

This communication assesses the progress on sustainable development since the current EU Sustainable Development Strategy, adopted in 2001. It precedes a new EU Sustainable Development Strategy, which is to be presented later in 2005 and will be written in the light of public consultation (which was completed in 2004). The emerging themes of the review suggest that accelerated progress/pace of change are needed and possible in this area. Furthermore, it reiterates that the Lisbon Strategy (for economic growth, job creation and welfare) remains an essential component of the Sustainable Development Strategy.

The current review goes on to suggest that the revised Sustainable Development Strategy will need to adopt a broader approach to sustainable development, “highlighting the structural changes in the economy needed to move towards more sustainable production and consumption patterns”. Furthermore, sustainable development will have to be a guiding principle for future EU policies. This is particularly so in the light of:• A worsening of unsustainable trends (environmental,

social and economic)

• Europe’s economic underperformance during continued globalisation and increased competition

• New international development commitments• Increasing security threats, natural crises and health

scares• Enlargement of the EU to 25 member states

The probable focus of the future Sustainable Development Strategy is clear, given that the review is focusing on:

Changing the way policies are made – eg by improving policy coherence, making co-ordination between policies more transparent, making sure that prices and incentives encourage changes in production and consumption patterns, investing in appropriate science and technology, and communicating effectively with citizens and businesses to mobilise their efforts towards sustainability.

Reversing unsustainable trends – eg by making progress on energy effi ciency to slow climate change, promoting good health and researching the spread of diseases, combating poverty, modernising social protection measures, enhancing resource use effi ciency, decoupling transport from GDP growth by limiting the volume of transport and improving the urban environment.

Promoting sustainable development at the global level – eg by harnessing globalisation, promoting good governance and democracy and achieving UN targets for fi nancing development.

The future orientation of the EU Sustainable Development Strategy will be set within the light of the issues raised above. It is likely that the next EU Sustainable Development Strategy will set out clearer objectives, targets and deadlines than previously and will attempt to implement more effective monitoring measures. Interestingly, the next EU Sustainable Development Strategy will seek to strengthen links between public and private sectors as well as within the public sector, by raising awareness and clarifying “ownership” of and responsibility for required actions.

The Council of the European Union announced at its Spring European Council in June 2005 that it strongly supported the direction and content of the Sustainable Development Strategy review. The implications of the Sustainable Development Strategy review for businesses and the property sector remain fully to be seen. It is clear, however, that environmental policy and regulation are likely to become more stringent, as well as more pervasive, throughout different policy areas. It is to be hoped that policy for sustainable development will become more “joined-up”, coherent and effective.

For more information: http://europa.eu.int/comm/sustainable/pages/review_en.htm

46

King Sturge: Property Sustainability Matters - the practical reality

EU Green Paper on Energy Effi ciency or Doing More With Less

[COM (2005) 265 fi nal]

This Green Paper is set within the context of an increasing demand of between 1% and 2% pa for energy products within the EU, with approximately 50% of energy being imported. If current trends remain unchecked, this could rise to 70% by 2030. Given limited room for increasing energy supplies, the Green Paper seeks to promote energy effi ciency.

Transport is, again, identifi ed as the main cause for the increasing need for energy products – mainly oil-based ones. Electricity production is also identifi ed as a major contributor. The use of energy within buildings, at 40% of total consumption, is also recognised as being too wasteful.

Targets for reducing energy consumption are set out, the key one being a 20% reduction by 2020. It is contended that half of this could be saved through the implementation of existing legislation and policy (including the Energy Performance of Buildings Directive). To achieve the remaining 10% reduction, savings could be made in the following ways:

• Transport: fi scal measures and public procurement to promote fuel-effi cient cars; improving traffi c management systems, spreading road charging and promoting public transport; prompting the car industry to improve effi ciency; organising air traffi c management; fi nancing research and development on alternative fuels.

• Buildings: the European Commission proposes to extend the provisions of the Energy Performance of Buildings Directive to all buildings being renovated; extending the range of appliances needing energy labelling; more informative metering to demonstrate the cost of energy supply (particularly at times of peak demand).

• Industry: the European Commission proposes to develop market-based measures to help energy consumption reduction; investing in effi cient means of electricity production; decentralising energy production.

• Dialogue with the EU’s partners: fi nancial cooperation and technical assistance with countries such as China and India.

For more information: http://europa.eu.int/comm/energy/effi ciency/index_en.htm

The Greenhouse Gas Emission Trading Scheme (EU ETS)

BackgroundEmissions trading is particularly suited to the emissions of greenhouse gases, the gases responsible for global warming, which have the same effect wherever they are emitted. This allows the government to regulate the amount of emissions produced in aggregate by setting the overall cap for the scheme but gives companies the fl exibility of determining how and where the emissions reductions will be achieved. By allowing participants the fl exibility to trade allowances, the overall emissions reductions are achieved in the most cost-effective way possible.

