Boosting best energy use

Graham Sprigg reports on the implications for UK business of the Energy Performance in Buildings Directive, and its potential to drive reductions in carbon dioxide emissions

You know that energy is costing your company money, so you might feel that the £3.5m that the government has just spent on advertising the fact could have been put to better use. In case you didn’t see the TV commercials put out by DEFRA via Action Energy, an initiative of the Carbon Trust (are you with me so far?), official figures put wastage by SMEs at up to 30% of their total energy bill.

Increasing awareness of the need for improved energy management will be helped by the implementation of a potentially far reaching piece of Euro-legislation. So, if you haven’t got a TV it doesn’t matter, because anyone whose business is based in a building will soon be taking a more active interest in their energy consumption.

Jeopardising Kyoto

The Energy Performance of Buildings Directive is already law. It moved through the European legislative system relatively quickly, thanks to the EU’s realisation that energy inefficient buildings were eating up large amounts of fuel and jeopardising the likelihood of reaching the carbon emissions reduction agreed as part of the Kyoto protocol. With energy consumption in buildings accounting for over 40% of Europe’s greenhouse gas emissions, focusing on improvements in consumption in offices, shops and hotels is an obvious, and laudable, objective for governments throughout the EU. Any improvements in the insulation properties and energy efficiency of new buildings should be welcomed by firms, whose heating bills account for around 50% of commercial energy use.

Timing and implementation

In theory, the savings resulting from the implementation of the new law could be enormous. According to the European Alliance of Companies for Energy Efficiency in Buildings (Euroace), the EU’s own estimates of the directive delivering 45m tonnes of saving by 2010 are very conservative. Euroace’s own research shows that the figure could be ten times this amount. Unfortunately, both the timing and the implementation of the directive will not be without their difficulties. Countries have until January 2006 to implement the new laws, but there will be an additional three years – taking us almost to the end of the Kyoto phase in 2010 – during which time Member States can work out how they are going to apply the tricky energy rating systems required. This delay is likely to reduce real savings, possibly by a factor of ten. So the real reductions in carbon dioxide emissions are unlikely to be realised until after 2010.

Good news for occupiers of new buildings

Organisations such as Euroace and BRE are wholeheartedly behind the new regulations, which are bound to be good news for the occupiers of new buildings. Construction companies will have to build to higher standards of energy efficiency, incorporating technologies such as intelligent heating, air conditioning, fuel efficient boilers and improved insulation, boosting the sector’s spend.

Businesses will also benefit from reduced fuel consumption. The story for occupiers of existing buildings might not be so rosy, however. Inefficient buildings will be penalised and the owners may be required to trade carbon permits, increasing the cost of their energy, which will – the government hopes – act as an incentive for businesses to spend on improving their building efficiency. The costs here are likely to be significant. If the introduction of the Climate Change Levy could be viewed as anything of a model, it is hoped that more will be done early in the life of the new directive to encourage owners and occupiers to act, rather than penalise them.

Lack of financial help

While there can be no doubt that improvements in energy efficiency at all levels of industry and commerce will help business, you, me and the planet; perhaps the £3.5m that has just been spent by the Carbon Trust could have been better used in other ways. With long pay back times on many improvements, financial help in the form of grants, capital allowances or reduced VAT could really help SMEs.

According to Euroace, one of the most positive aspects of the directive is that all of the technologies required to reach the potential 450m tonnes reduction are already out there. Many of these will be highlighted at the forthcoming NEMEX National Energy Management Exhibition and conference, which takes place at the NEC from 30 March to 1 April. Among the seminars related to energy in buildings, the directive itself will be the focus of sessions on Wednesday 31 March. These will include presentations by BRE’s Paul Davidson on policy drivers and implementation timescales and advice on the
environmental assessment of buildings from a director of Faber Maunsell.

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