Productive workplaces: what we need from the Clean Growth Strategy
On 25th September, BEIS Climate Change Minister Claire Perry set out her reflections on Climate Week. She noted that we are decarbonising faster than any other G20 nation, and highlighted the opportunity for UK businesses offered by further progress in this economic transformation.
The Minister suggested that decarbonisation will require more than just government policy action, and I will return to this point later. But she also acknowledged that government knows there is much more to do.
So, while we await the (imminent?) publication of the Government’s Clean Growth Strategy, it is worth thinking about what role it can play in helping to transform our workplaces into the healthy and comfortable spaces that will support increased productivity for UK businesses and enhance their competitiveness globally.
ACE’s analysis shows that with current policy and current levels of energy efficiency market activity, the energy performance of commercial buildings in 2030 will simply not be good enough. They will be emitting 42% more carbon than they would be if we were on the Committee on Climate Change’s least-cost path to meeting our carbon emissions targets. And public sector buildings will be emitting 34% more than they should. Think about what that implies for the energy productivity of our non-domestic buildings: in London and Manchester alone, businesses spend over £5.3 billion each year on gas and electricity; if they could avoid wasting at least 1/3 of this fuel, they would have over £1.75 billion every year to use for other things.
So, what can the Clean Growth Strategy do to encourage the necessary investment in energy efficiency?
First, it must set the level of ambition. What level of energy performance do we need to aim for, and by when? Government statistics show that almost 2/3 of the Energy Performance Certificates for non-domestic buildings lodged in 2017 had ratings lower than a C, suggesting a very significant potential for improvement. Government needs to look at this potential for improvement and define how far and how fast we need to access it. For example, a target for non-domestic buildings of a 25-30% reduction in energy use between now and 2030 would be consistent with the least-cost emissions reduction path and would create focus and impetus, if used along with supporting measures to help with delivery.
Second, it should define how the public sector will take a lead: we need an energy performance target for all public sector buildings, and annual reporting on progress towards this. Government (national and local) is a major customer for companies selling and renting out office space. If this customer demanded higher minimum energy efficiency standards, surely the market would follow. And the current state of the buildings occupied by public sector organisations also leaves much room for improvement, with 2/3 of Display Energy Certificates lodged in 2017 also rating D or lower.
Third, we need incentives to encourage businesses to act on the energy performance information they have, whether this comes from the EPCs of their buildings, or from an ESOS or similar energy audit. We have been calling for fiscal incentives, such as tax breaks linked to the implementation of energy audit recommendations, for some time now, and this is echoed by a recent report from Policy Exchange, which suggested that business rates should be linked to energy efficiency.
Enough of what we are looking for from government: what role can and should businesses themselves play? Many businesses now have information about their energy performance, but too few are acting on it. Can energy and environmental managers do more to bring to the attention of the board the opportunity that exists? Probably they can. Business decision-makers are often not that interested in the logic of saving money on their energy bills – they have seemingly more pressing uses for their investment pot. So we energy professionals need to be better at linking energy efficiency investments to the things they care about (fewer production process errors, better productivity, a happier workforce…). Energy managers can also look outside their organisations for finance to support their investment proposals. The Investor Confidence Project has been looking at ways to increase understanding of energy efficiency investments in the finance sector, and these seem to be working – the range of offers for project finance is increasing.
The Clean Growth Strategy must lead the way, setting targets for energy performance and a clear strategy for how these will be reached. Government support for business energy efficiency investments; more compelling messages from energy professionals to their Board members and a continuing increase in the money on offer from the finance sector for energy efficiency projects should all be part of this strategy.