Participating companies are allocated allowances, each allowance representing a tonne of the relevant emission, in this case carbon dioxide equivalent. Emissions trading allows companies to emit in excess of their allocation of allowances by purchasing allowances from the market. Similarly, a company that emits less than its allocation of allowances can sell its surplus allowances. In contrast to regulation, which imposes emission limit values on particular facilities, emissions trading gives companies the fl exibility to meet emission reduction targets according to their own strategy; for example by reducing emissions on site or by buying allowances from other companies who have excess allowances. The environmental outcome is not affected because the amount of allowances allocated is fi xed.

In January 2005 the European Union Greenhouse Gas Emission Trading Scheme (EU ETS) commenced operation as the largest multi-country, multi-sector greenhouse gas emission trading scheme world-wide. The scheme is based on Directive 2003/87/EC, which came into force on 25 October 2003.

Allowances traded in the EU ETS are held in accounts in electronic registries set up by member states. All of these registries are overseen by a central administrator at EU level who, through the Community independent transaction log, will check each transaction for any irregularities. In this way, the registries system keeps track of the ownership of allowances in the same way as a banking system keeps track of the ownership of money. As of six months into the scheme, no member states’ registries are fully operational and approximately half of states’ registries are partially operational (the remaining member states’ registries not yet having been established).

An index of (and links to) registries is available at: http://europa.eu.int/comm/environment/ets/registrySearch.do

Access to the UK’s registry (operated by DEFRA) is available at: http://emissionsregistry.gov.uk/

47

The fact that relatively few countries have implemented the ETS is perhaps indicative of the problems that have existed prior to and since its inception. A key problem, and one which the UK feels considerably, has been that of National Allocation Plans (NAPs) of emissions allowances. Indeed, the UK government has instigated legal proceedings against the EU, in the belief that the initial UK NAP was insuffi cient to refl ect recent energy production projections.

The European Commission’s Directorate General for the Environment has commissioned consultants to monitor and review the EU emissions trading scheme during 2005 and 2006. The purpose of the review is to:• analyse the functioning and design of the system with

respect to a number of specifi c issues, • evaluate the impact of expanding the EU ETS to other

sectors and gases, and • understand the actual impact of the EU ETS on

competitiveness.

For further information: http://www.defra.gov.uk/environment/climatechange/trading/eu/intro/index.htm

http://europa.eu.int/comm/environment/climat/pdf/emission_trading2_en.pdf

Climate Change – Future EU Strategy

[EC Communication COM (2005) 35]

This document is as yet “unavailable”; however, it is likely to include information/commitments on:• EU leading multilateral initiatives on climate change• Including more sectors within post-2012 strategy

(aviation particularly)• Promoting innovation to enable up-take of resource-

effi cient technologies and appropriate use of technology in energy, transport and building/infrastructure.

• Continued use of market-based emissions-reducing systems (as per EU ETS).

• Adapting EU and international policies to ensure energy security

At time of going to print the following are under consultation process and not yet published:• EU Thematic Strategy on Air Pollution • EU Thematic Strategy on the Sustainable Use and

Management of Resources• EC Communication on Reducing the Climate

Change Impact of Aviation

With regards to the EC Communication on Reducing the Climate Change Impact of Aviation, it has been intimated that there may be the possibility of an inclusion of aviation in the carbon emissions EU European Trading System.

UK property-related statutes Information on the UK property-related statutes was outlined in detail in our 2004 report Property Sustainability Matters – caveat emptor. This edition endeavours to highlight changes to existing directives or bring attention to new policies as at summer 2005.

Energy Performance Certifi cates: Part L of the Building Regulations and Energy Performance of BuildingsThe Energy Performance of Buildings Directive is due to become law in January 2006 and will require that all buildings built, sold or let be rated for energy effi ciency (on an A-G scale) as part of the EU’s commitment to cutting carbon dioxide emissions (BSJ, 2005). It is envisaged that each building will, in effect, have its own energy consumption “label”, as do many retail “white goods”.

Prospective owners, occupiers and users will then be aware of the energy footprint and potential running cost implications of individual buildings, which may in turn affect rents and capital values.

Much of the detail of the scheme is still unclear and consultation continues within the sector. As of June 2005, it seems that there will be:• An agreed calculation method adopted at national

level• Minimum standards for new buildings – with Part L of

the Building Regulations being amended to incorporate the broader requirements of the Energy Directive.

• Minimum standards for buildings greater than 1000 m² undergoing renovation

• A certifi cate issued for each building within the scheme

• Public display of the certifi cate (energy label) in certain public buildings

• Qualifi ed experts will be required to carry out the assessments

According to Roger Watts, a spokesman for the RICS’s building surveying faculty, it seems “…unlikely that the government will be able to introduce the scheme by the beginning of 2006 without some signifi cant reconsideration. If a certifi cate is required for every building to be sold or let, the RICS conservatively estimates that there would need to be at least 500,000 certifi cates produced in the fi rst year. Assuming that a surveyor working full time could produce, say, 200 certifi cates in a year, this requires 2500 fully trained, and qualifi ed surveyors to be available by January 2006. If all those interested spent a quarter of their time on energy certifi cation, we would need 10,000 trained surveyors by 2006” (Watts, 2005).

The scheme is being implemented through the Offi ce of the Deputy Prime Minister and the Directive Implementation Advisory Group (DIAG) based at BRE.

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King Sturge: Property Sustainability Matters - the practical reality

The ODPM now intends to invoke the article in the EPC directive allowing implementation delay, which refers to a lack of experts to carry out the work. A ministerial statement was due in October 2005, but we expect they will not be implemented before mid-2006, after Part L, probably with an implementation period.

Residential energy certifi cates are due to come in January 2007 with the introduction of Home Information Packs (HIPs). This requires vendors to provide reliable energy effi ciency information with the Home Condition Report. The ODPM may also choose this date for energy certifi cates for other types of property.

For the latest information, advice and details of the current National Calculation Method, please refer to the relevant websites:

For further information: www.diag.org.uk and www.odpm.gov.uk > search for Energy Performance of Buildings Directive

The consultation version of Part L requires an increase in energy effi ciency of commercial buildings of around 27% (25% for dwellings). While many energy consultants consider this to be a challenging but achievable target, there is considerable concern with regard to the capability of the existing building control departments of local authorities to be able to implement the regime, due to a lack of resources and relevant expertise.

The results of the consultation on the revision of Part L (Conservation of fuel and power) of the Building Regulations were due to be published in the summer of 2005, and the new Part L itself to be reissued with the EPB regulations in January 2006. In September 2005 it was announced that Parts F and L would be implemented from April 2006 to allow the building industry time to prepare. Early collation of consultation responses (December 2004) suggests that:• A certifi cation scheme under the EPB regulations is

likely to be enforced under separate legislation to the Building Regulations.

• On-going requirements for the certifi cation of buildings would need to be considered carefully in the light of Landlord and Tenant legislation.

• A wide defi nition of “public buildings” would be preferred – ie not just those occupied by public authorities but to include “commerce” (privately owned and occupied) buildings of signifi cant size and where large numbers of the public visit.

• Guidance will be needed for multi-tenanted offi ce buildings were tenants’ disclosure of energy meter readings could not easily be enforced. A suggestion is that disclosure as per fi re certifi cates could be required.

• Guidance will also be required as to whether certifi cation would be required in shopping malls or individual units with malls.

For more information: http://www.diag.org.uk/

Directive on Waste Electrical and Electronic Equipment (WEEE)

Main requirements of the WEEE Directive:• Member states are to set up systems to encourage

separate collection of WEEE; and to set up systems which will allow the return of WEEE free of charge to the fi nal holder;

• No mandatory requirement for householders to separate all WEEE. Member states must instead seek to minimise co-disposal and encourage appropriate behaviour;

• Retailers are to ensure that WEEE is taken back on a one-to-one basis when a new, equivalent type, product is supplied; but member states can provide that retailers make alternative arrangements instead, provided that they are free of charge to the fi nal holder of the WEEE.

• By 31 December 2006, member states must achieve a collection rate of at least 4 kilograms on average per inhabitant per year of waste electrical and electronic equipment from private households;

• Member states are to ensure that all WEEE collected from private households is transported to treatment facilities authorised under Article 6. Article 6 sets down standards which treatment facilities will have to meet;

• Member States are to ensure that systems are set up by producers to provide for recovery and re-use of separately collected WEEE according to set recovery, re-use and recycling targets. Targets are set as a proportion of collected WEEE from private households.

Signifi cant data reporting obligations:• Producers are to provide guarantees for the fi nancing

of future waste management to minimise the amount of “orphan waste” (ie waste without an identifi able “owner” responsible for its recycling/disposal).

In the UK, the government has recently publicly consulted on the fee structure to be established by the Environment Agency for the collection of WEEE. On-going deliberations within the DTi also pertain to the “take-back” obligations of retailers and distributors, which should be implemented from January 2006. The original EU timetable stated that retailers would be obliged to start recycling as of 1 August 2005. As a result the UK and several other member states are facing legal action by the European Commission for its delay in implementing WEEE measures.

Current consultations with the British Retail Consortium include: • the funding of a retail compliance scheme • the upgrading of civic amenity collection sites • the allocation of physical collection and a fi nancial

settlement mechanism for smaller producers of WEEE.

49

Several waste companies have already established pre-compliance schemes and other groups have been formed by producers.

According to the DTi, the likely timetable for WEEE Directive implementation in UK is as follows:

Timetable for WEEE Directive implementation in UKEnd summer 2005 Regulations for WEEE to be made

January 2006 Anticipated start of producer registration

June 2006 Producer responsibility for fi nancing and retailer take-back begins

31 December 2006 WEEE collection and recycling targets to be achieved

Source: http://www.dti.gov.uk/sustainability/weee/#Timetable

PPS10: Planning for Sustainable Waste Management (July 2005)PPS10 replaces the 1999 version of PPG10 “Planning and Waste Management”; it has been published within the context of the national waste strategy (2000). The UK’s national recycling and the EU’s landfi ll diversion requirements require a speedier bringing-forward of waste management facilities than has previously been the case.

See also Landfi ll Tax, section 6.9, page 53

The essential elements of PPS10 that will lead to changes in waste planning include:• Waste management strategies and local development

plans will need to include specifi c objectives to implement waste management hierarchies, local self-suffi ciency and local proximity of waste management facilities to waste creators.

• Regional planning bodies will allocate waste tonnages that need to be managed by waste planning authorities. Local development documents will be required to identify suitable sites for waste facilities.

• The environmental impact of waste facilities will be determined following Strategic Environmental Assessment of local planning strategies.

• Planning applications for waste facilities should be determined according to the provisions of stated local planning policy rather than developers having to demonstrate need in a particular location.

For more information: http://www.odpm.gov.uk/stellent/groups/odpm_planning/documents/page/odpm_plan_039215.pdf

PPS 9: Biodiversity & Geological ConservationPPS 9 reiterates the Government’s objectives for planning in the area of enhancing biodiversity, viz:• To promote sustainable development• To conserve, enhance & restore the diversity of

England’s wildlife & geology• To contribute to rural renewal and urban renaissance

In essence, PPS9 requires regional planning bodies and local planning authorities to ensure that property development and planning decisions are considered in the light of biodiversity and geological conservation. This will require policy and decision makers to:• Maintain up-to-date environmental records for their

area• Assess the potential to sustain and improve

environmental resources• Maintain and enhance biodiversity and geological

conservation interests, attaching appropriate weight to sites of importance

• Take a strategic approach to policy formulation in terms of conserving, enhancing and restoring biodiversity and geology

• Promote opportunities to incorporate benefi cial biodiversity and geological features into the design of developments

• Permit development where the principal objective is to conserve or enhance biodiversity and geological conservation interests

• Require adequate mitigation or compensation measures to be in place if development proposals will signifi cantly harm biodiversity and geological conservation interests. In the event of adequate mitigation or compensation not being possible, then planning permission should be refused

PPS9 sets out how regional planning bodies and local planning authorities should plan for biodiversity and geological conservation and itemises different sites according to their designation (International Sites; Sites of Special Scientifi c Interest; Regional and Local Sites; Ancient Woodland and Other Important Natural Habitats; Networks of Natural Habitats).

Sustainable and Secure Buildings Act 2004This piece of legislation received Royal Assent on 16 September 2004. The major implications of the Act are to provide three new purposes for which Building Regulations may be made:• to promote environmental protection • to facilitate sustainable development• to foster the prevention and detection of crime.

The Act is an enabling measure to give powers, under the Building Act 1984, to make the Building Regulations more stringent in terms of stipulating minimum standards for the construction of new buildings or when existing buildings are renovated, as well as to encourage the generation of

50

King Sturge: Property Sustainability Matters - the practical reality

power from small-scale renewable sources.

The Act makes several environmental and security provisions:• The need to take steps to eliminate or reduce the

production of various emissions.• Producing compliance certifi cates and reports in

relation to these emissions targets, which should be signed off by those undertaking building works.

• For major refurbishment works, the Act requires similar standards of environmental protection and security to be applied as per new buildings.

• The appointment of on-site personnel to ensure that the new requirements are satisfi ed.

• An onus on developers to recycle or reuse construction materials where possible (as yet there are no specifi c obligations on this matter, but the Act enables future Buildings Regulations in this respect).

For more information: http://www.odpm.gov.uk/stellent/groups/odpm_buildreg/documents/sectionhomepage/odpm_buildreg_page.hcsp

Regulation 4 of the Control of Asbestos at Work Regulations (2002)The Control of Asbestos at Work Regulations 2002 introduced a new duty to manage asbestos in non-domestic premises, which came into force on 21 May 2004. This duty is intended to protect the largest group at risk of exposure to asbestos, building and maintenance workers, thereby helping to prevent 4,700 asbestos-related deaths.

The duty requires those who have responsibilities for maintenance activities in non-domestic premises to assess whether there is any asbestos in their premises, and, depending on its condition, either remove it or manage it, making sure that maintenance activities carried out subsequently do not expose the workers to any avoidable risk. They must ensure that information on the location and condition of these materials is given to anyone likely to disturb it.

Some of the key issues involved include the safe management of contractors. In this respect, building owners, occupiers and their managing agents are advised to ensure good provision and management of information to and from competent contractors. This becomes all the more problematic in respect of multi-let premises where appropriate coordination and approval of any works can take time to undertake.

For further information: http://www.hse.gov.uk/asbestos/hse-asbestos.htm

London’s Supplementary Planning Guidance: Sustainable Design and Construction. Policy 4B.6The following draft SPG was published in March 2005 for consultation - the consultation period ended on 3 June 2005. Final publication of SPG is scheduled for autumn 2005.

Policy 4B.6 Sustainable design and constructionThe mayor will, and boroughs should, ensure future developments meet the highest standards of sustainable design and construction and refl ect this principle in UDP policies. These will include measures to:• Re-use land and buildings• Conserve energy, materials, water and other

resources• Ensure designs make the most of natural systems,

both within and around the building• Reduce the impacts of noise, pollution, fl ooding and

micro-climate effects• Ensure developments are comfortable and secure for

users• Conserve and enhance the natural environment,

particularly in relation to bio-diversity• Promote sustainable waste behaviour in new and

existing developments, including support for local integrated recycling schemes, CHP schemes and other treatment options (subject to Policy 4A.1 and 4A.2)

Applications for strategic developments should include a statement showing how sustainability principles will be met in terms of demolition, construction and long-term management

Boroughs should ensure that, where appropriate, the same sustainability principles are used to address planning applications.

The GLA is proposing that all new developments must provide that 10% of their energy comes from renewable sources.

For more info: http://www.london.gov.uk/mayor/strategies/sds/sustainable_design.jsp

PPG3: Supporting the Delivery of New HousingNew paragraph 42 (a) of PPG3 is as follows:“42(a) Local planning authorities should consider favourably planning applications for housing or mixed-use developments which concern land allocated for industrial or commercial use in saved policies and development plan documents or redundant land or buildings in industrial or commercial use, but which is no longer needed for such use, unless any of the following apply:• the proposal fails to refl ect the policies in this PPG

(including paragraph 31), particularly those relating to a site's suitability for development and the presumption that previously-developed sites (or buildings for re-use

51

or conversion) should be developed before greenfi eld sites;

• the housing development would undermine the planning for housing strategy set out in the regional spatial strategy or the development plan document where this is up-to-date, in particular if it would lead to over-provision of new housing and this would exacerbate the problems of, or lead to, low demand;

• it can be demonstrated, preferably through an up-to-date review of employment land (refer to Annex D for practice guidance), that there is a realistic prospect of the allocation being taken up for its stated use in the plan period or that its development for housing would undermine regional and local strategies for economic development and regeneration.”

For more info: http://www.odpm.gov.uk/stellent/groups/odpm_planning/documents/sectionhomepage/odpm_planning_page.hcsp

Securing the Future: The UK Sustainable Development Strategy 2005The new UK Sustainable Development Strategy (SDS) was published in March 2005. The lengthy policy document, at over 200 pages, covers a lot of ground. In essence, the whole document is underpinned by four principal priorities:• The promotion of sustainable consumption and

production. Initiatives in this respect range from incentives for businesses and individuals investing in eco-effi cient products and technologies, to provision of funds for eco-innovations, to making stronger sustainability demands from businesses involved in government procurement.

• Tackling climate change. The government expects business to provide many of the solutions to this global challenge.

• Natural resource protection. There is an expectation that businesses and individuals will respect environmental resource limits, particularly those which use signifi cant quantities of raw materials, eg in the construction sector.

• Sustainable communities. Sustainable development is pitched as being central to the land use planning system – although this is not a new claim, this has potentially signifi cant implications for the property and construction sectors.

The key difference between the current strategy and the previous version (1999) is the obvious attempt to try to integrate or “join-up” the policy approach – the absence of which has been a serious criticism of the government’s approach to sustainable development in the past.

As with other New Labour pronouncements on sustainability, there is a clear attempt to align sustainable development with social well-being, but it is interesting to see the environmental limits within which the economy

will have to operate in future being confi rmed so openly in a major policy document.

The guiding principles of the government’s approach to sustainable development, which are underpinned by the four priorities, are:• Living within environmental limits• Ensuring a strong, healthy and just society • Achieving a sustainable economy• Promoting good governance• Using sound science responsibly

The new SDS has been fairly well received by business groups, environmentalists and most NGOs; very few commentators have criticised it to a great extent. Of the concerns raised over the SDS, perhaps the two key ones are:• Despite the attempt at “joined-up” policy-making,

there is still a lack of detail in terms of where the ultimate responsibility for implementing the strategy will lie – all government departments have their own sustainable development plans, but no department will implement the SDS.

• The clear business focus of the SDS means, perhaps understandably, those environmental impacts are considered in relation solely to GDP rather than to the state of the environment they are affecting.

For more info: http://www.sustainable-development.gov.uk/index.htm

For general sources of information on sustainable development: http://www.sustainable-development.gov.uk/publications/publications.htm

UK property-related fi scal changes

In terms of sustainable development, the 2005 Budget continued to focus on sustainable growth and a better environment. As with previous Budgets, climate change was its environmental focus, with reference being made to the UK’s leadership role through EU and G8 presidencies this year, which have heralded a package of new measures “to support further action on the abatement of greenhouse gas emissions”.

The Budget 2005 set out the key environmental challenges for the government as:• Tackling climate change• Improving air quality• Improving waste management• Protecting the UK’s countryside and natural resources

Uniform Business Rates Residential property is subject to council tax and is based on the capital value of a property. Non-domestic property is subject to business rates and this is calculated

52

King Sturge: Property Sustainability Matters - the practical reality

by applying a national multiplier, known as the “uniform business rate” to the rateable value, which is a property’s rental value as at April 2003 levels.

There are reliefs and exemptions available to some businesses, but so far there has been little incentive to encourage sustainability. Where high-quality environmental-friendly buildings are constructed and there is a demand for them which results in a higher rental value, the current rating system will penalise them, as the rating assessment will refl ect the increased rental value.

However, there are some exceptions in certain specialist areas. Since 2001 combined heat and power plants (CHP), with the appropriate certifi cation, have been able to able to gain possible UBR exemption on qualifying plant. This did benefi t initially large users of steam and electricity such as paper makers, but due to other market changes it has not on its own been a suffi cient incentive to persuade other entrants to construct new plant in recent years.

The Electricity Supply Industry (Rateable Values) (England) Order 2000 sets out the rates applied per megawatt of declared net capacity of the generating plant for the different methods of generating electricity to arrive at the rateable value. These do vary from £5,000 for wind power to £16,000 per megawatt for nuclear fi ssion not produced by a magnox reactor. This is an area where a review could be justifi ed to refl ect the changing market.

Business rates is a very specialised area, for further information or professional assistance contact:

Graham Beaumont Partner, Business Rates, Occupier Services and Corporate Real Estate

Email: graham.beaumont@kingsturge.com

Telephone: +44 (0) 207 7318 4361

Climate Change Levy: Still Frozen In A Warming Climate

According to DEFRA:“The climate change levy is a tax on the use of energy in industry, commerce and the public sector, with offsetting cuts in employers’ National Insurance Contributions - and additional support for energy effi ciency schemes and renewable sources of energy.

It was announced in the March 1999 Budget to give businesses a full two years to adjust. Rates of levy are 0.15p/kWh for gas, 1.17p/kg (equivalent to 0.15p/kWh) for coal, 0.96p/kg (equivalent to 0.07p/kWh) for liquefi ed petroleum gas (LPG), and 0.43p/kWh for electricity. The levy was expected to raise around £1bn in its fi rst full year (2001-02). The levy package is expected to lead to reductions in carbon dioxide emissions of at least 2.5

million tonnes of carbon a year by 2010.

The levy does not apply to fuels used by the domestic or transport sector, or fuels used for the production of other forms of energy (eg electricity generation) or for non-energy purposes. The levy does not apply to energy used by registered charities for non-business uses, and energy used by very small fi rms, ie those using a de minimis (domestic) amount of energy.” (DEFRA, 2005)

Given the pronouncements in the Budget and elsewhere about its international “leadership role” on climate change, it is interesting to note the government’s decision to freeze the climate change levy (CCL) rates again for 2005-06; they have been frozen since their introduction by the 2000 Finance Act. The justifi cation for this is that the CCL has been such a success in delivering climate change objectives. It is payable by fuel suppliers at the following rates:• Electricity: 0.43p/kwh• Natural gas: 0.15p/kwh• Solid fuel (eg coal and coke): 1.17p/kwh• LPG for heating: 0.96p/kwh

For more information: www.defra.gov.uk/environment/ccl

Household Energy Effi ciencyMeasures announced in Budget 2005 to promote energy effi ciency within the residential property sector include:• A reduced rate of VAT for the installation of micro-

combined heat and power and air source heat pumps• Extension of the Landlord’s Energy Savings Allowance

(LESA) to include solid wall insulation (ie in addition to cavity wall and loft insulation)

Fuel DutyConsistent with government policy, Budget 2005 saw an increase in fuel duty of 1.22p/litre for main fuel duties. Given the volatility in fuel markets, this has been deferred to 2006.

The 2005 Budget statement commits the Treasury to continue to investigate and support the development of alternative fuels. Bio fuels (biodiesel and bioethanol) will have a 20p/litre duty differential until at least 2007-08. The duty differential on LPG (liquefi ed petroleum gas) against conventional road fuels will narrow by the equivalent of 1p/litre each year until 2007-08. However, the current duty differential for natural gas will be maintained until the end of 2007-08.

Company Car TaxThe 2002 reformation of this tax to refl ect vehicle carbon dioxide emissions is considered a success in Budget 2005. The threshold for the minimum percentage charge rate was thus frozen at 140g/km until 2007-08. Discounts for bio-fuel and hybrid electric cars will be simplifi ed from

53

2006 – an enhancement of 1% on discounts will replace existing provisions.

Company Car FuelThe calculation fi gure of £14,400 is frozen in 2005-06. Furthermore, the government intends to reform the VAT fuel scale charge to a CO2 emissions basis.

Vehicle Excise Duty (Ved)The six VED bands refl ecting CO2 emissions will be renamed from AAA – D to A – F, which is consistent with other eco-labelling schemes. From 1 April 2006, VED rates for the four least polluting CO2 bands will be frozen and increased by £5 for the two most polluting bands, as well as for cars and vans of over 1549cc registered before March 2001.

Waste ManagementThe government notes in Budget 2005 the need for a successful economy to be an effi cient one in terms of reducing wastefulness. It is stated that since the introduction of the landfi ll tax, waste sent to landfi ll has fallen by 20%.

Landfi ll TaxConsistent with the announcement in Budget 2003, the “standard” tax rate for active waste will increase by £3 this year to £18 per tonne – the target rate is still £35 per tonne in the medium to long term.

As from April 2005, the revenue from landfi ll tax will be used to fund a Business Resource Effi ciency and Waste (BREW) programme worth £284m, which will be spent over three years on supporting businesses to reduce their waste output. The Landfi ll Tax Credit Scheme will be increased to £49.7m in line with infl ation.

Countryside and Natural ResourcesIt is acknowledged in Budget 2005 that it has several domestic and international obligations to ensure prudent management of the UK’s natural resources, including for river water quality, biodiversity and land use. Also acknowledged is the fact that recent improvement for a number of indicators have begun to slow down.

Aggregates LevyThe Aggregates Levy was introduced in 2002. Between 2001 and 2003, sales of primary aggregate have fallen by 8% in Great Britain and the production of recycled aggregates increased by 3.1 million tonnes. Budget 2005 announced that the levy would be frozen at £1.60 per tonne.

Sustainable land useBudget 2005 notes that energy effi ciency measures for houses should lead to at least a 25% more effi cient use of energy and that all social housing will be brought up to the Decent Homes standard by 2010. Furthermore, the

voluntary Code for Sustainable Buildings (demonstrations of which should be in place by the end of 2005 with a national rollout in 2006) is intended to set new standards for resource effi ciency.

Further research into the use of the Contaminated Land Tax Credit (CLTC), which promotes the effective re-use of long-term derelict land, is announced in Budget 2005.

For more information:

http://www.hm-treasury.gov.uk./media/AA7/59/bud05_chap07_171.pdf

Central and local government estatesThe central government estate is making moves to address the sustainable agenda. All central government departments and their executive agencies are to draw up, by December 2005, an environmental purchasing policy, to fi nd sustainable solutions to the provision of goods, works and services, and to incorporate sustainable development considerations into all new build and major refurbishment construction projects. Similar schemes apply to local government authorities that must be fully committed to sustainable procurement in the public sector by 2009.

The prequel to this report, Property Sustainability Matters – caveat emptor, 2004, outlined The Green Book, published in by HM Treasury in 2003, and the Green Guide for Buyers by the DETR in 2001. This chapter aims to highlight new government initiatives as at summer 2005.

What is sustainable community?In March 2005 the UK government published Securing the Future - The UK Government Sustainable Development Strategy, stating it “has a new purpose and principles for sustainable development”. Its new “integrated vision” set out fi ve principles:

1 Living with environmental limits2 Ensuring a strong, healthy and just society3 Achieving a sustainable economy4 Promoting good governance5 Using sound science responsibly

The four priorities for UK action were set out as:• Sustainable consumption and production• Climate change and energy• Natural resource protection and environmental

enhancement• Sustainable communities

For more information: http://www.sustainable-development.gov.uk/publications/uk-strategy/uk-strategy-2005.htm

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King Sturge: Property Sustainability Matters - the practical reality

Contacts

ResearchAngus McIntosh Tel: +44 (0)20 7529 6890 angus.mcintosh@ kingsturge.comCatherine Burke Tel: +44 (0)20 7529 6500 catherine.burke@ kingsturge.comMiles Keeping Tel: +44 (0)20 7493 4933 miles.keeping@kingsturge.com

Asset ManagementSimon Young Tel: +44 (0) 20 7318 4234 simon.young@kingsturge.com

Building ConsultancyJim Rowland Tel: +44 (0)20 7318 4330 jim.rowland@ kingsturge.comRichard Fiddes Tel: +44 (0)20 7318 4331 richard.fi ddes@kingsturge.comJames Tinkler Tel: +44 (0)20 7529 6544 james.tinkler@kingsturge.com

PlanningPhilip Robin Tel: +44 (0)20 7318 4340 philip.robin@ kingsturge.comJohn Foddy Tel: +44 (0)20 7318 4343 john.foddy@kingsturge.comTim Pope Tel: +44 (0)20 7529 6529 tim.pope@kingsturge.com

Public SectorRichard Haynes Tel: +44 (0)20 7529 6773 richard.haynes@ kingsturge.comTim Stapleton Tel: +44 (0)117 930 5830 tim.stapleton@ kingsturge.comAndrew Tice Tel: +44 (0)20 7318 4228 andrew.tice@kingsturge.com

Uniform Business RatesGraham Beaumont Tel: +44 (0) 20 7318 4361 graham.beaumont@kingsturge.com

Urban Regeneration & DevelopmentNed Cussen Tel: +44 (0)117 930 5730 ned.cussen@ kingsturge.comGordon Hood Tel: +44 (0)161 238 6231 gordon.hood@ kingsturge.comAtam Verdi Tel: +44 (0)113 235 5258 atam.verdi@ kingsturge.com

ValuationPaul Hale Tel: +44 (0) 20 7318 4373 paul.hale@kingsturge.com

King Sturge UK Offi ce NetworkLondon: West End Tel: +44 (0)20 7493 4933 Partner in charge: Richard Batten & Chris IrelandLondon: City Tel: +44 (0)20 7796 5454 Partner in charge: Peter JoslinBath Tel: +44 (0)1225 319300 Partner in charge: Bob ChapmanBirmingham Tel: +44 (0)121 233 2898 Partner in charge: Chris MonkBristol Tel: +44 (0)117 927 6691 Partner in charge: Jeremy RichardsCardiff Tel: +44 (0)29 2022 7666 Partner in charge: Bob CroydonExeter Tel: +44 (0)1392 423696 Partner in charge: Charles KislingburyLeeds Tel: +44 (0)113 244 1441 Partner in charge: Colin FellLiverpool Tel: +44 (0)151 236 7336 Partner in charge: Chris PrescottManchester Tel: +44 (0)161 236 8793 Partner in charge: David LathwoodNewcastle Tel: +44 (0)191 230 2033 Partner in charge: Jonathan SykesNottingham Tel: +44 (0)115 908 2120 Partner in charge: Mike HansonScotland: Edinburgh Tel: +44 (0)131 225 4221 Partner in charge: Chris MacfarlaneScotland: Glasgow Tel: +44 (0)141 204 2221 Partner in charge: Philip WalkerSouthampton Tel: +44 (0)23 8023 2882 Partner in charge: Michael GreenSwindon Tel: +44 (0)1793 533155 Partner in charge: David Spencer

All data contained in this report has been compiled by King Sturge LLP and is published for general information purposes only. Whilst every effort has been made to ensure the accuracy of the data and other material contained in this report, King Sturge LLP does not accept any liability (whether in contract, tort or otherwise) to any person for any loss or damage suffered as a result of any errors or omissions. The information, opinions and forecasts set out in the Report should not be relied upon to replace professional advice on specifi c matters and no responsibility for loss occasioned to any person acting, or refraining from acting, as a result of any material in the publication can be accepted by King Sturge LLP.

© King Sturge LLP November 2005 This publication is printed on environmentally friendly, chlorine free paper produced from sustainable stock.

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